Hertz 2009 Annual Report Download - page 99

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
debt. Net cash used in financing activities during the year ended December 31, 2008 was $695.3 million,
a decrease of $38.8 million from the year ended December 31, 2007. The decrease is primarily due to
decreases repayments of short-term borrowings and long-term debt, partly offset by a decrease in
proceeds from short-term borrowings.
Our car rental and equipment rental operations are seasonal businesses with decreased levels of
business in the winter months and typically heightened activity during the spring and summer. This is
particularly true of our airport car rental operations and our equipment rental operations. To
accommodate increased demand, we maintain 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 the variable funding notes portion of our U.S. Fleet Debt facilities
as defined in Note 3 to the Notes to our consolidated financial statements included in this Annual Report
under caption ‘‘Item 8—Financial Statements and Supplemental Data.’’ As business demand moderates
during the winter, we reduce our fleet accordingly and dispose of vehicles and equipment. The disposal
proceeds are used to reduce debt.
In April 2009, we made aggregate open market repurchases, at a discount, of approximately
$68.0 million and $81.5 million in face value of our Senior Notes and Senior Subordinated Notes,
respectively. In addition, we and our affiliates have repurchased and may in the future repurchase or
otherwise retire debt of our subsidiaries and take other steps to reduce such debt or otherwise improve
our balance sheet. These actions include open market purchases, negotiated repurchases and other
retirements of outstanding debt. The amount of debt that may be repurchased or otherwise retired, if
any, will depend on market conditions, trading levels of such debt from time to time, our cash position
and other considerations.
As of December 31, 2009, we had approximately $10,364.4 million of total indebtedness outstanding.
Cash paid for interest during the year ended December 31, 2009, was $635.2 million, net of amounts
capitalized. Accordingly, we are highly leveraged and a substantial portion of our liquidity needs arise
from debt service on indebtedness incurred in connection with the Acquisition and from the funding of
our costs of operations and capital expenditures.
In 2009 we raised new capital intended to fund the 2010 fleet debt maturities as they occur. We began
addressing these liquidity needs at the end of the second quarter and the beginning of the third quarter
by completing the 2009 Hertz Holdings Offerings, pursuant to which we received approximately
$990 million of net proceeds, after deducting underwriting discounts and commissions and before
offering expenses payable by Hertz Holdings.
On September 18, 2009, HVF, a bankruptcy-remote special purpose entity wholly-owned by Hertz,
completed the closing of a new variable funding note facility referred to as the Series 2009-1 Variable
Funding Rental Car Asset Backed Notes, or the ‘‘Series 2009-1 Notes.’’ The facility has an expected
maturity date of January 2012 and a 3 month controlled amortization period beginning in November
2011. The aggregate principal amount of such facility is $2.1 billion and such facility is available to HVF
on a revolving basis until the controlled amortization period begins in November 2011.
Immediately prior to the issuance of the Series 2009-1 Notes, HVF caused the termination of the series
supplements and note purchase agreements relating to its Series 2005-3 Variable Funding Rental Car
Asset Backed Notes, or the ‘‘Series 2005-3 Notes,’’ Series 2005-4 Variable Funding Rental Car Asset
Backed Notes, or the ‘‘Series 2005-4 Notes,’’ and Series 2008-1 Variable Funding Rental Car Asset
Backed Notes, or the ‘‘Series 2008-1 Notes,’’ or the ‘‘Terminated VFNs,’’ and caused the repayment and
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