Hertz 2010 Annual Report Download - page 111

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
liability and property damage reserves, reserves for restructuring, allowance for doubtful accounts and
fair value of derivatives.
Reclassifications
Certain prior period amounts have been reclassified to conform with current reporting. For the years
ended December 31, 2009 and 2008, we have revised net cash provided by operating activities and net
cash used in investing activities within our consolidated statements of cash flows due to a gross up of
cash lease payments relating to our revenue earning equipment in the non-cash add back previously
included in depreciation of revenue earning equipment and proceeds from disposal of revenue earning
equipment.
Revenue Recognition
Rental and rental related revenue (including cost reimbursements from customers where we consider
ourselves to be the principal versus an agent) are recognized over the period the revenue earning
equipment is rented based on the terms of the rental or leasing contract. Revenue related to new
equipment sales and consumables is recognized at the time of delivery to, or pick-up by, the customer
and when collectability is reasonably assured. Fees from our licensees are recognized over the period
the underlying licensees’ revenue is earned (over the period the licensees’ revenue earning equipment
is rented).
Sales tax amounts collected from customers have been recorded on a net basis.
Cash and Cash Equivalents and Other
We consider all highly liquid debt instruments purchased with an original maturity of three months or less
to be cash equivalents.
In our Consolidated Statements of Cash Flows, we net cash flows from revolving borrowings in the line
item ‘‘Proceeds (payments) under the revolving lines of credit, net.’’ The contractual maturities of such
borrowings may exceed 90 days in certain cases.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents includes cash and cash equivalents that are not readily available
for our normal disbursements. Restricted cash and cash equivalents are restricted for the purchase of
revenue earning vehicles and other specified uses under our Fleet Debt facilities, for our Like-Kind
Exchange Program, or ‘‘LKE Program,’’ and to satisfy certain of our self-insurance regulatory reserve
requirements. As of December 31, 2010 and 2009, the portion of total restricted cash and cash
equivalents that was associated with our Fleet Debt facilities was $115.6 million and $295.0 million,
respectively. The decrease in restricted cash and cash equivalents associated with our fleet debt of
$179.4 million from December 31, 2009 to December 31, 2010, primarily related to payments to reduce
fleet debt and the timing of purchases and sales of revenue earning vehicles and the temporary
suspension of our U.S. car rental LKE Program. The suspension of the U.S. car rental LKE program
enabled us to build liquidity in anticipation of future growth initiatives.
Receivables
Receivables are stated net of allowances for doubtful accounts, and represent credit extended to
manufacturers and customers that satisfy defined credit criteria. The estimate of the allowance for
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