Hertz 2011 Annual Report Download

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2011 Annual Report

Table of contents

  • Page 1
    2011 Annual Report

  • Page 2
    ...number one airport car rental brand in the U.S. and at 119 major airports in Europe. In addition, the Company has sales and marketing centers in 60 countries which promote our business both within and outside each country. Product and service initiatives such as Hertz Gold Choice, Hertz #1 Club Gold...

  • Page 3
    ... airports in Europe • World's largest airport general-use car rental brand • Rentals for hourly, weekly, monthly, yearly (leases) for leisure, business, insurance replacement, etc. • Global footprint-approx. 315 locations worldwide • Low-cost structure • Diversified revenue...

  • Page 4
    ...PROFILE Employees Worldwide Car Rental Locations Worldwide Equipment Rental Locations Countries Served 32,000 8,500 317 150 WORLDWIDE CAR RENTAL Franchisees (a) U.S. Airport (Leisure) U.S. Airport (Commercial) U.S. Off Airport Europe Off Airport Europe Airport (Leisure) Other International Europe...

  • Page 5
    ...to provide the best overall value in the car and equipment rental industries. We will continue to make progress in 2012 by focusing on and staying balanced on continually improving customer service satisfaction, employee satisfaction and asset management. In late 2010, Hertz introduced its new Brand...

  • Page 6
    ... rental units which allow our customer service representatives at our on and off-airport locations to change reservations at the car, not at the counter. Inside the car, Bluetooth, Internet and GPS technology help create a virtual rental location with Hertz systems, information and customer support...

  • Page 7
    ...â„¢ provides hourly car sharing services on three continents, while Hertz Classic and Advantage Rent-a-Car provide airport and off-airport car rentals from 8,500 locations in 150 countries, and Donlen provides vehicle leasing and fleet management in the U.S., Canada and Mexico. We envision a day in...

  • Page 8
    ...equally on efficiency and growth which are mutually supportive. Robust, company-wide efficiency initiatives enable Hertz to deliver new products and services which provide optimal value and experiences to our customers. Our growth initiatives tap underserved and new ancillary markets via organic and...

  • Page 9
    ... Canada and Mexico. Donlen leases vehicles to Fortune 500 companies and small business fleets alike. Donlen also provides innovative and technology-driven fleet management and maintenance services. Hertz and Donlen are developing products jointly." Acquisitions continue to provide a source of new...

  • Page 10
    .... We also purchased Ace Rental Cars and rapidly expanded to 10 locations in Australia and New Zealand, offering the cost conscious consumer greater value for their traveling dollar. We achieved exceptional growth rates in these newer markets. For example, Hertz on Demandâ„¢ car sharing revenues grew...

  • Page 11
    81 Advantage locations in the U.S. and Europe Hertz on Demandâ„¢, our car sharing business, operates on three continents from 300 city locations globally and over 60 U.S. college campuses, and grew revenues more than 80% last year. page 7

  • Page 12
    ...total North American revenues in 2011. HERC also increased its positive presence in the lucrative pump & power business, which thrives on a combination of planned events and projects and natural disaster response. The pump & power business serves a wide array of market niches including entertainment...

  • Page 13
    ... Canada and Europe, 5 locations in China and 1 location in Saudi Arabia, generating annual revenues of $1.2 billion." HERC EXPANSION INITIATIVES • Oil & Gas rentals • Entertainment services • Pump & Power • Industrial facility maintenance and construction • International...

  • Page 14
    ... to book a car to the moment they return it; they want a simpler, easier, and faster experience that is priced right. With this in mind, Hertz has been investing in new technology over the last few years that is purposed to enhance every aspect of the rental experience and reward our customers for...

  • Page 15
    ...of every customer's experience and thereby our standing in the marketplace. Hertz has made a major investment in the development and marketing of new products and services to differentiate the brand on more than just price, creating the best value proposition in the car rental industry. Traveling at...

  • Page 16
    ... from 81 Advantage locations in the U.S. and Europe • Launched several technology-driven customer service innovations, including: - eReturn - Gold Choice - ExpressRent™ Kiosks - Mobile Apps and Gold Alerts • Launched new loyalty program, Gold Plus Rewards, resulting in 270K new members...

  • Page 17
    ... reservations and vehicle type, to customers who will have the choice to change their vehicle type when they receive the alert or when they arrive at the airport. Of course, Gold Plus Rewards members can choose to drive away their pre-selected vehicle. Hertz is unique in the car rental industry...

  • Page 18
    ...we installed solar powered energy at 7 U.S. locations with an additional 9 sites planned for 2012. Collectively, Hertz will generate 2.7 million kilowatt hours of electricity annually, through our solar installation program. We also work hard to offer our customers the most environmentally conscious...

  • Page 19
    ...Electric Drive Transportation Association and the U.S. Green Building Council. "In 2011, we installed solar energy systems at 7 U.S. locations with an additional 9 planned for 2012. Collectively, Hertz will generate 2.7 million kilowatt hours of electricity annually." HERTZ SOLAR INITIATIVE Hertz...

  • Page 20
    ...stop as we constantly innovate, expand markets and increase the value provided to customers and shareholders alike. Since 2007, our transformation has resulted in efficiency savings totaling more than $2.1 billion, more than 20% of overall costs, and incremental revenues in 2011 of over $340 million...

  • Page 21
    ... at 66 car and equipment rental locations globally, with financial, customer satisfaction and employee satisfaction results which exceed division averages by wide margins. Since 2009, we have deployed Lighthouse at 84 locations which generate approximately 40% of our revenues, leaving a large...

  • Page 22
    ... Chief Executive Officer, Donlen Scott Sider Executive Vice President and President, Car Rental and Leasing, The Americas Robert J. Stuart Senior Vice President, Global Sales and Marketing Michel Taride Executive Vice President and President, Hertz International Ltd. J. Jeffrey Zimmerman Senior Vice...

  • Page 23
    FORM 10-K

  • Page 24

  • Page 25
    ... ZIP Code, and telephone number, including area code, of registrant's principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, Par Value $0.01 per share Name of each exchange on which registered New York Stock Exchange Securities...

  • Page 26
    ... ...CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ...CONTROLS AND PROCEDURES ...OTHER INFORMATION ...DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...EXECUTIVE COMPENSATION ...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED...

  • Page 27
    ... to be undertaken to secure regulatory approval for an acquisition of Dollar Thrifty; • levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; • significant changes in the competitive environment, including as a result of...

  • Page 28
    ...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 and adjust the size of our fleet accordingly...

  • Page 29
    ... 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 approximately 315 branches in the United States, Canada, France, Spain, Italy, China and Saudi Arabia, as well as through our international...

  • Page 30
    ..., industry revenues from off-airport car rentals in the United States have grown faster than revenues from airport rentals. We provide commercial fleet leasing and management services to national corporate customers throughout the U.S. and Canada through Donlen Corporation, or ''Donlen,'' a wholly...

  • Page 31
    ... in the United States and internationally, and what we believe to be the largest number of company-operated airport car rental locations in the world, enabling us to provide consistent quality and service worldwide. Our licensees and associates also operate rental locations in over 140 countries and...

  • Page 32
    ... Collection national-scale luxury rental program, our Adrenaline Collection sports car rentals, our Green Traveler Collection environmentally friendly rental program and a limited number of models in high-volume, leisure-oriented destinations. We rent cars on an hourly (in select markets), daily...

  • Page 33
    ... United States and internationally, over many years. We have sought to support our reputation for quality and customer service in car rental through a variety of innovative service offerings, such as our customer loyalty program (Gold Plus Rewards), our global expedited rental program (Hertz #1 Club...

  • Page 34
    ... start renting cars by the hour. Members reserve vehicles online, then pick up the vehicles at various locations throughout a city, at a university or a corporate campus without the need to visit a Hertz rental office. Customers are charged an hourly car-rental fee which includes fuel, insurance, 24...

  • Page 35
    ... off-airport locations offering car rental services to a variety of customers. Our off-airport rental customers include people wishing to rent cars closer to home for business or leisure purposes, as well as those needing to travel to or from airports. Our off-airport customers also include people...

  • Page 36
    ...leisure 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, 2011, approximately one-third of our rental revenues at off-airport locations were related...

  • Page 37
    ..., our sales force works with membership associations, tour operators, travel companies and other groups whose members, participants and customers rent cars for either business or leisure purposes. A specialized sales force calls on companies with replacement rental needs, including insurance and...

  • Page 38
    ... United States and all other countries with company-operated locations, customers may also reserve cars for rental from us and our licensees worldwide through local, national or toll-free telephone calls to our reservations center, directly through our rental locations or, in the case of replacement...

  • Page 39
    ... 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 40
    ... the cost of our reservations system, sales force and certain other services. In return, licensees are provided the use of the Hertz brand name, management and administrative assistance and training, reservations through our reservations channels, the Gold Plus Rewards and #1 Club Gold programs, our...

  • Page 41
    ... and service reputation of the Hertz brand and our extensive worldwide ownership of car rental operations provide us with a competitive advantage. Worldwide Equipment Rental Operations We, through HERC, operate an equipment rental business in the United States, Canada, France, Spain, Italy, China...

  • Page 42
    ...-occasion special events, such as weddings, conventions, and fairs. Hertz Entertainment Services are tailored to fit the needs of large and small productions alike with competitive pricing and customized, monthly billing. Hertz delivers vehicles and equipment to production locations and a dedicated...

  • Page 43
    ... expense represented 0.3% of HERC's revenues. Fleet HERC acquires its equipment from a variety of manufacturers. The equipment is typically new at the time of acquisition and is not subject to any repurchase program. The per-unit acquisition cost of units of rental equipment in HERC's fleet varies...

  • Page 44
    ... rental fleet, the quality of its sales force and its established national accounts program. Other Operations Our wholly-owned subsidiary, Hertz Claim Management Corporation, or ''HCM,'' provides claim administration services to us and, to a lesser extent, to third parties. These services include...

  • Page 45
    ... operation of our cars and on-road equipment (vehicle liability); • 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...

  • Page 46
    ...Company Europe Limited, or ''Probus,'' a direct writer of insurance domiciled in Ireland. In European countries with company-operated locations, we have purchased from Probus the vehicle liability insurance required by law, and Probus reinsured the risks under such insurance with Hertz International...

  • Page 47
    ... 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 48
    ... insurance is available on commercially reasonable terms. Our rental contracts typically provide that the renter is responsible for damage to or loss (including loss through theft) of rented vehicles or equipment. We generally offer an optional rental product, known in various countries as ''loss...

  • Page 49
    ... Environmental Response, Compensation, and Liability Act of 1980 and comparable state superfund statutes. Environmental legislation and regulations and related administrative policies have changed rapidly in recent years, both in the United States and in other countries. There is a risk that...

  • Page 50
    ...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 Illinois...

  • Page 51
    ... (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 with the SEC (for example, our Annual Report on Form 10-K, our Quarterly...

  • Page 52
    ...we operate are highly competitive. We believe that price is one of the primary competitive factors in the car and equipment rental markets and that the Internet has enabled cost-conscious customers, including business travelers, to more easily compare rates available from rental companies. If we try...

  • Page 53
    ... material cash payments for U.S. federal and state income tax liabilities. In August 2010, we elected to temporarily suspend the U.S. car rental LKE Program. See ''Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Income Taxes'' in this Annual Report. If...

  • Page 54
    ...increased risk relating to residual value and the related depreciation on our car rental fleet and our flexibility to reduce the size of our fleet by returning cars sooner than originally expected without the risk of loss in the event of an economic downturn or to respond to changes in rental demand...

  • Page 55
    ...regulatory requirements and laws that are subject to change and are often much different than the domestic laws in the United States, including laws relating to taxes, automobile-related liability, insurance rates, insurance products, consumer privacy, data security, employment matters, cost and fee...

  • Page 56
    ... the acquired business or segregating assets to be disposed of; (iii) exposure to unknown, contingent or other liabilities, including litigation arising in connection with the acquisition or disposition or against any business we may acquire; (iv) changing our business profile in ways that...

  • Page 57
    .... 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 employment-related claims by our employees. Currently, we generally self-insure up to...

  • Page 58
    ... to a reduction in revenue and profitability. See ''Item 1-Business-Risk Management'' in this Annual Report for further discussion regarding how changes in the regulation of insurance intermediaries may affect us. If customers decline to purchase supplemental liability insurance products from us as...

  • Page 59
    ... is in our or their own best interests. Additionally, the Sponsors may from time to time acquire and hold interests in businesses that compete directly with us. One or more of the Sponsors may also pursue acquisition opportunities and other corporate opportunities that may be complementary to...

  • Page 60
    ... Facilities,'' in this Annual Report. Our ability to manage these risks depends on financial market conditions as well as our financial and operating performance, which, in turn, is subject to a wide range of risks, including those described under ''-Risks Related to Our Business.'' If our capital...

  • Page 61
    ... 1A. RISK FACTORS (Continued) asset-based financing arrangements, including increased credit enhancement or required cash collateral and/or other liquid reserves; (iv) the insolvency or deterioration of the financial condition of one or more of our principal car manufacturers; or (v) changes in...

  • Page 62
    ... acquisitions; (x) engage in mergers or consolidations; (xi) change the business conducted by us; and (xii) engage in certain transactions with affiliates. Our Senior ABL Facility (as defined below in Note 4 to the Notes to the consolidated financial statements included in this Annual Report under...

  • Page 63
    ... shares, including shares available for issuance pursuant to our various equity plans. A sale of a substantial number of our shares or other equity-related securities in the public market pursuant to new issuances (by us or upon the conversion of our Convertible Senior Notes (as defined below...

  • Page 64
    ...Australia. We operate equipment rental locations in the United States, Canada, France, Spain, Italy and China. We also operate headquarters, sales offices and service facilities in the foregoing countries in support of our car rental and equipment rental operations, as well as small car rental sales...

  • Page 65
    ..., 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 ''LDW,'' or an Environmental Recovery Fee, or ''ERF.'' The plaintiffs seek...

  • Page 66
    ... 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 on a non-discounted basis. Reserve requirements...

  • Page 67
    ... that the losses are probable and reasonably estimated, including for various of the matters set forth above. Other than with respect to the aggregate reserves established for claims for public liability and property damage, none of those reserves are material. For matters, including those described...

  • Page 68
    ...Board Executive Vice President and Chief Financial Officer Executive Vice President & President, Vehicle Rental and Leasing, The Americas Executive Vice President and President, Hertz International, Ltd. Executive Vice President and President, Hertz Equipment Rental Corporation Senior Vice President...

  • Page 69
    ... General Manager, Rent A Car France and HERC Europe. Previously, he served in various other operating positions in Europe from 1980 to 1983 and from 1985 to 1998. Ms. Boyd has served as the Executive Vice President and President, Hertz Equipment Rental Corporation since April 2011. From March 2010...

  • 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
    ...-weighted index representing 25 stocks of companies that rent or lease various durable goods to the commercial and consumer market including cars and trucks, medical and industrial equipment, appliances, tools and other miscellaneous goods, including Hertz Holdings, ABG, Dollar Thrifty, RSC and...

  • Page 72
    ... close, through December 31, 2011. Trading in our common stock began on the NYSE on November 16, 2006. COMPARISON OF CUMULATIVE TOTAL RETURN AMONG HERTZ GLOBAL HOLDINGS, INC., RUSSELL 1000 INDEX AND MORNINGSTAR RENTAL & LEASING SERVICES INDUSTRY GROUP ASSUMES DIVIDEND REINVESTMENT 120 100 DOLLARS...

  • Page 73
    ...related notes thereto included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' (In millions of dollars, except per share data) 2011 Years ended December 31, 2010(a) 2009(a) 2008(a) 2007(a) Statement of Operations Data Revenues: Car rental ...Equipment...

  • Page 74
    ... to our Consolidated Financial Statements included in this Report. Includes fees and certain cost reimbursements from our licensees and revenues from our car leasing operations and thirdparty claim management services. For the years ended December 31, 2011, 2010, 2009, 2008 and 2007, depreciation...

  • Page 75
    ... management services, including charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and the sale of loss or collision damage waivers, liability insurance coverage and other products); • Equipment rental...

  • Page 76
    ...of our total car rental revenues in the years ended December 31, 2011, 2010 and 2009, respectively. Our strategy includes selected openings of new off-airport locations, the disciplined evaluation of existing locations and the pursuit of same-store sales growth. Our strategy also includes increasing...

  • Page 77
    ... position in long-term car, truck and equipment leasing and fleet management. Donlen's fleet management programs provide outsource solutions to reduce fleet operating costs and improve driver productivity. These programs include administration of preventive maintenance, advisory services, and fuel...

  • Page 78
    ...Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Revenue Earning Equipment Our principal assets are revenue earning equipment, which represented approximately 57% of our total assets as of December...

  • Page 79
    ...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 80
    ..., 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 assets are...

  • Page 81
    ... 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 82
    ... which the employee is 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...

  • Page 83
    ... of dollars): Years Ended December 31, 2011 2010 2009 Percentage of Revenues Years Ended December 31, 2011 2010 2009 Revenues: Car rental ...Equipment rental ...Other ...Total revenues ...Expenses: Direct operating ...Depreciation of revenue earning equipment and lease charges . . Selling, general...

  • Page 84
    ... 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 85
    ...-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 86
    ... our 8.875% Senior Notes. Equipment rental and rental related revenue consists of all revenue, 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...

  • Page 87
    ...our third-party claim management services. EXPENSES Years Ended December 31, 2011 2010 (in millions of dollars) $ Change % Change Expenses: Fleet related expenses ...Personnel related expenses ...Other direct operating expenses ...Direct operating ...Depreciation of revenue earning equipment and...

  • Page 88
    ...-airport and Advantage locations in 2011. The decrease in benefits primarily related to the U.K. pension plan curtailment gain. Equipment Rental Segment Direct operating expenses for our equipment rental segment of $730.6 million for 2011 increased $53.3 million, or 7.9% from $677.3 million for 2010...

  • Page 89
    ... increase due to the acquisition of Donlen and its related depreciation expense of $117.0 million. The increase was partly offset by an improvement in certain vehicle residual values and a change in mix of vehicles. Equipment Rental Segment Depreciation of revenue earning equipment and lease charges...

  • Page 90
    ... disciplined cost management, partly offset by decreased pricing. Adjustments to our car rental segment income before income taxes for 2011 totaled $94.5 million (which consists of non-cash debt charges of $43.9 million, purchase accounting of $39.5 million, restructuring and restructuring related...

  • Page 91
    ... cost management performance and higher residual values on the disposal of used equipment. Adjustments to our equipment rental segment income before income taxes for 2011 totaled $92.3 million (which consists of purchase accounting of $44.4 million, restructuring and restructuring related charges...

  • Page 92
    ... improved residual values on the disposal of certain vehicles and used equipment, disciplined cost management, lower interest expense and increased pricing in our equipment rental operations, partly offset by lower pricing in our worldwide car rental operations, costs incurred in connection with the...

  • Page 93
    ... services, including transporter wages of $22.2 million and incentive compensation costs of $26.1 million. The expense increases were primarily related to improved results, as well as additional U.S. off-airport and Advantage locations in 2010. Other direct operating expenses for our car rental...

  • Page 94
    ... 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) $30.2 million, concession fees of $27.4 million, charge card fees of $13.8 million and reservation costs of $5.2 million primarily related to improved car rental volume demand. Equipment Rental...

  • Page 95
    ...the Dollar Thrifty Automotive Group transaction which has now been terminated, as well as consulting expenses, salaries and related expenses, foreign exchange losses and stock option expense, partly offset by a decrease in restructuring and restructuring related expenses. Interest Expense Car Rental...

  • Page 96
    ...our worldwide car rental operations, improved residual values on the disposal of used equipment and certain vehicles and disciplined cost management, partly offset by lower rental volume and pricing in our worldwide equipment rental operations. The impact of changes in exchange rates on net loss was...

  • Page 97
    ...-insurance regulatory reserve requirements. The increase in restricted cash and cash equivalents of $100.4 million from December 31, 2010, primarily related to the timing of purchases and sales of revenue earning vehicles. See ''Income Taxes'' below. During the year ended December 31, 2010, we used...

  • Page 98
    ...offering. Capital Expenditures The tables below set forth the revenue earning equipment and property and equipment capital expenditures and related disposal proceeds, on a cash basis consistent with our consolidated statements of cash flows, by quarter for 2011, 2010 and 2009 (in millions of dollars...

  • Page 99
    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Years Ended December 31, 2011 2010 2009 Revenue earning equipment expenditures: Car rental ...Equipment rental ...Total ... $8,865.6 588.7 $9,454.3 $8,274.1 166.8 $8,440.9 $7,442.3 85.0 $7,...

  • Page 100
    ...) Financing Our primary liquidity needs include servicing of corporate and fleet related debt, the payment of operating expenses and purchases of rental vehicles and equipment to be used in our operations. Our primary sources of funding are operating cash flows, cash received on the disposal of...

  • Page 101
    ... that are not members of the Hertz credit group. For further information on our indebtedness, see Note 4 to the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' A significant number of cars that we...

  • Page 102
    ... further information concerning our asset-backed financing programs and our indebtedness, see Note 4 to the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' For a discussion of the risks associated...

  • Page 103
    ... facilities were available for the use of Hertz and its subsidiaries (in millions of dollars): Remaining Capacity Availability Under Borrowing Base Limitation Corporate Debt Senior ABL Facility ...Total Corporate Debt ...Fleet Debt U.S. Fleet Variable Funding Notes . . Donlen GN II Variable Funding...

  • Page 104
    ... timing of our uncertain tax positions liability and interest and penalty payments in individual years beyond twelve months due to uncertainties in the timing of the effective settlement of tax positions. See Note 8 to the Notes to our consolidated financial statements included in this Annual Report...

  • Page 105
    ..., 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 106
    ... vehicle liability, general liability and property damage insurable risks, see ''Item 1-Business-Risk Management'' in this Annual Report. Market Risks We are exposed to a variety of market risks, including the effects of changes in interest rates (including credit spreads), foreign currency exchange...

  • Page 107
    ... 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 fuel prices through the use...

  • Page 108
    ... continued analysis. For a discussion of risks related to our reliance on asset-backed financing to purchase cars, see ''Item 1A-Risk Factors'' included in this Annual Report. On January 1, 2009, Bank of America acquired Merrill Lynch & Co., Inc., the parent company of BAMLCP . Accordingly, Bank of...

  • Page 109
    ...(Continued) 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 5 of the Notes to our consolidated financial statements included in this Annual Report under...

  • Page 110
    ..., on the financial statement schedules, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and...

  • Page 111
    ... acquired by the Company in a purchase business acquisition during 2011. We have also excluded Donlen from our audit of internal control over financial reporting. Donlen is a wholly-owned subsidiary whose total assets and total revenues represent approximately 8% and 2%, respectively, of the related...

  • Page 112
    ... Dollars) December 31, 2011 2010 ASSETS Cash and cash equivalents ...Restricted cash and cash equivalents ...Receivables, less allowance for doubtful accounts of $20,282 and $19,708 ...Inventories, at lower of cost or market ...Prepaid expenses and other assets ...Revenue earning equipment, at cost...

  • Page 113
    ...(In Thousands of Dollars, except share and per share data) Years ended December 31, 2010 2009 2011 Revenues: Car rental ...Equipment rental ...Other ...Total revenues ...Expenses: Direct operating ...Depreciation of revenue earning equipment and lease charges ...Selling, general and administrative...

  • Page 114
    ...118,451 Defined benefit pension plans, net ...Total Comprehensive Loss ...Dividend payment to noncontrolling interest . . Net income relating to noncontrolling interest . Employee stock purchase plan ...Net settlement on vesting of restricted stock . Stock-based employee compensation charges, net...

  • Page 115
    ...,675 Defined benefit pension plans, net ...Total Comprehensive Income ...Dividend payment to noncontrolling interest . Net income relating to noncontrolling interest Acquisition of remaining portion of non-controlling interest, net of tax of $9,798 . Employee stock purchase plan ...Net settlement...

  • Page 116
    ... purchase plan ...Net settlement on vesting of restricted stock ...Proceeds from exercise of stock options ...Proceeds from disgorgement of stockholder short-swing profits Payment of financing costs ... Net cash provided by (used in) financing activities ...Effect of foreign exchange rate changes...

  • Page 117
    ...of the outstanding shares of common stock of Hertz Holdings. On September 1, 2011, Hertz completed the acquisition of Donlen Corporation, or ''Donlen,'' a leading provider of fleet leasing and management services. See Note 3-Goodwill and Other Intangible Assets. In December 2011, Hertz purchased the...

  • Page 118
    ... equipment, reserves for litigation and other contingencies, accounting 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...

  • Page 119
    ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 or leased...

  • Page 120
    ... effect on residual values at the time of disposal and the estimated holding periods. Market conditions for used vehicle and equipment sales can also be affected by external factors such as the economy, natural disasters, fuel prices and incentives offered by manufacturers of new cars. These key...

  • Page 121
    ...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 122
    ...goodwill annually, using a two-step process. The first step is to identify any potential impairment by comparing the carrying value of the reporting unit to its fair value. We estimate the fair value of our reporting units using a discounted cash flow methodology. The cash flows represent management...

  • Page 123
    ... 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 and risk-free interest rate. See...

  • Page 124
    ... Assets The following summarizes the changes in our goodwill, by segment (in millions of dollars): Car Rental Equipment Rental Total Balance as of January 1, 2011 Goodwill ...Accumulated impairment losses ...Goodwill acquired during the year ...Adjustments to previously recorded purchase price...

  • Page 125
    ... 2015 and $19.3 million in 2016. Donlen Acquisition On September 1, 2011, Hertz acquired 100% of the equity interest in Donlen, a leading provider of fleet leasing and management services. Donlen provides Hertz an immediate leadership position in long-term car, truck and equipment leasing and fleet...

  • Page 126
    ... synergies described above are the primary drivers behind the excess purchase price paid over the fair value of the assets and liabilities acquired. All such goodwill recognized as part of this acquisition is reported in the car rental segment. The Donlen base equity valuation for the transaction...

  • Page 127
    ... taxes on income, which could change once Donlen's pre-acquisition tax return is completed. Other Acquisitions Additionally, during the year ended December 31, 2011, we added ten international car rental locations and four domestic equipment rental locations by acquiring a former franchisee and from...

  • Page 128
    ... 49.6 (72.3) 4,704.8 $ 1,345.0 - 3,229.6 518.5 345.6 474.8 22.0 (104.8) 5,830.7 ... Total Corporate Debt ...Fleet Debt U.S. ABS Program U.S. Fleet Variable Funding Notes: Series 2009-1(4) ...Series 2010-2(4) ...Series 2011-2(4) ... 1.35% 1.37% 2.77% Floating Floating Floating 3/2013 3/2013 4/2012...

  • Page 129
    ... for any losses) as well as airport concession obligations in the United States, Canada and Europe. As of December 31, 2011, none of these letters of credit have been drawn upon. CORPORATE DEBT Senior Credit Facilities Hertz had a credit agreement that provided a $1,400.0 million secured term loan...

  • Page 130
    ... 31, 2011, we recorded financing costs of $6.6 million in ''Interest expense'' on our consolidated statement of operations associated with the new Senior Term Facility. Senior ABL Facility: In March 2011, Hertz, Hertz Equipment Rental Corporation, or ''HERC,'' and certain other of our subsidiaries...

  • Page 131
    ... dividends and other restricted payments (including to the parent entities of Hertz and other persons), create liens, make investments, make acquisitions, engage in mergers, change the nature of their business, engage in certain transactions with affiliates that are not within the Hertz credit group...

  • Page 132
    ...certain indebtedness, make certain restricted payments (including paying dividends, redeeming stock or making other distributions to parent entities of Hertz and other persons outside of the Hertz credit group), make investments, create liens, transfer or sell assets, merge or consolidate, and enter...

  • Page 133
    ... other members of the Hertz credit group from redeeming stock or making loans, advances, dividends, distributions or other restricted payments to any entity that is not a member of the Hertz credit group, including Hertz Holdings, subject to certain exceptions. Pursuant to the terms of exchange and...

  • Page 134
    ... revolving rental car asset-backed securities, the collateral for which consists primarily of a substantial portion of the rental car fleet used in Hertz's domestic car rental operations and contractual rights related to such vehicles. References to the ''U.S. ABS Program'' include HVF's U.S. Fleet...

  • Page 135
    ... Fleet Notes, collectively. The European Fleet Debt is the primary fleet financing for our rental car operations in Germany, Italy, Spain, Belgium, Luxembourg and Switzerland, and can be expanded to provide fleet financing in Australia, Canada, France, The Netherlands, New Zealand, and the United...

  • Page 136
    ... the Canadian Securitization has been granted a security interest primarily in the owned rental car fleet used in our car rental operations in Canada and certain contractual rights related to such vehicles as well as certain other assets owned by entities connected to the financing. In November 2011...

  • Page 137
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) a security interest primarily in the owned rental car fleet used in our car rental operations in Australia and certain contractual rights related to such vehicles. In connection with the issuance of ...

  • Page 138
    ... facilities were available for the use of Hertz and its subsidiaries (in millions of dollars): Availability Under Borrowing Base Limitation Remaining Capacity Corporate Debt Senior ABL Facility ...Total Corporate Debt ...Fleet Debt U.S. Fleet Variable Funding Notes ...Donlen GN II Variable Funding...

  • Page 139
    ...Benefit Pension Plan, or the ''Hertz Retirement Plan,'' a cash balance plan. Under this qualified Hertz Retirement Plan, we pay the entire cost and employees are not required to contribute. Most of our international subsidiaries have defined benefit retirement plans or participate in various insured...

  • Page 140
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) officer postretirement car benefit plan that provides the use of a vehicle for retired Senior Vice Presidents and above who have a minimum of 20 years of service and who retired at age 58 or above. We...

  • Page 141
    ... The discount rate used to determine the December 31, 2011 benefit obligations for U.S. pension plans is based on the rate from the Mercer 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...

  • Page 142
    ...Pension Benefits U.S. Non-U.S. Years ended Years ended December 31, December 31, 2011 2010 2009 2011 2010 2009 Components of Net Periodic Benefit Cost: Service cost ...Interest cost ...Expected return on plan assets ...Amortization: Losses and other ...Curtailment gain ...Settlement loss ...Special...

  • Page 143
    ... HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Changing the assumed health care cost trend rates by one percentage point is estimated to have the following effects (in millions of dollars): One Percentage Point Increase Decrease Effect on total of service...

  • Page 144
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The fair value measurements of our U.S. pension plan assets are based upon significant observable inputs (Level 2) and relate to common collective trusts and other pooled investment vehicles ...

  • Page 145
    ... of our union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects: a) b) c) Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating...

  • Page 146
    ...contributed by Hertz to the Local 1034 Pension Fund was reported as being more than 5% of total contributions to the plan, on the fund's Form 5500 for the year ended 12/31/2010. Note 6-Stock-Based Compensation Plans On February 28, 2008, our Board of Directors adopted the Hertz Global Holdings, Inc...

  • Page 147
    ... of not less than the fair market value of one share of Hertz Holdings common stock on the grant date. Stock options and stock appreciation rights will vest based on a minimum period of service or the occurrence of events (such as a change in control, as defined in the Omnibus Plan) specified by the...

  • Page 148
    ... of our common stock price as an assumption in the valuation model. We selected the Dow Jones Specialized Consumer Services sub-sector within the consumer services industry, and we used the U.S. large capitalization component, which includes the top 70% of the index universe (by market value). The...

  • Page 149
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Additional information pertaining to option activity under the plans is as follows (in millions of dollars): Years ended December 31, 2011 2010 2009 Aggregate intrinsic value of stock options ...

  • Page 150
    ... our Board of Directors adopted the Hertz Global Holdings, Inc. Employee Stock Purchase Plan, or the ''ESPP ,'' and the plan was approved by our stockholders on May 15, 2008. The ESPP is intended to be an ''employee stock purchase plan'' within the meaning of Section 423 of the Internal Revenue Code...

  • Page 151
    ... future market conditions and their effect on residual values at the time of disposal. During 2011, 2010 and 2009, depreciation rates being used to compute the provision for depreciation of revenue earning equipment were adjusted on certain vehicles in our car rental operations to reflect changes in...

  • Page 152
    ... and foreign net deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows (in millions of dollars): 2011 2010 Deferred Tax Assets: Employee benefit plans ...Net operating loss carryforwards . Foreign tax credit carryforwards . . Federal, state and foreign local tax Accrued...

  • Page 153
    ... the previous 36 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...

  • Page 154
    ...span from 2003 to 2011. We are currently under audit by the Internal Revenue Service for tax years 2006 to 2009. Several U.S. state and non-U.S. jurisdictions are under audit. In many cases the uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing...

  • Page 155
    ... agreements, which provide for payment of rents and a percentage of revenue with a guaranteed minimum, and real estate leases under which the following amounts were expensed (in millions of dollars): Years ended December 31, 2011 2010 2009 Rents ...Concession fees: Minimum fixed obligations...

  • Page 156
    ... capital leases within our vehicle rental programs have been reflected in Note 4- Debt. Note 10-Segment Information Our operating segments are aggregated into reportable business segments based primarily upon similar economic characteristics, products, services, customers, and delivery methods. We...

  • Page 157
    ...CONSOLIDATED FINANCIAL STATEMENTS (Continued) contribution of our reportable segments for the years ended December 31, 2011, 2010 and 2009 is summarized below (in millions of dollars). Years ended December 31, 2011 2010 2009 Revenues Car rental ...Equipment rental ...Other reconciling items ...Total...

  • Page 158
    ... in the United States and in international countries. International operations are substantially in Europe. The operations within major geographic areas are summarized below (in millions of dollars): Years ended December 31, 2011 2010 2009 Revenues United States ...International ...Total ...$5,413...

  • Page 159
    ...-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 160
    ... with Dollar Thrifty. 1. Hertz Equipment Rental Corporation, or ''HERC,'' Loss Damage Waiver On August 15, 2006, Davis Landscape, Ltd., individually and on behalf of all others similarly situated, filed a complaint against HERC in the United States District Court for the District of New Jersey...

  • Page 161
    ...by Michael Shames and Gary Gramkow against The Hertz Corporation, Dollar Thrifty Automotive Group, Inc., Avis Budget Group, Inc., Vanguard Car Rental USA, Inc., Enterprise Rent-A-Car Company, Fox Rent A Car, Inc., Coast Leasing Corp., The California Travel and Tourism Commission, and Caroline Beteta...

  • Page 162
    ... 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 on a non-discounted basis. Reserve requirements...

  • Page 163
    ..., 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 164
    ... our strategy of reducing operating costs, we have evaluated our workforce and operations and made adjustments, including headcount reductions and business process reengineering resulting in optimized work flow at rental locations and maintenance facilities as well as streamlined our back-office...

  • Page 165
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Years ended December 31, 2011 2010 2009 By Segment: Car rental ...Equipment rental ...Other reconciling items ...Total ... $16.6 $18.1 40.5 34.7 (0.7) 1.9 $56.4 $54.7 $ 58.7 38.2 9.9 $106.8 During...

  • Page 166
    ... cash and cash equivalents,'' respectively. Marketable Securities Marketable securities held by us consist of equity securities classified as available-for-sale, which are carried at fair value and are included within ''Prepaid expenses and other assets.'' Unrealized gains and losses, net of related...

  • Page 167
    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 (in millions of dollars): Fair Value of ...

  • Page 168
    ...fair value of these interest rate swaps are included in our results of operations in the periods incurred (in Selling, general and administrative). We purchase unleaded gasoline and diesel fuel at prevailing market rates and maintain a program to manage our exposure to changes in fuel prices through...

  • Page 169
    ... countries in which we operate, including making fleet and equipment purchases and borrowing locally. Also, we have purchased foreign exchange options to manage exposure to fluctuations in foreign exchange rates for selected marketing programs. The effect of exchange rate changes on these financial...

  • Page 170
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) comply with New York Stock Exchange rules, we will be required to have a majority of independent directors on our Board of Directors by no later than March 31, 2012 and we believe that we will fulfill...

  • Page 171
    ... (which are stockholders of Hertz Holdings), have provided various investment and commercial banking and financial advisory services to us for which they have received customary fees and commissions. In addition, these parties have acted as agents, lenders, purchasers and/or underwriters to us...

  • Page 172
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table sets forth the computation of basic and diluted earnings (loss) per share (in millions of dollars, except per share amounts): Years ended December 31, 2011 2010 2009 Basic and ...

  • Page 173
    ... AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) First Quarter 2010 Second Quarter 2010 Third Quarter 2010 Fourth Quarter 2010 Revenues ...Income (loss) before income taxes ...Net income (loss) attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders...

  • Page 174
    SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY BALANCE SHEETS (In Thousands of Dollars) December 31, 2011 2010 ASSETS Cash and cash equivalents ...Accounts receivable from Hertz affiliate ...Taxes receivable ...Prepaid expenses and other assets ...

  • Page 175
    .... PARENT COMPANY STATEMENTS OF OPERATIONS (In Thousands of Dollars) Years ended December 31, 2011 2010 2009 Revenues ...Expenses: Selling, general and administrative ...Interest expense, net of interest income ...Total expenses ...Other income ...Loss before income taxes ...(Provision) benefit for...

  • Page 176
    ... of tax of $(1,291) ...Unrealized holding gains on securities, net of tax of $0 ...Unrealized loss on Euro-denominated debt, net of tax of $(4,144) ...Defined benefit pension plans, net of tax of $15,555 ...Total Comprehensive Income ...Employee stock purchase plan, net of tax of $0 Net settlement...

  • Page 177
    SCHEDULE I (Continued) HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY STATEMENTS OF CASH FLOWS (In Thousands of Dollars) Years ended December 31, 2011 2010 2009 Cash flows from operating activities: Net income (loss) ...Adjustments to reconcile net income (loss) to net cash used in operating activities...

  • Page 178
    ...-level holding company that conducts substantially all of its business operations through its indirect subsidiaries. Hertz Holdings was incorporated in Delaware on August 31, 2005 in anticipation of the December 21, 2005 acquisition by its subsidiary, Hertz Investors, Inc., of the Hertz Corporation...

  • Page 179
    ... included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Note 4-Dividends During 2011 and 2010, Hertz Holdings received approximately $23 million and $23 million, respectively, of cash dividends from its subsidiaries, primarily for interest payments...

  • Page 180
    ... ACCOUNTS HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES (In Thousands of Dollars) Additions Balance at Beginning of Charged to Translation Period Expense Adjustments Deductions Balance at End of Period Allowance for doubtful accounts: Year ended December 31, 2011 Year ended December 31, 2010...

  • Page 181
    ... from our evaluation the internal controls over financial reporting of Donlen Corporation, which was acquired on September 1, 2011. The total assets and total revenues of the excluded business represented 7.7% and 1.7%, respectively, of the related consolidated financial statement amounts as of and...

  • Page 182
    ... AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information relating to this item is set forth in this Annual Report under the caption ''Item 5-Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities- Equity Compensation Plan Information'' and...

  • Page 183
    ... are filed as part of this Annual Report: Page (a) 1. Financial Statements: Our financial statements filed herewith are set forth in Part II, Report as follows: Hertz Global Holdings, Inc. and Subsidiaries- Report of Independent Registered Public Accounting Firm . . Consolidated Balance Sheets...

  • Page 184
    ... state of New Jersey, on the 27th day of February, 2012. 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, this report has been signed...

  • Page 185
    Signature Title /s/ DAVID H. WASSERMAN David H. Wasserman /s/ HENRY C. WOLF Henry C. Wolf Director Director 159

  • Page 186
    ... Report on Form 8-K of Hertz Global Holdings, Inc., as filed on April 1, 2011). Indenture, dated as of December 21, 2005, between CCMG Acquisition Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as Trustee, relating...

  • Page 187
    ... on November 9, 2010). First Supplemental Indenture, dated as of March 11, 2011, among Hertz Entertainment Services Corporation, The Hertz Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as Trustee, relating to the 7.50...

  • Page 188
    ... to the Annual Report on Form 10-K of Hertz Global Holdings, Inc., as filed on February 25, 2011). First Supplemental Indenture, dated as of March 11, 2011, among Hertz Entertainment Services Corporation, The Hertz Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto...

  • Page 189
    ... Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on November 6, 2009). Third Amended and Restated Base Indenture, dated as of September 18, 2009, between Hertz Vehicle Financing LLC, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to Rental Car Asset...

  • Page 190
    ... to the Annual Report on Form 10-K of Hertz Global Holdings, Inc., as filed on March 30, 2007). Amended and Restated Series 2009-1 Supplement, dated as of December 16, 2010, between Hertz Vehicle Financing LLC, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities...

  • Page 191
    ... to the Annual Report on Form 10-K of Hertz Global Holdings, Inc., as filed on February 25, 2011). Amended and Restated Series 2009-2 Supplement, dated as of June 18, 2010, between Hertz Vehicle Financing LLC, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities...

  • Page 192
    ... to time parties thereto, Gelco Corporation d/b/a GE Fleet Services, as Administrative Agent, Domestic Collateral Agent and PRUSVI Collateral Agent, Bank of America, N.A., as Documentation Agent and Bank of America, N.A. and GE Capital Markets, Inc. as Joint Lead Arrangers and Bookrunning Managers...

  • Page 193
    ... on June 1, 2010).†Form of Employee Stock Option Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010).†Form of Director Stock Option...

  • Page 194
    ...Key Officer Postretirement Assigned Car Benefit Plan (Incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registration Statement on Form S-1 of The Hertz Corporation (File No. 333-125764), as filed on August 30, 2005).†The Hertz Corporation Account Balance Defined Benefit Pension...

  • Page 195
    ... April 2009) (Incorporated by reference to Exhibit 10.51 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on August 6, 2010). Amended and Restated Indemnification Agreement, dated as of December 21, 2005, between The Hertz Corporation, Hertz Vehicles LLC, Hertz Funding...

  • Page 196
    ... Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on May 8, 2009). Tax Sharing Agreement, dated as of December 21, 2005, between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), CCMG Corporation, The Hertz Corporation, and Hertz International, Ltd. (Incorporated...

  • Page 197
    ... December 31, 2011, 2010, 2009, 2008, and 2007. Subsidiaries of Hertz Global Holdings, Inc. Consent of Independent Registered Public Accounting Firm. Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a). Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d...

  • Page 198
    ... 12 HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) (In Millions of Dollars Except Ratios) 2011 Years ended December 31, 2010 2009 2008 2007 Income (loss) before income taxes . . Interest expense ...Portion of rent estimated...

  • Page 199
    ...Hertz Investors, Inc...The Hertz Corporation ...Brae Holding Corp...Executive Ventures, Ltd...EVZ LLC ...Hertz Aircraft, LLC ...Hertz Claim Management Corporation ...HCM Marketing Corporation ...Hertz Equipment Rental Corporation ...CCMG HERC Sub, Inc...Hertz Entertainment Services Corporation Hertz...

  • Page 200
    ... Limited Partnership ...Donlen Fleet Leasing ...Hertz Canada Vehicles Partnership ...CMGC Canada Acquisition ULC ...China Hertz International Car Rental Consulting (Shanghai) Co., Ltd...Hertz Rent A Car (Beijing) Co., Ltd...Hertz Rent A Car (Shanghai) Co. Ltd...Hertz Equipment Rental Company Limited...

  • Page 201
    ...GmbH ...Hertz Claim Management GmbH ...Ireland Apex Processing Limited ...Dan Ryan Car Rentals Ltd...Hertz Europe Service Centre Limited . . Hertz Fleet Limited ...Hertz Finance Centre Limited ...Hertz International RE Ltd...Hertz International Treasury Limited ...Probus Insurance Company Europe Ltd...

  • Page 202
    Companies Listed by Country State or Jurisdiction of Incorporation Doing Business As Italy Hertz Fleet (Italiana) Srl ...Hertz Claim Management Srl ...Hertz Holdings South Europe Srl Hertz Italiana SpA ...Rent One Italia Srl ...Hertz Italy Holdings Limited ... ... ... ... ... ... ... ... ... ...

  • Page 203
    ...) of Hertz Global Holdings, Inc. of our report dated February 27, 2012 relating to the financial statements, financial statement schedules, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Florham Park, New Jersey...

  • Page 204
    ... OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a) I, Mark P . Frissora, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2011 of Hertz Global Holdings, Inc.; Based on my knowledge, this report does not contain any untrue statement of...

  • Page 205
    ... OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a)/15d-14(a) I, Elyse Douglas, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2011 of Hertz Global Holdings, Inc.; Based on my knowledge, this report does not contain any untrue statement of...

  • Page 206
    ... In connection with the Annual Report of Hertz Global Holdings, Inc. (the ''Company'') on Form 10-K for the period ending December 31, 2011 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 207
    ... 1350 In connection with the Annual Report of Hertz Global Holdings, Inc. (the ''Company'') on Form 10-K for the period ending December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Elyse Douglas, Chief Financial Officer of the Company, certify...

  • Page 208
    ... could cause such differences, please see the section of our Annual Report on Form 10-K for the year ended December 31, 2011, 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 209
    ...Adjusted pre-tax income is calculated as income before income taxes plus non-cash purchase accounting charges, non-cash debt charges relating to the amortization of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted Net Income Adjusted net income...

  • Page 210
    ... to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders ...(a) $ 256.3 $ 150.7 $ 407.0 Represents the increase in amortization of other intangible assets, depreciation of property and equipment and accretion of certain revalued liabilities relating to purchase accounting. For...

  • Page 211
    ...) (In millions) Condensed Consolidated Statements of Operations (Continued) (d) Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. For the year ended December 31, 2010, also includes $68.9 million associated with the...

  • Page 212
    ... workers' compensation and public liability and property damage liabilities. Also represents the purchase accounting effects of subsequent acquisitions on our results of operations relating to increased depreciation and amortization of intangible assets. Represents non-cash debt charges relating to...

  • Page 213

  • Page 214

  • Page 215
    ...TRANSFER AGENT Hertz Global Holdings, Inc. common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol: HTZ INVESTOR RELATIONS Securities analysts, portfolio managers, representatives of financial institutions and individuals interested in receiving information about Hertz...

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    Hertz Global Holdings, Inc. 225 Brae Boulevard Park Ridge, NJ 07656 201-307-2000 www.hertz.com ® U.S. Pat Off. ©2012 Hertz System, Inc.