Hertz 2011 Annual Report Download - page 102

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
proposed SEC rules and regulations governing the issuance of asset-backed securities and additional
requirements contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act. While we
will continue to monitor these developments and their impact on our ABS program, the SEC rules and
regulations, once adopted and implemented, may impact our ability and/or desire to engage in asset-
backed financings in the future. For 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 with our reliance on asset-backed and asset-based
financing and the significant amount of indebtedness, see ‘‘Item 1A—Risk Factors’’ in this Annual
Report.
Covenants
Certain of our debt instruments and credit facilities contain a number of covenants that, among other
things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur
additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain
restricted payments (including paying dividends, redeeming stock or making other distributions), create
liens, make investments, make acquisitions, engage in mergers, fundamentally change the nature of
their business, make capital expenditures, or engage in certain transactions with certain affiliates.
Under the new terms of our amended Senior Term Facility and Senior ABL Facility, we are not subject to
ongoing financial maintenance covenants; however, under the Senior ABL Facility, failure to maintain
certain levels of liquidity will subject the Hertz credit group to a contractually specified fixed charge
coverage ratio of not less than 1:1 for the four quarters most recently ended. As of December 31, 2011,
we were not subject to such contractually specified fixed charge coverage ratio.
In addition to borrowings under our Senior Credit Facilities, we have a significant amount of additional
debt outstanding. For further information on the terms of our Senior Credit Facilities as well as our
significant amount of debt outstanding, see Note 4 to the Notes to our consolidated financial statements
included in this Annual Report under caption ‘‘Item 8—Financial Statements and Supplementary Data.’’
For a discussion of the risks associated with our significant indebtedness, see ‘‘Item 1A—Risk Factors’’
in this Annual Report.
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