Hertz 2011 Annual Report Download - page 119

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
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 based on the terms of the rental or leasing contract. Maintenance
management administrative fees are recognized monthly and maintenance management service
revenue is recognized when services are performed. 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). Certain truck
and equipment leases are originated with the intention of syndicating to banks, and upon the sale of
rights to these direct financing leases, the net gain is recorded in revenue.
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, 2011 and 2010, the portion of total restricted cash and cash
equivalents that was associated with our Fleet Debt facilities was $213.6 million and $115.6 million,
respectively. The increase in restricted cash and cash equivalents associated with our fleet debt of
$98.0 million from December 31, 2010 to December 31, 2011, primarily related to the timing of
purchases and sales of revenue earning vehicles.
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
doubtful accounts is based on our historical experience and our judgment as to the likelihood of ultimate
payment. Actual receivables are written-off against the allowance for doubtful accounts when we
determine the balance will not be collected. Bad debt expense is reflected as a component of Selling,
general and administrative in our consolidated statements of operations.
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