Hertz 2011 Annual Report Download - page 97

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Cash Flows
As of December 31, 2011, we had cash and cash equivalents of $931.8 million, a decrease of
$1,442.4 million from December 31, 2010. The decrease was primarily related to proceeds received from
debt offerings in September and December 2010 which were not used to pay down Corporate Debt until
January and February 2011. The following table summarizes the change:
2011 vs. 2010 vs.
Years Ended December 31, 2010 2009
2011 2010 2009 $ Change $ Change
(in millions of dollars)
Cash provided by (used in):
Operating activities ................ $2,233.4 $2,208.7 $ 1,693.3 $ 24.7 $515.4
Investing activities ................ (2,192.9) (943.6) (1,208.0) (1,249.3) 264.4
Financing activities ................ (1,486.7) 133.7 (129.1) (1,620.4) 262.8
Effect of exchange rate changes ........ 3.8 (10.3) 35.2 14.1 (45.5)
Net change in cash and cash equivalents . $(1,442.4) $1,388.5 $ 391.4 $(2,830.9) $997.1
During the year ended December 31, 2011, we generated $24.7 million more cash from operating
activities compared with the same period in 2010. The increase was primarily due to an increase in net
income before depreciation, amortization and other non-cash expenses and higher prepaid expenses in
2010, partly offset by the timing of our vendor payments, equipment rental customer receivables and
VAT receivables, as well as premiums paid to redeem debt in 2011 and timing of our interest payments.
During the year ended December 31, 2010, we generated $515.4 million more cash from operating
activities compared with the same period in 2009. The increase was primarily due to a change in
accounts payable driven by effective management of vendor terms taken in 2010, a change in accrued
liabilities due to cash payments in 2009 relating to the buydown of our rate on our interest rate swaps as
well as increased restructuring payments in 2009 and an increase in net income before depreciation,
amortization and other non-cash expenses.
Our primary use of cash in investing activities is for the acquisition of revenue earning equipment, which
consists of cars and equipment. During the year ended December 31, 2011, we used $1,249.3 million
more cash for investing activities compared with the same period in 2010. The increase in the use of
funds was primarily due to increased purchases of revenue earning equipment and property and
equipment, the year-over-year change in restricted cash and cash equivalents and the Donlen
acquisition, partly offset by an increase in proceeds from disposal of revenue earning equipment. As of
December 31, 2011 and 2010, we had $308.0 million and $207.6 million, respectively, of restricted cash
and cash equivalents to be used for the purchase of revenue earning vehicles and other specified uses
under our fleet financing facilities, our Like Kind Exchange Program, or ‘‘LKE Program,’’ (in 2010 only)
and to satisfy certain of our self-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 $264.4 million less cash for investing activities compared with the same
period in 2009. The decrease in the use of funds was primarily due to an increase in proceeds from the
disposal of revenue earning equipment, partly offset by an increase in revenue earning equipment
expenditures, the year-over-year change in restricted cash and cash equivalents and an increase in
property and equipment expenditures. The increase in revenue earning equipment expenditures and in
proceeds from the disposal of revenue earning equipment was related to higher car rental volumes and
a general improvement in the car rental market.
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