Hertz 2012 Annual Report Download

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2012 ANNUAL REPORT
Mobility…
Fast Forward

Table of contents

  • Page 1
    Mobility...Fast Forward 2012 AnnuAl RepoRt

  • Page 2
    ..., Prestige and Green Traveler Collections, set Hertz apart from the competition. In 2008, the Company entered the global car sharing market with its service, now referred to as Hertz on Demand, which rents cars by the hour and/or by the day, at various locations in the U.S., Canada and Europe. Hertz...

  • Page 3
    ...themid-pointsfromtheFullYear2013GuidanceissuedbytheCompanyon February25,2013. † AAPreconciliationtotheadjustedfinancialmeasurementsinthischart,aswellasa"forward-looking"statement,maybefoundinthe G Company's201210-KwhichisincludedinthisAnnualReport.

  • Page 4
    ...2011 Employees †Worldwide Car Rental Locations(1) Worldwide Equipment Rental Locations Countries Served (1) (1) 41,000 10,270 340 150 U.S. International $6,313 $5,413 $2,708 $2,885  IncludingDollar/Thrifty †Includingfull-timeequivalents ReVenue 2012 2011 pRoFitAbility 2012 10...

  • Page 5
    ... financial results and completed several strategic objectives, including the acquisition of Dollar Thrifty Automotive Group. As a result of operational excellence and completing our strategic goals, Hertz is poised in 2013 for breakout success in its global car and equipment rental markets. That...

  • Page 6
    ... global markets. Additionally, Dollar and/or Thrifty will be offered as new options to the customers and employees of our key travel and corporate partners. Superior Growth Strategies Unlike most companies, Hertz has four $500 millionplus businesses growing revenues at double-digit levels, which...

  • Page 7
    ... Generation Equipment Rental Equipment Rental On Demand Rent2Buy through in-house development, a technology platform to enable 24/7 car rental service beyond Hertz on Demand's urban and university car sharing markets. In 2013, we will introduce a capability to stage cars anywhere customers need...

  • Page 8
    Providing Quality and Convenience technology And innoVAtion Hertz is harnessing technology to expedite and simplify the car rental experience every step of the way, from game changers like 24/7 rentals, and the ability to upgrade the rental vehicle from a handheld device, to eReceipts. Hertz is the ...

  • Page 9
    ...U.S. and other key international markets. In 2012 we launched 24/7 service at 50 off airport locations in the Northeastern U.S., utilizing our industry leading technology to break down the barriers between car sharing and car rental. By the end of 2013, 90,000 Hertz vehicles will be equipped with 24...

  • Page 10
    ... AMeRicA $0.1B 2012 Corporate Revenue = $0.1B 500 Employees 100 Locations Hertz completed the acquisition of Dollar Thrifty Automotive Group on November 19, 2012. The merger of the world's #1 premium brand with two leaders in the value leisure market creates the world's largest car rental company...

  • Page 11
    ...customer benefits. Today, Hertz peak business is mid-week serving business renters, while Dollar Thrifty peaks on weekends renting to leisure travelers. Sharing fleet enables Hertz and Dollar Thrifty to accommodate more customers every day of the week. euRope/MeA AsiA pAciFic $1.6B 2012 Corporate...

  • Page 12
    Famous for Our Cars ouR collections PAGE 8

  • Page 13
    ... these special vehicles into Collections: Green Traveler, Adrenaline Collection and Prestige Collection, including exotic vehicles rarely seen in national rental fleets. green traveler collection Hertz has over 3,000 high MPG, low emission vehicles for customers committed to economy travel and...

  • Page 14
    ... to providing customers with convenient vehicle rental options that are fuel efficient and use clean, low-emissions technology such as Electric Vehicles (EVs) and hybrids. Most Fuel Efficient Rental Fleet (U.S.) • Low Emission and Alternative Fuel Vehicles- Green Traveler Collection • Hybrids...

  • Page 15
    ... Hertz employees have helped build nine Habitat for Humanity homes, including one for a Hertz team member • Hertz for Heroes-over provided to veterans returning from war and over 300 veterans hired via Hertz Military Hiring Portal 40,000 rentals • Nearly $10 million donated to United Way since...

  • Page 16
    ... require pump & power equipment. HERC provides a wide range of products to meet this growing demand. The pump business supports the needs of our industrial customers, oil and gas extraction and production, and disaster recovery support for public and private sector customers. With increasing demand...

  • Page 17
    ..., loaders, and pick-up trucks. Pump & power specialists assisted customers rebuilding after the storm. heRc • Revenues improved 14.5%. • North American operations delivered a 19% improvement, outpacing the American Rental Association's growth rate of 9.2%. • Pricing improved more than...

  • Page 18
    ... of The Hertz Corporation, is a leader in the fleet leasing and management industry. Their strength lies in providing companies with the most responsive customer service and innovative products to help them integrate and manage any asset in their fleet. Donlen's commitment to technology and strong...

  • Page 19
    ... edge technology Donlen's internal IT department develops all of their systems and tools, including FleetWeb ® their highly scalable technology fleet management platform. In 2012, Donlen launched several products that illustrate how they're using innovation to increase productivity and lower cost...

  • Page 20
    ... Pump Power Services Oil & Gas Key business segments Airport Off-airport Fleet Leasing and Management Car Sharing products/offerings/equipment • traveling at the speed of hertz - Mobile Gold Board featuring Hertz "Carfirmations™" -Gold Choice -eReturn - ExpressRent Kiosks - Gold Plus Rewards...

  • Page 21
    2012 FoRM 10-K

  • Page 22

  • Page 23
    ... (201) 307-2000 (Address, including 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...

  • Page 24
    ... OF CASH FLOWS ...NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ...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...

  • Page 25
    ... equipment rental business, (v) ''cars'' means cars, crossovers and light trucks (including sport utility vehicles and, outside North America, light commercial vehicles), (vi) ''program cars'' means cars purchased by car rental companies under repurchase or guaranteed depreciation programs with car...

  • Page 26
    ...to increase productivity and profitability; • an increase in our fleet costs as a result of an increase in 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...

  • Page 27
    ... North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz is the largest worldwide airport general use car rental brand, operating from approximately 8,860 corporate and licensee locations in approximately 150 countries. Our Dollar and Thrifty brands have...

  • Page 28
    ...Inc., or ''Dollar Thrifty,'' a car and truck rental and leasing business. 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.'' On December 12, 2012, Hertz completed the sale of Simply...

  • Page 29
    ... compressors, generators, pumps, small tools, compaction equipment and constructionrelated trucks. HERC also derives revenues from the sale of new equipment and consumables as well as through its Hertz Entertainment Services division, which rents lighting and related aerial products used primarily...

  • Page 30
    ...book value as of December 31, 2012 $12.9 billion 22MAR201316203800 17% Vechicles Equipment 83% 22MAR201316253303 (1) Car rental segment revenue includes fees and certain cost reimbursements from licensees. See Note 11 to the Notes to our consolidated financial statements included in this Annual...

  • Page 31
    ... service offerings, such as our customer loyalty program (Gold Plus Rewards), our global expedited rental program (Hertz #1 Club Gold), our one-way rental program (Rent-it-Here/Leave-it-There), our national-scale luxury rental program (Prestige Collection), our sports car rental program (Adrenaline...

  • Page 32
    ... 1A-Risk Factors'' in this Annual Report. Off-Airport Locations In addition to our airport locations, we operate 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...

  • Page 33
    ... to our airport rental locations, an off-airport rental location typically services the same variety of customers, uses smaller rental facilities with fewer employees, conducts pick-up and delivery services and deals with replacement renters using specialized systems and processes. In addition...

  • Page 34
    ...Gold Plus Rewards points that may be redeemed for free rental days. For the year ended December 31, 2012, rentals by Hertz #1 Club Gold members accounted for approximately 37% of our worldwide rental transactions. We believe the Hertz #1 Club Gold program provides a significant competitive advantage...

  • Page 35
    ...the hour or by the day. 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 or daily car-rental fee which includes fuel, insurance, 24...

  • Page 36
    ... our acquisition of Dollar Thrifty, we expect U.S. airport leisure business as a percentage of our worldwide car rental revenue to increase. Our business and leisure customers rent from both our airport and off-airport locations. Demand for airport rentals is correlated with airline travel patterns...

  • Page 37
    ..., 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 leasing companies and car dealers. We also advertise our car rental...

  • Page 38
    ... and Results of Operations-Liquidity and Capital Resources,'' in this Annual Report. We maintain automobile maintenance centers at certain airports and in certain urban and off-airport areas, which provide maintenance facilities for our car rental fleet. Many of these facilities, which include 14

  • Page 39
    ... other channels. Licensees Under Our Hertz Brand We believe that our extensive worldwide ownership of car rental operations contributes to the consistency of our high-quality service, cost control, fleet utilization, yield management, competitive pricing and our ability to offer one-way rentals...

  • Page 40
    ...-brand or co-brand location, pay a monthly fee generally based on a percentage of rental revenue. Franchisee Services and Products Dollar and Thrifty provide their U.S. and Canadian franchisees a wide range of products and services, including reservations, marketing programs and assistance, branded...

  • Page 41
    ... and service provide us with a competitive advantage. Our acquisition of Dollar and Thrifty brands adds two popular value leisure brands enabling us to compete across multiple market segments. Worldwide Equipment Rental Our worldwide equipment rental segment generated $1,385.4 million in revenues...

  • Page 42
    ...of large and small productions alike with competitive pricing and customized, monthly billing. Hertz delivers vehicles and equipment to production locations and a dedicated staff is available 24/7 to address specific client needs. Productions can also rent equipment for use at special events such as...

  • Page 43
    ... fleet was 43 months. HERC disposes of its used equipment through a variety of channels, including private sales to customers and other third parties, sales to wholesalers, brokered sales and auctions. Licensees HERC licenses the Hertz name to equipment rental businesses in six countries in Europe...

  • 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
    ... of rental equipment to and from customers' job sites. Risk Management Three types of generally insurable risks arise in our operations: • legal liability arising from the operation of our cars and on-road equipment (vehicle liability); • legal liability to members of the public and employees...

  • 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
    ... vehicle liability on us. In both our domestic car rental operations and our company-operated international car rental operations in many countries, we offer optional products providing insurance coverage, or ''PAI/PEC'' coverage, to the renter and the renter's immediate family members traveling...

  • Page 48
    ... 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 damage waiver,'' ''collision damage waiver,'' ''theft protection'' or ''accident...

  • Page 49
    ... with applicable requirements of environmental laws, we cannot offer assurance that our future environmental liabilities will not be material to our consolidated financial position, results of operations or cash flows. Dealings with Renters In the United States, car and equipment rental transactions...

  • Page 50
    ... position that car rental companies either may not pass through to customers, by means of separate charges, expenses such as vehicle licensing and concession fees or may do so only in certain limited circumstances. Recent or potential changes in law or regulation that affect us relate to insurance...

  • Page 51
    ...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 Reports on Form...

  • 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
    ... 2010, we elected to temporarily suspend the U.S. car rental LKE Program. In October 2012, Hertz reinstated the program. See the section entitled ''Management's Discussion and Analysis of Financial Condition and Results of Operations-Income Taxes'' in this Annual Report Dollar Thrifty similarly used...

  • Page 54
    ... of the acquisition of Dollar Thrifty. Manufacturers agree to repurchase program cars at a specified price or guarantee the depreciation rate on the cars during a specified time period. Therefore, with fewer program cars in our fleet, we have an increased risk that the market value of a car at the...

  • 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 concentration of our systems creates risks for us. We rely heavily on communication networks and information technology systems to accept reservations, process rental and sales transactions, manage our fleets of cars and equipment, manage our financing arrangements, account for our activities...

  • Page 57
    .... See ''-Risks Related to Acquisition of Dollar Thrifty.'' 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...

  • Page 58
    ... adverse effect on our consolidated financial position, results of operations or cash flows. See Note 6 to the consolidated financial statements included in this Annual Report. Environmental laws and regulations and the costs of complying with them, or any liability or obligation imposed under them...

  • Page 59
    ITEM 1A. RISK FACTORS (Continued) Changes in the U.S. legal and regulatory environment that affect our operations, including laws and regulations relating to taxes, automobile-related liability, insurance rates, insurance products, consumer privacy, data security, employment matters, cost and fee ...

  • Page 60
    ... Operations-Liquidity and Capital Resources-Credit Facilities'' included in this annual report for the year ended December 31, 2012 and ''Note 5-Debt'' to the consolidated financial statements included in this Annual Report. Our ability to manage these risks depends on financial market conditions as...

  • Page 61
    ... ratings provided by credit rating agencies for our asset-backed indebtedness; (iii) third parties requiring changes in the terms and structure of our asset-backed or asset-based financing arrangements, including increased credit enhancement or required cash collateral and/or other liquid reserves...

  • 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 5 to the Notes to the consolidated financial statements included in this Annual Report under...

  • Page 63
    ... refinanced, the cost of servicing our debt would increase and our liquidity and results of operations could be materially adversely affected. Risks Relating to Our Common Stock Hertz Holdings is a holding company with no operations of its own and depends on its subsidiaries for cash. The operations...

  • Page 64
    ... benefits of the acquisition include, among other things: • integrating and optimizing the utilization of the rental vehicle fleets and related financing of Hertz and Dollar Thrifty; • integrating and consolidating the marketing, promotion, reservation and information technology systems of Hertz...

  • Page 65
    ... annual report. The future results of Hertz, as the combined company following the Dollar Thrifty acquisition, may be materially different from those shown in the pro forma financial information presented in Note 4 to the Notes to our consolidated financial statements included in this Annual Report...

  • Page 66
    ... Darien, Illinois and Buffalo Grove, Illinois, for all of its fleet management services, consultation call center staff and certain financial systems functions. Donlen has other sales offices located throughout the United States. ITEM 3. LEGAL PROCEEDINGS From time to time we are a party to various...

  • Page 67
    ... PROCEEDINGS (Continued) combination with Dollar Thrifty. On February 14, 2013, we were informed by the staff that the investigation has been completed and that no action was taken by the staff or the SEC. 1. Hertz Equipment Rental Corporation, or ''HERC,'' Loss Damage Waiver On August 15, 2006...

  • Page 68
    ... 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. Originally filed in November...

  • Page 69
    ... 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 70
    ... of the 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...

  • Page 71
    ... a member of their compensation committee and their finance and investment committee. Mr. Sider has served as the Executive Vice President & President, Vehicle Rental and Leasing The Americas of Hertz and Hertz Holdings since January 2010. Mr. Sider also oversees the fleet planning and re-marketing...

  • Page 72
    ... 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 73
    EXECUTIVE OFFICERS OF THE REGISTRANT (Continued) and Vice President of Supply Chain from April 2006 through November 2008. Prior to Ingersoll Rand's acquisition of Trane Inc., Mr. Poste held a number of increasing responsibilities at Trane Inc. from October 2000 through 2006. Mr. Poste has also ...

  • Page 74
    ...capitalization. The Morningstar Rental & Leasing Services Industry Group is a published, market capitalization-weighted index representing 22 stocks of companies that rent or lease various durable goods to the commercial and consumer market including cars and trucks, medical and industrial equipment...

  • Page 75
    ...November 15, 2006, at the market close, through December 31, 2012. 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...

  • Page 76
    ... 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) 2012(a) Years ended December 31, 2011 2010 2009 2008 Statement of Operations Data Revenues: Car rental ...Equipment rental...

  • Page 77
    ....'' Includes fees and certain cost reimbursements from our licensees and revenues from our car leasing operations and thirdparty claim management services. The increases for the years ended December 31, 2012 and 2011 primarily reflect our acquisitions of Dollar Thrifty in November 2012 and Donlen in...

  • Page 78
    ...operated car rental and fleet leasing operations and 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...

  • Page 79
    ... review of present and estimated future market conditions and their effect on residual values at the time of disposal. During 2012, 2011 and 2010, depreciation rates being used to compute the provision for depreciation of revenue earning equipment were adjusted on certain vehicles in our car rental...

  • Page 80
    ... in 83 countries. Dollar Thrifty brings to Hertz an immediate leadership position in the value-priced rental vehicle market generally appealing to leisure customers, including domestic and foreign tourists, and to small businesses, government and independent business travelers. Equipment Rental HERC...

  • Page 81
    ... costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes. In addition, our management expects to utilize enhanced process improvements, including efficiency initiatives and the use of our information technology...

  • Page 82
    ... requirements, at a specific price during a specified time period. These programs limit our residual risk with respect to vehicles purchased under these programs. For all other vehicles, as well as equipment acquired by our equipment rental business, we use historical experience and monitor market...

  • Page 83
    ... 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 are based on rental volume...

  • Page 84
    ... include discount rates, growth rates, cash flow projections and terminal value rates. Discount rates are set by using the Weighted Average Cost of Capital, or ''WACC,'' methodology. The WACC methodology considers market and industry data as well as Company specific risk factors for each reporting...

  • Page 85
    ...various risks related to interest rates, fuel prices and foreign currency rates. Derivative financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. All derivatives are recorded on the balance sheet as either assets or liabilities measured...

  • Page 86
    ...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 forfeiture rate. These...

  • Page 87
    ... of dollars): Years Ended December 31, 2012 2011 2010 Percentage of Revenues Years Ended December 31, 2012 2011 2010 Revenues: Car rental ...Equipment rental ...Other ...Total revenues ...Expenses: Direct operating ...Depreciation of revenue earning equipment and lease charges . . Selling, general...

  • Page 88
    ... Transaction days represent 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 89
    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) 2011 foreign exchange rates) for the years ended December 31, 2012, 2011 and 2010 (in millions of dollars, except as noted): Years Ended December 31, 2012 2011 2010 Car rental segment revenues...

  • Page 90
    ... rate cap. Primarily represents Dollar Thrifty acquisition related expenses, change in control expenses, 'Day-1' compensation expenses and other adjustments related to the Dollar Thrifty acquisition, loss on the Advantage divestiture, expenses related to additional required divestitures and costs...

  • Page 91
    ...of Donlen and Dollar Thrifty are referred to below as the ''Recent Acquisitions.'' See Note 4 of the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Car Rental Segment Revenues from our car rental...

  • Page 92
    ... and other direct operating expenses. Fleet related expenses for our car rental segment of $932.1 million for 2012 increased $5.4 million, or 0.6%, from 2011. On a comparable basis, the increase was primarily related to worldwide rental volume demand which resulted in increases in gasoline costs of...

  • Page 93
    ... of revenue earning equipment and lease charges for our car rental segment of $1,876.1 million for 2012 increased $224.7 million, or 13.6% from $1,651.4 million for 2011. The increase was primarily attributable to the increase in average fleet due to the Recent Acquisitions. The increase was partly...

  • Page 94
    ..., costs related to our customer loyalty program, partly offset by the effects of foreign currency translation of approximately $4.2 million. The remaining 2012 net increase was primarily attributable to the Recent Acquisitions. Interest Expense Car Rental Segment Interest expense for our car rental...

  • Page 95
    ... per vehicle, improved residual values and disciplined cost management, partly offset by decreased pricing. Adjustments to our car rental segment income before income taxes for 2012 totaled $236.0 million (which consists of acquisition related costs and charges of $96.4 million, purchase accounting...

  • Page 96
    ... and non-deductible compensation payments under Internal Revenue Code Section 280(G) related to the Dollar Thrifty acquisition. See Note 9 to the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data...

  • Page 97
    ... includes $142.7 million of revenues related to Donlen which was acquired on September 1, 2011. These increases were partly offset by a decrease in worldwide RPD. RPD for worldwide car rental for the year ended December 31, 2011 decreased 3.7% from 2010, due to decreases in U.S. and International...

  • Page 98
    ... in gasoline costs also related to higher gasoline prices. These increases were partly offset by a decrease in vehicle damage costs of $11.5 million. Other direct operating expenses for our car rental segment of $1,695.5 million for 2011 increased $74.9 million, or 4.6% from 2010. The increase...

  • Page 99
    ...-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 100
    ... for our car rental segment of $333.1 million for 2011 decreased 17.0% from $401.3 million for 2010. The decrease was primarily due to lower interest rates in 2011, partly offset by an increase in the weighted average debt outstanding as a result of an increased fleet size. Equipment Rental Segment...

  • Page 101
    ... 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 102
    ...our worldwide car and equipment rental operations, 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...

  • Page 103
    ..., 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,'' and to satisfy certain of our self-insurance regulatory reserve requirements. The...

  • Page 104
    ... increases in car rental operations are a result of increased locations in 2012. The decrease in equipment rental operations was primarily due to the timing of purchases and payments during the year ended December 31, 2012. The increase in other activities primarily relates to costs associated with...

  • Page 105
    ... MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Financing Our primary liquidity needs include servicing of corporate and fleet related debt, acquisitions, the payment of operating expenses and purchases of rental vehicles and equipment to be used...

  • Page 106
    ...) For subsequent events relating to our indebtedness, see Note 18 to the Notes to our consolidated financial statements included in this Annual Report. Registration Rights and Indentures for the Senior Notes Hertz entered into exchange and registration rights agreements entered into in connection...

  • Page 107
    ...Item 1A-Risk Factors'' included in this Annual Report. We rely significantly on asset-backed and asset-based financing arrangements to purchase cars for our domestic and international car rental fleet. The amount of financing available to us pursuant to these programs depends on a number of factors...

  • Page 108
    ... 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 HVF U.S. Fleet Variable Funding Notes ...RCFC U.S. Fleet Variable Funding Notes ...Donlen GN...

  • Page 109
    ... cash obligations for debt and related interest payable, operating leases and concession agreements, tax liability for uncertain tax positions and related interest and other purchase obligations as of December 31, 2012 (in millions of dollars): Total 2013 Payments Due by Period 2014 to 2015...

  • Page 110
    ... the timing of the effective settlement of tax positions. See Note 9 to the Notes to our consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Purchase obligations represent agreements to purchase goods or services...

  • Page 111
    ... 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 rates and fluctuations in fuel prices. We manage...

  • Page 112
    ... 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 113
    ... significant net operating losses. In August 2010, we elected to temporarily suspend the U.S. car rental LKE Program allowing cash proceeds from sales of vehicles to be utilized for various business purposes, including paying down existing debt obligations, future growth initiatives and for general...

  • Page 114
    ... due to lower expected rates of return in 2012, lower discount rates at the end of 2011 compared to 2010 and a curtailment gain in the U.K. recorded in 2011. The funded status (i.e., the dollar amount by which the projected benefit obligations exceeded the market value of pension plan assets) of our...

  • Page 115
    ... the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that...

  • Page 116
    ... a purchase business acquisition during November 2012. We have also excluded Dollar Thrifty from our audit of internal control over financial reporting. Dollar Thrifty is a wholly-owned subsidiary whose total assets and total revenues represent approximately 21% and 2%, respectively, of the related...

  • Page 117
    ...31, 2012 December 31, 2011 ASSETS Cash and cash equivalents ...Restricted cash and cash equivalents ...Receivables, less allowance for doubtful accounts of $25,113 and $20,282 ...Inventories, at lower of cost or market ...Prepaid expenses and other assets ...Revenue earning equipment, at cost: Cars...

  • Page 118
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands of Dollars, except share and per share data) Years Ended December 31, 2011 2010 2012 Revenues: Car rental ...Equipment rental ...Other ...Total revenues ...Expenses: Direct operating ...Depreciation of...

  • Page 119
    ...(LOSS) (In Thousands of Dollars) Years Ended December 31, 2011 2012 2010 Net income (loss) ...Other comprehensive income (loss), net of tax: Translation adjustment changes ...Unrealized holding gains (losses) on securities, (net of tax of 2012: $0; 2011: $125 and 2010: $0) ...Change in fair value...

  • Page 120
    ... Total Equity Balance at: December 31, 2009 ...Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders ...Other comprehensive income ...Dividend payment to noncontrolling interest . Net income relating to noncontrolling interest Employee stock purchase plan...

  • Page 121
    ... from employee stock purchase plan ...Proceeds from exercise of stock options ...Proceeds from disgorgement of stockholder short-swing profits . Witholding taxes-restricted stock ...Payment of financing costs ... Net cash provided by (used in) financing activities ...Effect of foreign exchange rate...

  • Page 122
    ...Dollar Thrifty,'' a car and truck rental and leasing business. See Note 4-Business Combinations and Divestitures. On December 12, 2012, Hertz completed the sale of Simply Wheelz LLC, a wholly owned subsidiary of Hertz that operated our Advantage Rent A Car business. See Note 4-Business Combinations...

  • Page 123
    ... and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill represents the excess of the purchase price over the net tangible and intangible assets acquired. Revenue Recognition Rental and rental related revenue (including cost reimbursements from customers...

  • Page 124
    ... 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. These funds are primarily held in highly rated money market funds...

  • Page 125
    .... Depreciation rates are reviewed on a quarterly basis based on management's ongoing assessment of present and estimated future market conditions, their effect on residual values at the time of disposal and the estimated holding periods. Market conditions for used vehicle and equipment sales can...

  • Page 126
    ...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 127
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Derivative Instruments We are exposed to a variety of market risks, including the effects of changes in interest rates, gasoline and diesel fuel prices and foreign currency exchange rates. We manage ...

  • Page 128
    ...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 Note 7- Stock...

  • Page 129
    ... reporting units using a discounted cash flow methodology. The cash flows represent management's most recent planning assumptions. These assumptions are based on a combination of industry outlooks, views on general economic conditions, our expected pricing plans and expected future savings generated...

  • Page 130
    ... book values of our reporting units did not exceed their estimated fair values and therefore no impairment existed for the years ended December 31, 2012, 2011 and 2010. The following summarizes the changes in our goodwill, by segment (in millions of dollars): Car Rental Equipment Rental Total...

  • Page 131
    ... primarily include Dollar Thrifty concession agreements, Donlen trade name, reacquired franchise rights, non-compete agreements and technology-related intangibles. Other amortizable intangible assets primarily consisted of our Advantage trade name and concession rights, Donlen trade name, reacquired...

  • Page 132
    ...a wholly owned Hertz subsidiary. In accordance with the terms of the Merger Agreement, Merger Sub completed a tender offer in which it purchased a majority of the shares of Dollar Thrifty common stock then outstanding at a price equal to $87.50 per share in cash. Merger Sub subsequently acquired the...

  • Page 133
    ... cost approach was utilized in combination with the market approach to estimate the fair values of most working capital accounts. The following summarizes the fair values of the assets acquired and liabilities assumed as of the Dollar Thrifty acquisition date (in millions): Cash and cash equivalents...

  • Page 134
    ...' customer base. This transaction is part of the overall growth strategy of Hertz to provide the most flexible transportation programs for corporate and general consumers. Additionally, Donlen brings to Hertz a specialized consulting and technology expertise that will enable us to model, measure and...

  • Page 135
    ...historical financial information of Hertz Holdings, Donlen and Dollar Thrifty, adjusted for the following pre-tax amounts: Pro forma adjustments-Dollar Thrifty acquisition • Additional amortization expense (approximately $38.9 million in 2012 and $44.4 million in 2011) related to the fair value of...

  • Page 136
    ... business and locations to be divested where Dollar Thrifty operated at least one of its brands prior to the consummation of the Dollar Thrifty acquisition for the years ended December 31, 2012 and 2011. • Including an estimated amount of leasing revenue to be earned by Hertz from leasing vehicles...

  • Page 137
    ...the Dollar Thrifty acquisition, Hertz agreed to dispose of Advantage, to secure for the buyer of Advantage certain on-airport car rental concessions and related assets at 13 locations where Dollar Thrifty operated at least one of its brands prior to the consummation of the Dollar Thrifty acquisition...

  • Page 138
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5-Debt Our debt consists of the following (in millions of dollars): Average Interest Rate at December 31, 2012(1) ...(Corporate)(3) ...3.75% 2.47% 6.74% 6.96% 5.25% 4.40% Fixed or Floating ...

  • Page 139
    ...2012, short-term borrowings had a weighted average interest rate of 2.1%. We are highly leveraged and a substantial portion of our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations, acquisitions and capital expenditures. We believe that cash...

  • Page 140
    ... merger agreement with Dollar Thrifty, Hertz obtained $1,950.0 million in financing commitments for use in acquiring Dollar Thrifty. In October 2012 after having secured permanent financing for the Dollar Thrifty acquisition, Hertz terminated these commitments having never drawn upon them. CORPORATE...

  • Page 141
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Investors, Inc.) and most of its direct and indirect domestic subsidiaries (subject to certain exceptions, including Hertz International Limited, which ultimately owns entities carrying on most of our...

  • Page 142
    ...the completion of the acquisition of Dollar Thrifty, at which time the gross proceeds of the offering were released from escrow and HDTFS, Inc. was merged into Hertz. Hertz's obligations under the indentures for the Senior Notes are guaranteed by each of its direct and indirect domestic subsidiaries...

  • Page 143
    ... of the rental car fleet used in Hertz's (and through fleet sharing arrangements, a portion of the fleet used in Dollar Thrifty's) domestic car rental operations and contractual rights related to such vehicles. References to the ''HVF U.S. ABS Program'' include HVF's U.S. Fleet Variable Funding...

  • Page 144
    ... of the rental car fleet used in Dollar Thrifty's (and through fleet sharing arrangements, a portion of the fleet used in Hertz's) domestic car rental operations and contractual rights related to such vehicles. References to the ''RCFC U.S. ABS Program'' include RCFC's U.S. Fleet Variable Funding...

  • Page 145
    ... by Hertz. The lenders under the U.S. Fleet Financing Facility have been granted a security interest primarily in the owned rental car fleet used in our car rental operations in Hawaii, Puerto Rico and the U.S. Virgin Islands and certain contractual rights related to rental vehicles in Kansas...

  • Page 146
    ... FINANCIAL STATEMENTS (Continued) European Revolving Credit Facility and European Fleet Notes In June 2010, Hertz Holdings Netherlands B.V., an indirect wholly-owned subsidiary of Hertz organized under the laws of The Netherlands, or ''HHN BV,'' entered into a credit agreement that provides...

  • Page 147
    ... 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 the Australian Securitization, an interest rate cap was purchased by a subsidiary, HA Fleet Pty Limited. Concurrently, Hertz sold an...

  • Page 148
    ... from June 2012 to February 2013. See Note 18-Subsequent Events. Capitalized Leases References to the ''Capitalized Leases'' include the capitalized lease financings outstanding in the United Kingdom, or the ''U.K. Leveraged Financing,'' Australia, The Netherlands and the United States. The amount...

  • Page 149
    ... 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 HVF U.S. Fleet Variable Funding Notes ...RCFC U.S. Fleet Variable Funding Notes ...Donlen GN...

  • Page 150
    ...1, 2012, service credit rates for each employee will be determined on the first day of the year. We sponsored a defined benefit pension plan in the U.K. On June 30, 2011, we approved an agreement with the trustees of that plan to cease all future benefit accruals to existing members and to close the...

  • Page 151
    .... We use a December 31 measurement date for all of our plans. The following tables set forth the funded status and the net periodic pension cost of the Hertz Retirement Plan, other postretirement benefit plans (including health care and life insurance plans covering domestic (''U.S.'') employees and...

  • Page 152
    ...that is appropriate for the duration of our plan liabilities. For our plans outside the U.S., the discount rate reflects the market rates for an optimized subset of high-quality corporate bonds currently available. The discount rate in a country was determined based on a yield curve constructed from...

  • Page 153
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table sets forth the net periodic pension and postretirement (including health care, life insurance and auto) expense (in millions of dollars): Pension Benefits U.S. 2012 2011 Non-U.S. Years Ended December 31, 2010 2012 2011 2010...

  • Page 154
    ... 12% cash and cash equivalents. The U.K. Plan currently assumes a rate of return on assets of 7.5%, which represents the expected long-term annual weighted-average return. The fair value measurements of our U.S. pension plan assets are based upon significant observable inputs (Level 2) and relate to...

  • Page 155
    ...$13.6 Multiemployer Pension Plans We contribute to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of our union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the...

  • Page 156
    ...following information is provided: The ''EIN / Pension Plan Number'' column provides the Employer Identification Number and the three-digit plan number assigned to a plan by the Internal Revenue Service. The most recent Pension Protection Act Zone Status available for 2011 and 2012 is for plan years...

  • Page 157
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For plans that are not individually significant to us, the total amount of contributions is presented in the aggregate. Pension Protection Act Zone Status 2012 Green Critical Green Green Critical ...

  • Page 158
    ... consolidated depreciation (which includes revenue earning equipment lease charges) and amortization. ''Corporate EBITDA,'' represents EBITDA as adjusted for car rental fleet interest, car rental fleet depreciation and certain other items, as provided in the applicable award agreements. Of the PVUs...

  • Page 159
    ... exercise price 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...

  • Page 160
    ... information pertaining to option activity under the plans is as follows (in millions of dollars): Years ended December 31, 2012 2011 2010 Aggregate intrinsic value of stock options exercised . Cash received from the exercise of stock options ...Fair value of options that vested ...Tax benefit...

  • Page 161
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A summary of RSU and PSU activity under the Omnibus Plan as of December 31, 2012 is presented below. WeightedAverage Fair Value Aggregate Intrinsic Value (In thousands of dollars) Shares Outstanding...

  • Page 162
    ...estimated future market conditions and their effect on residual values at the time of disposal. During the year ended December 31, 2012, depreciation rates being used to compute the provision for depreciation of revenue earning equipment were adjusted on certain vehicles in our car rental operations...

  • Page 163
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) equipment is sold. These depreciation rate changes resulted in net decreases of $130.6 million and $13.8 million and a net increase of $19.1 million in depreciation expense for the years ended December 31, 2012, 2011 and 2010 respectively...

  • Page 164
    ... SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The principal items of the U.S. and foreign net deferred tax assets and liabilities at December 31, 2012 and 2011 are as follows (in millions of dollars): 2012 2011 Deferred Tax Assets: Employee benefit plans ...Net operating loss...

  • Page 165
    ... mix, changes in valuation allowances for losses in certain non-U.S. jurisdictions for which tax benefits cannot be realized and non-deductible compensation payments under Internal Revenue Code Section 280(G) related to the Dollar Thrifty acquisition. The negative effective tax rate in 2010 is...

  • Page 166
    ... various concession 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, 2012 2011 2010 Rents ...Concession fees: Minimum fixed...

  • Page 167
    ... concession agreements and real estate leases require us to pay or reimburse operating expenses, such as common area charges and real estate taxes, to pay concession fees above guaranteed minimums or additional rent based on a percentage of revenues or sales (as defined in those agreements) arising...

  • Page 168
    ...-time charges and non-operational items. The contribution of our reportable segments for the years ended December 31, 2012, 2011 and 2010 is summarized below (in millions of dollars). Years ended December 31, 2012 2011 2010 Revenues Car rental ...Equipment rental ...Other reconciling items ...Total...

  • Page 169
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Years ended December 31, 2012 2011 2010 Revenue earning equipment and property and equipment Car rental Expenditures ...Proceeds from disposals ...Net expenditures ...Equipment rental Expenditures ......

  • Page 170
    ... process changes. Represents the mark-to-market adjustment on our interest rate cap. Primarily represents Dollar Thrifty acquisition related expenses, change in control expenses, 'Day-1' compensation expenses and other adjustments related to the Dollar Thrifty acquisition, loss on the Advantage...

  • Page 171
    ... STATEMENTS (Continued) pre-acquisition interest and commitment fee expenses for interim financing associated with the Dollar Thrifty acquisition and a gain on the investment in Dollar Thrifty stock. (7) (8) (9) Represents a gain for the U.K. pension plan relating to unamortized prior service cost...

  • Page 172
    ... FINANCIAL STATEMENTS (Continued) 2. Concession Fee Recoveries On October 13, 2006, Janet Sobel, Daniel Dugan, PhD. and Lydia Lee, individually and on behalf of all others similarly situated v. The Hertz Corporation and Enterprise Rent-A-Car Company, or ''Enterprise,'' was filed in the United States...

  • Page 173
    ... 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 174
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) expenses, premiums and administrative costs. At December 31, 2012 and December 31, 2011 our liability recorded for public liability and property damage matters was $332.2 million and $281.5 million, ...

  • Page 175
    .... AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) the Sponsors and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. We also entered into indemnification agreements with each of our directors. We do not...

  • Page 176
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) During 2012, we continued to streamline operations and reduce costs with the closure of several car rental and equipment rental locations globally as well as a reduction in our workforce by ...

  • Page 177
    ... $1.0 million in ASC 715 pension adjustment. Note 14-Financial Instruments Gasoline Swap Contracts 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 the use of derivative commodity instruments. We...

  • Page 178
    ..., including making fleet and equipment purchases and borrowing for working capital needs. 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 instruments...

  • Page 179
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Fair value measures Pursuant to the accounting guidance for fair value measurements and its subsequent updates, fair value is defined as the price that would be received from selling an asset or paid ...

  • Page 180
    ... Investments classified as Level 1 assets and liabilities are priced using quoted market prices for identical assets in active markets that are observable. Fair Value of Financial Instruments The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses...

  • Page 181
    ... fair value of all debt at December 31, 2011 was $11,832.5 million, compared to its aggregate unpaid principal balance of $11,400.3 million. Note 15-Related Party Transactions Relationship with Hertz Investors, Inc. and the Sponsors Stockholders Agreement In connection with the Acquisition, we...

  • Page 182
    ... stock units having an equivalent fair market value equal to the annual equity award amount on the date of grant. The restricted stock units will vest on the business day immediately preceding the next annual meeting of shareholders. For 2013, the lead director is paid an additional annual cash fee...

  • Page 183
    HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In May 2009 we entered into subscription agreements with investment funds affiliated with CD&R and Carlyle to purchase an additional 32,101,182 shares of our common stock at a price of $6.23 per share...

  • Page 184
    ... to the Class A notes. The net proceeds from the sale of the notes will be, to the extent permitted by the applicable agreements, (i) used to pay the purchase price of vehicles acquired by HVF pursuant to HVF's U.S. ABS Program (as defined herein), (ii) used to pay the principal amount of...

  • Page 185
    SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY BALANCE SHEETS (In Thousands of Dollars) December 31, 2012 2011 ASSETS Cash and cash equivalents ...Accounts receivable from Hertz affiliate . . Taxes receivable ...Prepaid expenses and other assets ...

  • Page 186
    ...) HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY STATEMENTS OF OPERATIONS (In Thousands of Dollars) Years ended December 31, 2012 2011 2010 Revenues ...Expenses: Selling, general and administrative ...Interest expense, net of interest income ...Total expenses ...Loss before income taxes ...Benefit for...

  • Page 187
    ... of Dollars) Years Ended December 31, 2012 2011 2010 Net income (loss) ...Other comprehensive income (loss) ...Comprehensive income (loss) ... $243,079 1,522 $244,601 $176,170 $(48,681) (66,237) 41,154 $109,933 $ (7,527) The accompanying notes are an integral part of these financial statements...

  • Page 188
    ...of tax of $3 ...December 31, 2010 ...Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders ...Other comprehensive loss ...Acquisition of remaining portion of non-controlling interest, net of tax of $9,798 ...Employee stock purchase plan, net of tax of $0 ...Net...

  • Page 189
    SCHEDULE I (Continued) HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY STATEMENTS OF CASH FLOWS (In Thousands of Dollars) Years ended December 31, 2012 2011 2010 Cash flows from operating activities: Net income (loss) ...Adjustments to reconcile net income (loss) to net cash used in operating activities...

  • Page 190
    ... a discussion of background and basis of presentation, see Note 1 and Note 2 to the Notes to the consolidated financial statements included in this Annual Report under the caption ''Item 8-Financial Statements and Supplementary Data.'' Return of Capital from subsidiary We had presented in error the...

  • Page 191
    ... stock price per share exceeded $10.77 for at least 20 trading days during the 30 consecutive trading day period ending on December 31, 2012. On June 1 and December 1, 2012 and 2011, Hertz Holdings made semi-annual interest payments of approximately $12.5 million on the Convertible Senior Notes...

  • Page 192
    ... 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 Year ended December Year ended December Year ended December accounts: 31, 2012...

  • Page 193
    ... the internal controls over financial reporting of Dollar Thrifty Automotive Group, Inc., or ''Dollar Thrifty,'' which was acquired on November 19, 2012. The total assets and total revenues of the excluded business represented 21% and 2%, respectively, of the related consolidated financial statement...

  • Page 194
    ... set forth under the caption ''Election of Directors'' of our proxy statement, or the ''2013 Proxy Statement,'' for our annual meeting of stockholders scheduled for May 15, 2013. Such information is incorporated herein by reference. Information relating to our Executive Officers is included in Part...

  • Page 195
    ... documents 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...

  • Page 196
    ..., and state of New Jersey, on the 4th day of March, 2013. 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 197
    Signature Title /s/ LINDA FAYNE LEVINSON Linda Fayne Levinson /s/ ANGEL L. MORALES Angel L. Morales /s/ DAVID H. WASSERMAN David H. Wasserman /s/ HENRY C. WOLF Henry C. Wolf Director Director Director Director 173

  • Page 198
    ...the Current Report on Form 8-K of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on July 18, 2011). Amendment No. 1 to Agreement and Plan of Merger, dated August 25, 2011, among The Hertz Corporation, DNL Merger Corp., Donlen Corporation, Gary Rappeport, as Shareholder Representative and...

  • Page 199
    ... the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on May 4, 2012). Indenture, dated as of December 20, 2010, among The Hertz Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto, and Wells Fargo Bank, National Association...

  • Page 200
    ... to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on May 4, 2012). Exchange and Registration Rights Agreement, dated as of March 13, 2012, among The Hertz Corporation, the Guarantors named therein, and Barclays Capital Inc., as the Initial Purchaser...

  • Page 201
    ... Registration Statement on Form S-4 of The Hertz Corporation (File No. 333-186328), as filed on January 31, 2013). Exchange and Registration Rights Agreement, dated as of November 19, 2012, among The Hertz Corporation, the Guarantors named therein, and Barclays Capital Inc., Deutsche Bank Securities...

  • Page 202
    ... 4.9.8 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on November 6, 2009). Amendment No. 1, dated as of December 21, 2010, to the Second Amended and Restated Purchase and Sale Agreement, among The Hertz Corporation, Hertz Vehicle Financing LLC and...

  • Page 203
    ... Statement on Form S-4 of The Hertz Corporation (File No. 333-186328), as filed on January 31, 2013). Second Amended and Restated Series 2009-1 Note Purchase Agreement, dated as of October 25, 2012, among Hertz Vehicle Financing LLC, The Hertz Corporation, as Administrator, Certain Conduit Investors...

  • Page 204
    ...., Thrifty Rent-A-Car System, Inc., Chicago Deferred Exchange Company, LLC, VEXCO, LLC and Deutsche Bank Trust Company Americas (incorporated by reference to Exhibit 4.224 to Dollar Thrifty Automotive Group, Inc.'s Form 10-Q for the quarterly period ended June 30, 2010, filed August 3, 2010 (File No...

  • Page 205
    ... 4.267 to Dollar Thrifty Automotive Group, Inc.'s Form 10-Q for the quarterly period ended June 30, 2012, filed August 2, 2012 (File No. 001-13647)). Amendment No. 2 to Master Motor Vehicle Lease and Servicing Agreement (Group VIII), dated as of June 15, 2012, among Rental Car Finance Corp., as...

  • Page 206
    ...February 23, 2012, between Rental Car Finance Corp. and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.258 to Dollar Thrifty Automotive Group, Inc.'s Annual Report on Form 10-K, filed February 28, 2012 (File No. 001-13647)). Note Purchase Agreement, dated as...

  • Page 207
    ..., 2012, between Rental Car Finance Corp. and Deutsche Bank Trust Company Americas, as trustee (incorporated by reference to Exhibit 4.259 to Dollar Thrifty Automotive Group, Inc.'s Annual Report on Form 10-K, filed February 28, 2012 (File No. 001-13647)). Series 2012-1 Note Purchase Agreement, dated...

  • Page 208
    ... Report on Form 8-K of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on October 10, 2012). Credit Agreement, dated as of March 11, 2011, among Hertz Equipment Rental Corporation, The Hertz Corporation, the Canadian Borrowers parties thereto, the several lenders from time to time parties...

  • Page 209
    ...Statement on Form S-1 of Hertz Global Holdings, Inc. (File No. 333-135782), as filed on November 8, 2006).†Form of Director Stock Option Agreement under Director Stock Incentive Plan (Incorporated by reference to Exhibit 10.36 to the Annual Report on Form 10-K of Hertz Global Holdings, Inc. (File...

  • Page 210
    ... of Price Vested Stock Unit Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to Exhibit 10.7.8 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc. (File No. 001-33139), as filed on August 3, 2012).†Form of Non-Employee Director...

  • Page 211
    ... The Hertz Corporation Account Balance Defined Benefit Pension Plan (Incorporated by reference to Exhibit 10.12 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).†Form of Special Award Agreement (Incorporated...

  • Page 212
    ....51 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc. (File No. 001-33139), 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 Corp., Hertz General Interest LLC...

  • Page 213
    ...(now known as Hertz Global Holdings, Inc.), CCMG Corporation, The Hertz Corporation, and Hertz International, Ltd. (Incorporated by reference to Exhibit 10.25 to the Current Report on Form 8-K of The Hertz Corporation (File No. 001-07541), as filed on March 31, 2006). Tax Sharing Agreement, dated as...

  • Page 214
    ... to the SEC upon request a copy of any such instrument defining the rights of the holders of such long-term debt. Schedules and exhibits not included above have been omitted because the information required has been included in the financial statements or notes thereto or are not applicable or not...

  • Page 215
    ... 12 HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) (In Millions of Dollars Except Ratios) 2012 Years ended December 31, 2011 2010 2009 2008 Income (loss) before income taxes . . Interest expense ...Portion of rent estimated...

  • Page 216
    ... LLC ...Hertz Canada Vehicles Partnership ...Cinelease Holdings, Inc...Cinelease, LLC ...Cinelease, Inc...Donlen Corporation ...Donlen Government Services, Inc ...GN Funding II LLC ...Donlen Trust ...Donlen Fleet Management Services, Inc . GreenDriver, Inc ...Donlen FSHCO Company ...Dollar Thrifty...

  • Page 217
    ...Donlen Fleet Leasing ...Dollar Thrifty Automotive Group Canada Inc...DTG Operations Canada Inc...DTG Canada Corp...TCL Funding Limited Partnership ...DTGC Car Rental L.P ...2232560 Ontario, Inc...2240919 Ontario, Inc...China Hertz International Car Rental Consulting (Shanghai) Co., Ltd...Hertz Rent...

  • Page 218
    Companies Listed by Country State or Jurisdiction of Incorporation Doing Business As Hong Kong Hertz Equipment Rental Holdings (H. K.) Limited ...Hertz Hong Kong Limited ...Hertz Rent A Car Holdings (H. K.) Limited . . Japan Hertz Asia Pacific (Japan), Ltd...Mexico Hertz Latin America, S.A. de ...

  • Page 219
    ... 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. Italy Hertz Fleet (Italiana) Srl ...Hertz Claim Management Srl ...Hertz Holdings...

  • Page 220
    ... 333-151103) and on Form S-3 (File Nos. 333-159348 and 333-173125) of Hertz Global Holdings, Inc. of our report dated March 4, 2013 relating to the financial statements, financial statement schedules, and the effectiveness of internal control over financial reporting, which appears in this Form 10...

  • Page 221
    ... Mark P . Frissora, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2012 of Hertz Global Holdings, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make...

  • Page 222
    ... Elyse Douglas, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2012 of Hertz Global Holdings, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the...

  • Page 223
    ... with the Annual Report of Hertz Global Holdings, Inc. (the ''Company'') on Form 10-K for the period ending December 31, 2012 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, pursuant...

  • Page 224
    ... with the Annual Report of Hertz Global Holdings, Inc. (the ''Company'') on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Elyse Douglas, Chief Financial Officer of the Company, certify, pursuant...

  • Page 225
    ... Company's GAAP measures, primarily related to fair value accounting for its financial assets (which includes the Company's derivative financial instruments), its income tax reporting and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude the Company from providing...

  • Page 226
    ... and Use / Importance of Non-GAAP Measures Adjusted Pre-Tax Income 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...

  • Page 227
    ... as Corporate EBITDA less non-fleet capital expenditures, net of non-fleet disposals, plus changes in working capital (receivables, excluding car rental receivables, inventories, prepaid expenses, accounts payable and accrued liabilities), cash used for acquisitions, cash used for / provided by...

  • Page 228
    ... accounting. Represents an increase in depreciation of property and equipment relating to purchase accounting. For the years ended December 31, 2012 and 2011, also includes restructuring and restructuring related charges of $20.5 million and $13.7 million, respectively, and acquisition related costs...

  • Page 229
    ... certain revalued liabilities relating to purchase accounting. For the years ended December 31, 2010 and 2009, also includes restructuring and restructuring related charges of $52.6 million, $99.6 million, respectively. Represents the increase in depreciation of revenue earning equipment based upon...

  • Page 230
    ...% Senior Notes. These costs are included within other (income) expense, net in our statement of operations. Primarily represents Dollar Thrifty acquisition related expenses of $57.7 million for the year ended December 31, 2012. Also includes change in control expenses, 'Day-1' compensation expenses...

  • Page 231
    ... of property and equipment and accretion of certain revalued liabilities relating to purchase accounting. Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. For the years ended December 31, 2010 and 2009, also includes $68...

  • Page 232
    ... reflect the following: NON-CASH EXPENSES AND CHARGES 2012 Non-cash amortization of debt costs included in car rental fleet interest Non-cash stock-based employee compensation charges ...Derivative (gains) losses ...Pension adjustment ...$ Years Ended December 31, 2011 2010 2009 $ 43.0 31...

  • Page 233
    ... ITEMS Years Ended December 31, 2012 2011 2010 2009 Restructuring charges ...Restructuring related charges Acquisition related costs ...Other(c) ...Premiums paid on debt ...Management transition costs . Gain on debt buyback ...Third party bankruptcy reserve Derivative losses ...$ 38.0 11.1 163.7 26...

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  • Page 236
    ...Chief Risk Officer scott sider Group President, Rent-A-Car Americas Robert J. stuart Executive Vice President, Sales and Marketing Michel taride Group President, Rent-A-Car International david trimm Senior Vice President, Business Transformation Projects J. Jeffrey zimmerman Executive Vice President...

  • Page 237
    ... 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 should contact...

  • Page 238
    Hertz Global Holdings, Inc. 225 Brae Boulevard Park Ridge, NJ 07656 201-307-2000 www.hertz.com