Hertz 2012 Annual Report Download - page 124

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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. These funds are primarily held in highly rated money market funds with investments
primarily in government and corporate obligations. Restricted cash and cash equivalents are excluded
from cash and cash equivalents.
Concentration of Credit Risk
Our cash and cash equivalents are invested in various investment grade institutional money market
accounts and bank term deposits. Deposits held at banks may exceed the amount of insurance
provided on such deposits. Generally, these deposits may be redeemed upon demand and are
maintained with financial institutions with reputable credit and therefore bear minimal credit risk. We
seek to mitigate such risks by spreading the risk across multiple counterparties and monitoring the risk
profiles of these counterparties. In addition, we have credit risk from derivative financial instruments
used in hedging activities. We limit our exposure relating to derivative financial instruments by
diversifying the financial instruments among various counterparties, which consist of major financial
institutions.
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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