Hertz 2012 Annual Report Download - 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 to transfer a liability in an
orderly transaction between market participants at the measurement date. When determining the fair
value measurements for assets and liabilities required or permitted to be recorded at fair value, we
consider the principal or most advantageous market in which we would transact and we consider
assumptions that market participants would use when pricing the asset or liability.
Fair Value Hierarchy
The accounting guidance for fair value measurements also requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial
instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. The inputs are prioritized into three levels that may be used to
measure fair value:
Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are
observable.
Level 2: Inputs that reflect quoted prices for similar assets or liabilities in active markets; quoted prices
for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in
which significant inputs are observable or can be derived principally from, or corroborated by,
observable market data.
Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset
or liability at the measurement date.
Asset and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011 were
as follows (in millions):
December 31, 2012
Fair Value Measurements Using
Quoted Prices in Significant
Active Markets Other Significant
for Identical Observable Unobservable
Instruments Inputs Inputs
Total (Level 1) (Level 2) (Level 3)
Prepaid Expenses and Other Current Assets:
Interest rate caps ........................ $0.9 $— $0.9 $—
Foreign currency forward contracts ........... 3.4 — 3.4 —
Foreign exchange options ................. 0.2 — 0.2 —
Total ................................. $4.5 $— $4.5 $—
Other Current Liabilities:
Gasoline swaps ......................... $0.1 $— $0.1 $—
Interest rate caps ........................ 0.9 — 0.9 —
Foreign currency forward contracts ........... 4.5 — 4.5 —
Total ................................. $5.5 $— $5.5 $—
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