Hertz 2013 Annual Report Download - page 121

Table of Contents
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
was approved by our stockholders on May 15, 2013. The ESPP is intended to be an “employee stock purchase plan” within the meaning of
Section 423 of the Internal Revenue Code.
The maximum number of shares that may be purchased under the ESPP is 8.0 million shares of Hertz Holdings' common stock, subject to
adjustment in the case of any change in Hertz Holdings' shares, including by reason of a stock dividend, stock split, share combination,
recapitalization, reorganization, merger, consolidation or change in corporate structure. An eligible employee may elect to participate in the
ESPP each quarter (or other period established by the Compensation Committee) through a payroll deduction. The maximum and
minimum contributions that an eligible employee may make under all of Hertz Holdings' qualified employee stock purchase plans will be
determined by the Compensation Committee, provided that no employee may be permitted to purchase stock with an aggregate fair market
value greater than $25,000 per year. At the end of the offering period, the total amount of each employee's payroll deduction will be used to
purchase shares of Hertz Holdings' common stock. The purchase price per share will be not less than 85% of the market price of Hertz
Holdings' common stock on the date of purchase; the exact percentage for each offering period will be set in advance by the Compensation
Committee.
For the years ended December 31, 2013, 2012 and 2011, we recognized compensation cost of approximately $0.9 million, $0.8 million and
$0.7 million, respectively, for the amount of the discount on the stock purchased by our employees under the ESPP. Approximately 2,100
employees participated in the ESPP as of December 31, 2013.

Depreciation of revenue earning equipment and lease charges includes the following (in millions of dollars):




Depreciation of revenue earning equipment $2,407.8
$2,145.9
$1,912.3
Adjustment of depreciation upon disposal of revenue earning equipment 37.2
(96.8)
(112.2)
Rents paid for vehicles leased 80.5
79.8
96.1
Total $2,525.5
$2,128.9
$1,896.2
The adjustment of depreciation upon disposal of revenue earning equipment for the years ended December 31, 2013, 2012 and 2011,
included net losses of $48.2 million, and net gains of $100.6 million and $114.9 million, respectively, on the disposal of vehicles used in our
U.S. car rental operations, net losses of $15.2 million, $17.3 million and $16.0 million, respectively, on the disposal of vehicles used in our
international car rental operations and net gains of $26.2 million, $13.5 million and $13.3 million, respectively, on the disposal of industrial
and construction equipment used in our worldwide equipment rental operations. The loss on vehicle sales in our car rental operations was
primarily due to a combination of declining residual values from falling demand for used vehicles and timing of sales of revenue earning
equipment in our car rental operations.
Depreciation rates are reviewed on a quarterly basis based on management's routine review of present and estimated future market
conditions and their effect on residual values at the time of disposal. During the year ended December 31, 2013, depreciation rates being
used to compute the provision for depreciation of revenue earning equipment were adjusted on certain vehicles in our car rental operations to
reflect changes in the estimated residual values to be realized when revenue earning equipment is sold. These depreciation rate changes in
our U.S. car rental operations from previous quarters resulted in net decreases of $44.2 million, $139.4 million and $26.7 million in
depreciation expense for the years ended December 31, 2013, 2012 and 2011, respectively. The favorable adjustments reflect changes from
the impact of car sales channel diversification, acceleration of our retail sales expansion and the optimization of fleet holding periods related to
the integration of Dollar Thrifty. The cumulative effect of the reduction in rates was also indicative of the residual values experienced in the
U.S. for the years ended December 31, 2013, 2012 and 2011. These depreciation rate changes in our international operations resulted in net
increases of $5.0 million, $8.8 million and $12.9 million in depreciation expense for the years ended December 31, 2013, 2012 and 2011. In
2013, 2012 and 2011, the depreciation rate changes in certain of our worldwide equipment rental operations resulted in a decrease of $0.4
million, an increase of $0.5 million, and a decrease of $4.4 million in depreciation expense, respectively.
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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