Hertz 2013 Annual Report Download - page 14

Table of Contents
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and newspapers, direct mail and the Internet. In addition to advertising, we also conduct a variety of other forms of marketing and promotion,
including travel industry business partnerships and press and public relations activities.
In almost all cases, when we rent a car, we rent it directly to an individual who is identified in a written rental agreement that we prepare.
Except when we are accommodating someone who cannot drive, the individual to whom we rent a car is required to have a valid driver's
license and meet other rental criteria (including minimum age and creditworthiness requirements) that vary on the basis of location and type
of rental. Our rental agreements permit only licensed individuals renting the car, people signing additional authorized operator forms and
certain defined categories of other individuals (such as fellow employees, parking attendants and in some cases spouses or domestic
partners) to operate the car.
With rare exceptions, individuals renting cars from us are personally obligated to pay all amounts due under their rental agreements. They
typically pay us with a charge, credit or debit card issued by a third party, although certain customers use a Hertz charge account that we have
established for them, usually as part of an agreement between us and their employer. For the year ended December 31, 2013, all amounts
charged to Hertz charge accounts established in the United States and by our international subsidiaries, were billed directly to a company or
other organization or were guaranteed by a company. We also issue rental vouchers and certificates that may be used to pay rental charges,
mostly for prepaid and tour-related rentals. In addition, where the law requires us to do so, we rent cars on a cash basis. For the year ended
December 31, 2013, no customer accounted for more than 6.0% of our car rental revenues.
In the United States for the year ended December 31, 2013, 80% of our car rental revenues came from customers who paid us with third-
party charge, credit or debit cards, 10% came from customers using rental vouchers or another method of payment, while 9% came from
customers using Hertz charge accounts or direct billing and 1% came from cash transactions. For the year ended December 31, 2013, bad
debt expense represented 0.3% of car rental revenues for our U.S. operations.
In our international operations for the year ended December 31, 2013, 46% of our car rental revenues came from customers who paid us
with third-party charge, credit or debit cards, while 27% came from customers using Hertz charge accounts, 26% came from customers
using rental vouchers or another method of payment and 1% came from cash transactions. For the year ended December 31, 2013, bad debt
expense represented 0.3% of car rental revenues for our international operations.
Fleet
We believe we are one of the largest private sector purchasers of new cars in the world. During the year ended December 31, 2013, we
operated a peak rental fleet in the United States of approximately 524,500 cars and a combined peak rental fleet in our international
operations of approximately 179,500 cars, and in each case exclusive of our franchisees' fleet and Donlen's leasing fleet. During the year
ended December 31, 2013, our approximate average holding period for a rental car was eighteen months in the United States and thirteen
months in our international operations.
Under our repurchase programs, the manufacturers agree to repurchase cars at a specified price or guarantee the depreciation rate on the
cars during established repurchase or auction periods, subject to, among other things, certain car condition, mileage and holding period
requirements. Repurchase prices under repurchase programs are based on either a predetermined percentage of original car cost and the
month in which the car is returned or the original capitalized cost less a set daily depreciation amount. Guaranteed depreciation programs
guarantee on an aggregate basis the residual value of the cars covered by the programs upon sale according to certain parameters which
include the holding period, mileage and condition of the cars. These repurchase and guaranteed depreciation programs limit our residual risk
with respect to cars purchased under the programs and allow us to determine depreciation expense in advance, however, typically the
acquisition cost is higher for these program cars.
Program cars as a percentage of all cars purchased by our U.S. and international operations were as follows:






U.S. 18%
19%
45%
54%
48%
International 57%
53%
55%
56%
57%
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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