Hertz 2015 Annual Report Download - page 99

Table of Contents
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Simplifying the Subsequent Measurement of Inventory
In July 2015, the FASB issued guidance that requires inventory to be measured at the lower of cost and net realizable value, excluding inventory
measured using the last-in, first-out method or the retail inventory method. Net realizable value is defined as the estimated selling prices in the
ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Current guidance requires inventory to
be measured at the lower of cost or market. This guidance is effective prospectively for annual periods beginning after December 15, 2016 and
interim periods within those annual periods. The Company is in the process of assessing the potential impacts of adopting this guidance on its
financial position, results of operations and cash flows.
Simplifying the Accounting for Measurement Period Adjustments for Business Combinations
In September 2015, the FASB issued guidance that requires adjustments to provisional amounts during the measurement period of a business
combination to be recognized in the reporting period in which the adjustments are determined, rather than retrospectively. The guidance is effective
prospectively for annual periods beginning after December 15, 2015 and interim periods within those annual periods. The Company has assessed
the potential impacts from future adoption of this guidance and has determined that there will be no impact on its financial position, results of
operations and cash flows.
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In February 2015, the Company acquired substantially all of the assets of certain Hertz-branded franchises, including existing fleets and contract
and concession rights, for $87 million. The franchises acquired include on airport locations in Indianapolis, South Bend and Fort Wayne, Indiana
and in Memphis, Tennessee, as well as several smaller off airport locations. The acquisition was part of a strategic decision to increase the
number of Hertz-owned locations and capitalize on certain benefits of ownership not available under a franchise agreement.
The acquisition was accounted for utilizing the acquisition method of accounting where the purchase price of the reacquired franchises was
allocated based on estimated fair values of the assets acquired and liabilities assumed. The excess of the purchase price over the estimated fair
value of the net tangible and intangible assets acquired was recorded as goodwill. The purchase price was allocated as follows:
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Revenue earning equipment $ 71
Property and other equipment 6
Other intangible assets 9
Goodwill 1
Total $ 87
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In August 2014, the Company acquired substantially all of the assets of certain Dollar and Thrifty franchisees including existing fleets and contract
and concession rights for $62 million. The acquisition was part of a strategic decision to increase its Hertz-owned locations and capitalize on
certain benefits of ownership not available to the Company under a franchise agreement.
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.