Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010March 31, 2011

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-33139

HERTZ GLOBAL HOLDINGS, INC.
(Exact name of Registrantregistrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
 20-3530539
(I.R.S. Employer
Identification Number)

225 Brae Boulevard
Park Ridge, New Jersey 07656-0713
(201) 307-2000
(Address, including Zip Code, and telephone number,
including area code, of Registrant'sregistrant's principal executive offices)

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)

Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

Indicate by check mark whether the Registrantregistrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to submit and post such files). Yes ý    No o

Indicate by check mark whether the Registrantregistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller
reporting company)
 Smaller reporting company o

Indicate by check mark whether the Registrantregistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

There were 412,516,648415,808,391 shares of the Registrant'sregistrant's common stock, par value $0.01 per share, issued and outstanding as of November 3, 2010.May 2, 2011.


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
INDEX

 
  
 Page

PART I. FINANCIAL INFORMATION

  
   

ITEM 1.

 

Condensed Consolidated Financial Statements (Unaudited)

  

 

Report of Independent Registered Public Accounting Firm

 

1

 

Condensed Consolidated Balance Sheets as of September 30, 2010March 31, 2011 and December 31, 20092010

 

2

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30,March 31, 2011 and 2010 and 2009

 

3

 

Consolidated Statements of Cash Flows for the NineThree Months Ended September 30,March 31, 2011 and 2010 and 2009

 

4-5

 

Notes to Condensed Consolidated Financial Statements

 

6-356-28

   

ITEM 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

36-6929-53

   

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

6953

   

ITEM 4.

 

Controls and Procedures

 

6954

PART II. OTHER INFORMATION

  
   

ITEM 1.

 

Legal Proceedings

 

7055

   

ITEM 1A.

 

Risk Factors

 

7055-56

   

ITEM 6.

 

Exhibits

 

70-7256

SIGNATURE

 

7357

EXHIBIT INDEX

 

74-7558-59


Table of Contents

PART I—FINANCIAL INFORMATION

ITEM l.    Condensed Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of Hertz Global Holdings, Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of Hertz Global Holdings, Inc. and its subsidiaries as of September 30, 2010,March 31, 2011, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30,March 31, 2011 and March 31, 2010 and September 30, 2009 and the consolidated statements of cash flows for the nine-monththree-month periods ended September 30, 2010March 31, 2011 and September 30, 2009.March 31, 2010. These interim financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2009,2010, and the related consolidated statements of operations, of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated February 26, 2010,25, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2009,2010, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
November 9, 2010May 6, 2011


Table of Contents



HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands of Dollars)

Unaudited



 September 30,
2010
 December 31,
2009
 
 March 31,
2011
 December 31,
2010
 

ASSETS

ASSETS

 

ASSETS

 

Cash and cash equivalents

Cash and cash equivalents

 $1,483,320 $985,642 

Cash and cash equivalents

 $1,365,759 $2,374,170 

Restricted cash and cash equivalents

Restricted cash and cash equivalents

 739,571 365,159 

Restricted cash and cash equivalents

 190,886 207,576 

Receivables, less allowance for doubtful accounts of $20,086 and $21,268

 1,674,946 1,325,332 

Receivables, less allowance for doubtful accounts of $21,323 and $19,708

Receivables, less allowance for doubtful accounts of $21,323 and $19,708

 1,311,755 1,356,553 

Inventories, at lower of cost or market

Inventories, at lower of cost or market

 87,615 93,415 

Inventories, at lower of cost or market

 97,472 87,429 

Prepaid expenses and other assets

Prepaid expenses and other assets

 329,144 300,125 

Prepaid expenses and other assets

 428,879 352,782 

Revenue earning equipment, at cost:

Revenue earning equipment, at cost:

 

Revenue earning equipment, at cost:

 

Cars

 9,281,200 8,205,579 

Cars

 8,970,894 8,435,077 
 

Less accumulated depreciation

 (1,161,781) (1,186,299) 

Less accumulated depreciation

 (1,256,743) (1,199,355)

Other equipment

 2,724,937 2,582,029 

Other equipment

 2,766,600 2,756,101 
 

Less accumulated depreciation

 (1,043,576) (749,724) 

Less accumulated depreciation

 (1,079,491) (1,052,414)
           
 

Total revenue earning equipment

 9,800,780 8,851,585  

Total revenue earning equipment

 9,401,260 8,939,409 
           

Property and equipment, at cost:

Property and equipment, at cost:

 

Property and equipment, at cost:

 

Land, buildings and leasehold improvements

 1,062,154 1,023,891 

Land, buildings and leasehold improvements

 1,101,047 1,071,987 

Service equipment and other

 880,550 838,906 

Service equipment and other

 945,999 900,271 
           

 1,942,704 1,862,797 

 2,047,046 1,972,258 
 

Less accumulated depreciation

 (782,204) (674,668) 

Less accumulated depreciation

 (860,537) (808,689)
           
 

Total property and equipment

 1,160,500 1,188,129  

Total property and equipment

 1,186,509 1,163,569 
           

Other intangible assets, net

Other intangible assets, net

 2,554,929 2,597,682 

Other intangible assets, net

 2,535,570 2,550,559 

Goodwill

Goodwill

 295,825 295,350 

Goodwill

 309,495 300,174 
           
 

Total assets

 $18,126,630 $16,002,419  

Total assets

 $16,827,585 $17,332,221 
           

LIABILITIES AND EQUITY

LIABILITIES AND EQUITY

 

LIABILITIES AND EQUITY

 

Accounts payable

Accounts payable

 $928,108 $658,671 

Accounts payable

 $1,204,927 $944,973 

Accrued liabilities

Accrued liabilities

 1,123,922 1,024,822 

Accrued liabilities

 983,420 1,070,082 

Accrued taxes

Accrued taxes

 192,460 108,356 

Accrued taxes

 121,602 108,940 

Debt

Debt

 12,046,930 10,364,367 

Debt

 10,750,019 11,306,429 

Public liability and property damage

Public liability and property damage

 286,536 277,828 

Public liability and property damage

 282,127 278,685 

Deferred taxes on income

Deferred taxes on income

 1,405,290 1,470,934 

Deferred taxes on income

 1,450,797 1,491,789 
           
 

Total liabilities

 15,983,246 13,904,978  

Total liabilities

 14,792,892 15,200,898 
           

Commitments and contingencies (Note 16)

 

Commitments and contingencies

Commitments and contingencies

 

Equity:

Equity:

 

Equity:

 

Hertz Global Holdings Inc. and Subsidiaries stockholders' equity

Hertz Global Holdings Inc. and Subsidiaries stockholders' equity

 

Hertz Global Holdings Inc. and Subsidiaries stockholders' equity

 

Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 412,310,646 and 410,245,225 shares issued and outstanding

 4,123 4,102 

Preferred Stock, $0.01 par value, 200,000,000 shares authorized, no shares issued and outstanding

   

Preferred Stock, $0.01 par value, 200,000,000 shares authorized, no shares issued and outstanding

   

Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 414,938,766 and 413,462,889 shares issued and outstanding

 4,149 4,135 

Additional paid-in capital

 3,170,761 3,141,695 

Additional paid-in capital

 3,184,496 3,183,225 

Accumulated deficit

 (1,081,203) (1,062,318)

Accumulated deficit

 (1,242,975) (1,110,362)

Accumulated other comprehensive income (loss)

 32,094 (3,331)

Accumulated other comprehensive income

 68,873 37,823 
           
 

Total Hertz Global Holdings, Inc. and Subsidiaries stockholders' equity

 2,125,775 2,080,148  

Total Hertz Global Holdings, Inc. and Subsidiaries stockholders' equity

 2,014,543 2,114,821 

Noncontrolling interest

Noncontrolling interest

 17,609 17,293 

Noncontrolling interest

 20,150 16,502 
           
 

Total equity

 2,143,384 2,097,441  

Total equity

 2,034,693 2,131,323 
           
 

Total liabilities and equity

 $18,126,630 $16,002,419  

Total liabilities and equity

 $16,827,585 $17,332,221 
           

The accompanying notes are an integral part of these financial statements.


Table of Contents



HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands of Dollars, except share and per share data)

Unaudited

 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 
 
 2010 2009 2010 2009 

Revenues:

             
 

Car rental

 $1,862,600 $1,724,887 $4,842,154 $4,436,691 
 

Equipment rental

  281,138  280,281  783,815  836,421 
 

Other

  42,566  36,247  100,809  87,673 
          
  

Total revenues

  2,186,304  2,041,415  5,726,778  5,360,785 
          

Expenses:

             
 

Direct operating

  1,157,485  1,118,596  3,245,521  3,062,489 
 

Depreciation of revenue earning equipment

  501,009  499,050  1,416,902  1,468,228 
 

Selling, general and administrative

  168,717  179,778  508,445  488,012 
 

Interest expense

  202,158  169,294  572,129  498,238 
 

Interest and other income, net

  (1,355) (1,066) (10,424) (52,598)
          
  

Total expenses

  2,028,014  1,965,652  5,732,573  5,464,369 
          

Income (loss) before income taxes

  158,290  75,763  (5,795) (103,584)

(Provision) benefit for taxes on income

  3,014  (6,792) (176) 19,873 
          

Net income (loss)

  161,304  68,971  (5,971) (83,711)

Less: Net income attributable to noncontrolling interest

  (4,664) (4,443) (12,915) (11,408)
          

Net income (loss) attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $156,640 $64,528 $(18,886)$(95,119)
          

Weighted average shares outstanding (in thousands)

             
 

Basic

  412,179  407,364  411,590  358,452 
 

Diluted

  430,385  425,171  411,590  358,452 

Earnings (loss) per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders:

             
 

Basic

 $0.38 $0.16 $(0.05)$(0.27)
 

Diluted

 $0.36 $0.15 $(0.05)$(0.27)
 
 Three Months Ended
March 31,
 
 
 2011 2010 

Revenues:

       
 

Car rental

 $1,478,938 $1,396,571 
 

Equipment rental

  268,086  236,971 
 

Other

  32,979  27,346 
      
  

Total revenues

  1,780,003  1,660,888 
      

Expenses:

       
 

Direct operating

  1,073,665  1,012,999 
 

Depreciation of revenue earning equipment and lease charges

  436,089  459,173 
 

Selling, general and administrative

  182,221  167,743 
 

Interest expense

  196,889  181,098 
 

Interest income

  (1,855) (2,278)
 

Other (income) expense, net

  51,876   
      
  

Total expenses

  1,938,885  1,818,735 
      

Loss before income taxes

  (158,882) (157,847)

Benefit for taxes on income

  29,940  11,020 
      

Net loss

  (128,942) (146,827)

Less: Net income attributable to noncontrolling interest

  (3,673) (3,578)
      

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $(132,615)$(150,405)
      

Weighted average shares outstanding (in thousands)

       
 

Basic

  414,065  410,740 
 

Diluted

  414,065  410,740 

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders:

       
 

Basic

 $(0.32)$(0.37)
 

Diluted

 $(0.32)$(0.37)

The accompanying notes are an integral part of these financial statements.


Table of Contents


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of Dollars)

Unaudited



 Nine Months Ended
September 30,
 
 Three Months Ended
March 31,
 


 2010 2009 
 2011 2010 

Cash flows from operating activities:

Cash flows from operating activities:

 

Cash flows from operating activities:

 

Net loss

 $(5,971)$(83,711)

Net loss

 $(128,942)$(146,827)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 
 

Depreciation of revenue earning equipment

 1,416,902 1,468,228  

Depreciation of revenue earning equipment

 412,508 442,671 
 

Depreciation of property and equipment

 116,238 119,712  

Depreciation of property and equipment

 37,695 39,630 
 

Amortization of other intangible assets

 48,990 50,161  

Amortization of other intangible assets

 16,784 16,372 
 

Amortization and write-off of deferred financing costs

 56,722 42,249  

Amortization and write-off of deferred financing costs

 44,598 15,573 
 

Amortization of debt discount

 31,298 26,731  

Amortization and write-off of debt discount

 15,297 12,356 
 

Stock-based compensation charges

 28,011 26,603  

Stock-based compensation charges

 9,078 8,997 
 

Loss on derivatives

 16,406 3,853  

(Gain) loss on derivatives

 (6,917) 9,838 
 

Amortization of cash flow hedges

 56,836 52,227  

Amortization of cash flow hedges

  20,899 
 

Provision for losses on doubtful accounts

 15,203 22,459  

Provision for losses on doubtful accounts

 6,362 5,087 
 

Asset writedowns

 19,523 26,463  

Asset writedowns

 742 676 
 

Deferred taxes on income

 (29,621) 99,922  

Deferred taxes on income

 (26,465) 32,233 
 

Gain on sale of property and equipment

 (2,660) (1,149) 

Gain on sale of property and equipment

 (2,317) (409)

Changes in assets and liabilities, net of effects of acquisition:

 

Changes in assets and liabilities, net of effects of acquisition:

 
 

Receivables

 (97,820) (25,118) 

Receivables

 (26,035) (28,545)
 

Inventories, prepaid expenses and other assets

 (47,604) 2,077  

Inventories, prepaid expenses and other assets

 (48,280) (8,975)
 

Accounts payable

 203,179 (188,137) 

Accounts payable

 28,813 48,868 
 

Accrued liabilities

 (66,724) (195,327) 

Accrued liabilities

 (165,747) (123,112)
 

Accrued taxes

 14,952 (112,994) 

Accrued taxes

 3,934 (56,487)
 

Public liability and property damage

 12,720 (27,047) 

Public liability and property damage

 (5,468) (4,175)
           
 

Net cash provided by operating activities

 1,786,580 1,307,202  

Net cash provided by operating activities

 165,640 284,670 
           

Cash flows from investing activities:

Cash flows from investing activities:

 

Cash flows from investing activities:

 

Net change in restricted cash and cash equivalents

 (378,796) 330,627 

Net change in restricted cash and cash equivalents

 20,611 139,905 

Revenue earning equipment expenditures

 (7,144,387) (5,194,514)

Revenue earning equipment expenditures

 (1,963,814) (2,214,469)

Proceeds from disposal of revenue earning equipment

 5,089,044 4,162,671 

Proceeds from disposal of revenue earning equipment

 1,690,159 1,606,447 

Property and equipment expenditures

 (134,269) (68,970)

Property and equipment expenditures

 (56,770) (51,292)

Proceeds from disposal of property and equipment

 25,459 6,140 

Proceeds from disposal of property and equipment

 14,451 6,683 

Acquisitions, net of cash acquired

 (12,074) (76,212)

Acquisitions, net of cash acquired

 (9,774)  

(Purchase) sale of short-term investments, net

 3,171 (4,169)

Sale of short-term investments, net

  3,360 

Other investing activities

 1,694 652 

Other investing activities

 1,192 341 
           
 

Net cash used in investing activities

 $(2,550,158)$(843,775) 

Net cash used in investing activities

 $(303,945)$(509,025)
           

The accompanying notes are an integral part of these financial statements.


Table of Contents


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Thousands of Dollars)

Unaudited



 Nine Months Ended
September 30,
 
 Three Months Ended
March 31,
 


 2010 2009 
 2011 2010 

Cash flows from financing activities:

Cash flows from financing activities:

 

Cash flows from financing activities:

 

Proceeds from issuance of long-term debt

 $2,133,958 $7,151 

Proceeds from issuance of long-term debt

 $2,429,456 $8,472 

Proceeds from convertible debt offering

  459,483 

Payment of long-term debt

 (3,138,875) (262,593)

Payment of long-term debt

 (2,074,930) (814,099)

Short-term borrowings:

 

Short-term borrowings:

  

Proceeds

 67,155 66,581 
 

Proceeds

 422,896 324,576  

Payments

 (225,302) (79,279)
 

Payments

 (528,333) (272,559) 

Proceeds (payments) under the revolving lines of credit, net

 47,928 347,175 
 

Proceeds (payments) under the revolving lines of credit, net

 1,406,666 (374,846)

Distributions to noncontrolling interest

  (2,975)

Distributions to noncontrolling interest

 (12,600) (11,900)

Proceeds from employee stock purchase plan

 871 610 

Proceeds from sale of common stock

  528,758 

Proceeds from exercise of stock options

 1,728 690 

Proceeds from exercise of stock options

 3,155 4,807 

Proceeds from disgorgement of stockholder short-swing profits

 40 41 

Proceeds from employee stock purchase plan

 1,857 1,846 

Net settlement on vesting of restricted stock

 (10,703) (5,262)

Proceeds from disgorgement of stockholder short-swing profits

 111 15 

Payment of financing costs

 (64,091) (1,311)

Net settlement on vesting of restricted stock

 (5,670)        

Payment of financing costs

 (51,515) (40,888) 

Net cash provided by (used in) financing activities

 (891,793) 72,149 
           
 

Net cash provided by (used in) financing activities

 1,295,595 (187,656)
     

Effect of foreign exchange rate changes on cash and cash equivalents

Effect of foreign exchange rate changes on cash and cash equivalents

 (34,339) 56,680 

Effect of foreign exchange rate changes on cash and cash equivalents

 21,687 (32,687)
           

Net increase in cash and cash equivalents during the period

 497,678 332,451 

Net change in cash and cash equivalents during the period

Net change in cash and cash equivalents during the period

 (1,008,411) (184,893)

Cash and cash equivalents at beginning of period

Cash and cash equivalents at beginning of period

 985,642 594,266 

Cash and cash equivalents at beginning of period

 2,374,170 985,642 
           

Cash and cash equivalents at end of period

Cash and cash equivalents at end of period

 $1,483,320 $926,717 

Cash and cash equivalents at end of period

 $1,365,759 $800,749 
           

Supplemental disclosures of cash flow information:

Supplemental disclosures of cash flow information:

 

Supplemental disclosures of cash flow information:

 

Cash paid during the period for:

 

Cash paid during the period for:

Cash paid during the period for:

 
 

Interest (net of amounts capitalized)

 $448,871 $556,932 

Interest (net of amounts capitalized)

 $205,812 $173,247 
 

Income taxes

 41,451 20,721 

Income taxes

 11,555 24,564 

Supplemental disclosures of non-cash flow information:

Supplemental disclosures of non-cash flow information:

 

Supplemental disclosures of non-cash flow information:

 
 

Purchases of revenue earning equipment included in accounts payable and accrued liabilities

 $439,218 $207,720 

Purchases of revenue earning equipment included in accounts payable and accrued liabilities

 $487,921 $709,052 
 

Sales of revenue earning equipment included in receivables

 755,097 358,013 

Sales of revenue earning equipment included in receivables

 387,620 632,336 
 

Purchases of property and equipment included in accounts payable

 26,251 12,629 

Purchases of property and equipment included in accounts payable

 38,782 26,164 
 

Sales of property and equipment included in receivables

 8,352 8,741 

Sales of property and equipment included in receivables

 6,760 6,271 

The accompanying notes are an integral part of these financial statements.


Table of Contents


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1—Background and Liquidity

Background

Hertz Global Holdings, Inc., or "Hertz Holdings," is our top-level holding company. The Hertz Corporation, or "Hertz," is our primary operating company and a direct wholly-owned subsidiary of Hertz Investors, Inc., which is wholly-owned by Hertz Holdings. "We," "us" and "our" mean Hertz Holdings and its consolidated subsidiaries, including Hertz.

We are a successor to corporations that have been engaged in the car and truck rental and leasing business since 1918 and the equipment rental business since 1965. Hertz was incorporated in Delaware in 1967. Ford Motor Company, or "Ford," acquired an ownership interest in Hertz in 1987. Prior to this, Hertz was a subsidiary of UAL CorporationUnited Continental Holdings, Inc. (formerly Allegis Corporation), which acquired Hertz's outstanding capital stock from RCA Corporation in 1985. Hertz Holdings was incorporated in Delaware in 2005 and had no operations prior to the Acquisition (as defined below).

On December 21, 2005, investment funds associated with or designated by:

or collectively the "Sponsors," acquired all of Hertz's common stock from Ford Holdings LLC. We refer to the acquisition of all of Hertz's common stock by the Sponsors as the "Acquisition." Following

In March 2011, the Sponsors sold 50,000,000 shares of their Hertz Holdings common stock to Goldman, Sachs & Co. as the sole underwriter in the registered public offering of those shares.

As a result of our initial public offering in November 2006 and subsequent offerings in June 2007, May 2009, and June 2009 and March 2011, the Sponsors currently ownreduced their holdings to approximately 51%39% of the outstanding shares of common stock of Hertz Holdings.

In January 2009, Bank of America Corporation, or "Bank of America," acquired Merrill Lynch & Co., Inc., the parent company of MLGPE.BAMLCP. Accordingly, Bank of America is now an indirect beneficial owner of our common stock held by MLGPEBAMLCP and certain of its affiliates.

Liquidity

Our primary liquidity needs include servicing of corporate and fleet related debt, the payment of operating expenses and purchases of rental vehicles and equipment to be used in our operations. Our primary sources of funding are operating revenue, cash received on the disposal of vehicles and equipment, borrowings under our asset-backed borrowing arrangements and our revolving credit facilities.

As of September 30, 2010, we had $12,046.9 million of total indebtedness outstanding. Accordingly, we are highly leveraged and a substantial portion of our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations and capital expenditures.

Our liquidity as of September 30, 2010 consisted of cash and cash equivalents, unused commitments under our Senior ABL Facility and unused commitments under our fleet financing facilities. For a description of these amounts, see Note 8—Debt.

Based on our current availability under our various credit facilities and our business plan, we believe we have sufficient liquidity to meet our debt maturities over the next twelve months. See Note 8—Debt.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

For a description of 2010 financing activities, see Note 8—Debt.

As of September 30, 2010, we have approximately $217.7 million of remaining international fleet debt outstanding that matures in December 2010. We are currently in discussions regarding our remaining refinancing options, and based on these discussions and our ability to access the capital markets, we expect to refinance the remaining debt maturing in December 2010 on or prior to maturity. In the event financing is not available or is not available on terms we deem acceptable, we would expect to utilize our corporate liquidity (availability under corporate debt facilities plus unrestricted cash) to repay these obligations.

The agreements governing our corporate indebtedness require us to comply with two key covenants based on a consolidated leverage ratio and a consolidated interest expense coverage ratio. Our failure to comply with the obligations contained in any agreements governing our indebtedness could result in an event of default under the applicable instrument, which could result in the related debt becoming immediately due and payable and could further result in a cross default or cross acceleration of our debt issued under other instruments. As of September 30, 2010, we were in compliance with all of these financial covenants.

MBIA Insurance Corporation, or "MBIA," and Ambac Assurance Corporation, or "Ambac," provide credit enhancements in the form of financial guarantees for our Series 2005-1 and 2005-2 Rental Car Asset-Backed Notes, or the "2005 Notes," with each providing guarantees for approximately half of the $875.0 million in principal amount of the 2005 Notes that was outstanding as of September 30, 2010, all of which matures during 2010.

An event of bankruptcy with respect to MBIA or Ambac between now and the maturities of the 2005 Notes in 2010 would result in an amortization event under the portion of the 2005 Notes guaranteed by the affected insurer. In addition, if an amortization event continues for 30 days or longer, the noteholders of the affected series of notes would have the right to require liquidation of a portion of the fleet sufficient to repay such notes, provided that the exercise of the right was exercised by a majority of the affected noteholders. Ambac has publicly stated that it has insufficient capital to finance its debt service and operating expense requirements beyond the second quarter of 2011 and may need to seek bankruptcy protection. Accordingly, if a bankruptcy of MBIA or Ambac were to occur prior to the 2005 Notes maturing, we expect that we would use our corporate liquidity and the borrowings under or proceeds from these recent financings to pay down the amounts owed under the affected series of 2005 Notes. The Series 2009-1 Notes, Series 2009-2 Notes, Series 2009-2 Class B Notes or the Series 2010-1 Notes are not guaranteed.

Note 2—Basis of Presentation

The significant accounting policies summarized in Note 12 to our audited consolidated financial statements contained in our Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2009,2010, filed with the United States Securities and Exchange Commission, or "SEC," on February 26, 2010 and March 1, 2010, respectively,25, 2011, or collectively known as our "Annual Report,the "Form 10-K," have been followed in preparing the accompanying condensed consolidated financial statements.

The preparation ofDecember 31, 2010 condensed consolidated balance sheet data was derived from our audited financial statements, in conformity withbut does not include all disclosures required by accounting principles generally accepted in the United States of America, or "GAAP,"GAAP."

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

The December 31, 2009 condensed consolidated balance sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP.

In our opinion, all adjustments necessary for a fair statement of the results of operations for the interim periods have been made. Results for interim periods are not necessarily indicative of results for a full year.

Certain prior period amounts have been reclassified to conform with current reporting.

Note 3—Recent Accounting Pronouncements

In June 2009,There have been no new accounting pronouncements issued or changes to existing guidance during the Financial Accounting Standards Board issued guidance, which contains amendments to Accounting Standards Codification 810, "Consolidation," relating to how a company determines when an entitythree months ended March 31, 2011 that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of the entity that most significantly impact the entity's economic performance. These provisions became effective for us on January 1, 2010, but did notwould have a material impact on our financial position or results of operations.

For the three months ended March 31, 2010, we have revised net cash provided by operating activities and net cash used in investing activities within our consolidated statement of cash flows due to a gross-up of cash lease payments relating to our revenue earning equipment in the non-cash add back previously included in depreciation of revenue earning equipment and proceeds from disposal of revenue earning equipment.

Note 4—3—Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

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 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. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, the portion of total restricted cash and cash equivalents that was associated with our Fleet Debt facilities was $663.4$110.2 million and $295.0$115.6 million, respectively. The increasedecrease in restricted cash and cash equivalents associated with our Fleet Debtfleet debt of $368.4$5.4 million from December 31, 20092010 to September 30, 2010,March 31, 2011 was primarily related to payments to reduce fleet debt and the timing of purchases and sales of revenue earning vehicles.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

Note 5—4—Goodwill and Other Intangible Assets

The following summarizes the changes in our goodwill, by segment for the periods presented (in millions of dollars):

 
 Car Rental Equipment
Rental
 Total 

Balance as of January 1, 2010

          
 

Goodwill

 $335.8 $654.5 $990.3 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

  292.8  2.6  295.4 
        
 

Goodwill acquired during the period

  
  
0.8
  
0.8
 
 

Other changes during the period(1)

  (0.4)   (0.4)
        

Balance as of September 30, 2010

          
 

Goodwill

  335.4  655.3  990.7 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

 $292.4 $3.4 $295.8 
        
 
 Car Rental Equipment
Rental
 Total 

Balance as of January 1, 2011

          
 

Goodwill

 $336.4 $658.7 $995.1 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

  293.4  6.8  300.2 
        
 

Goodwill acquired during the period

  
5.0
  
  
5.0
 
 

Adjustments to previously recorded purchase price allocation

  (0.9) 1.4  0.5 
 

Other changes during the period(1)

  3.6  0.2  3.8 
        

  7.7  1.6  9.3 

Balance as of March 31, 2011

          
 

Goodwill

  344.1  660.3  1,004.4 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

 $301.1 $8.4 $309.5 
        

 

 
 Car Rental Equipment
Rental
 Total 

Balance as of January 1, 2009

          
 

Goodwill

 $307.1 $651.9 $959.0 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

  264.1    264.1 
        
 

Goodwill acquired during the year

  
24.0
  
2.4
  
26.4
 
 

Other changes during the year(1)

  4.7  0.2  4.9 
        

Balance as of December 31, 2009

          
 

Goodwill

  335.8  654.5  990.3 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

 $292.8 $2.6 $295.4 
        
 
 Car Rental Equipment
Rental
 Total 

Balance as of January 1, 2010

          
 

Goodwill

 $335.8 $654.5 $990.3 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

  292.8  2.6  295.4 
        
 

Goodwill acquired during the year

  
2.7
  
4.3
  
7.0
 
 

Other changes during the year(1)

  (2.1) (0.1) (2.2)
        

  0.6  4.2  4.8 

Balance as of December 31, 2010

          
 

Goodwill

  336.4  658.7  995.1 
 

Accumulated impairment losses

  (43.0) (651.9) (694.9)
        

 $293.4 $6.8 $300.2 
        

(1)
Primarily consists of changes resulting from the translation of foreign currencies at different exchange rates from the beginning of the period to the end of the period.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

Other intangible assets, net, consisted of the following major classes (in millions of dollars):



 September 30, 2010 
 March 31, 2011 


 Gross
Carrying
Amount
 Accumulated
Amortization
 Net
Carrying
Value
 
 Gross
Carrying
Amount
 Accumulated
Amortization
 Net
Carrying
Value
 

Amortizable intangible assets:

Amortizable intangible assets:

 

Amortizable intangible assets:

 

Customer-related

 $601.6 $(290.1)$311.5 

Customer-related

 $606.6 $(319.3)$287.3 

Other(1)

 52.5 (17.3) 35.2 

Other(1)

 60.8 (20.7) 40.1 
               
 

Total

 654.1 (307.4) 346.7  

Total

 667.4 (340.0) 327.4 
               

Indefinite-lived intangible assets:

Indefinite-lived intangible assets:

 

Indefinite-lived intangible assets:

 

Trade name

 2,190.0  2,190.0 

Trade name

 2,190.0  2,190.0 

Other(2)

 18.2  18.2 

Other(2)

 18.2  18.2 
               
 

Total

 2,208.2  2,208.2  

Total

 2,208.2  2,208.2 
               
 

Total other intangible assets, net

 $2,862.3 $(307.4)$2,554.9  

Total other intangible assets, net

 $2,875.6 $(340.0)$2,535.6 
               

 



 December 31, 2009 
 December 31, 2010 


 Gross
Carrying
Amount
 Accumulated
Amortization
 Net
Carrying
Value
 
 Gross
Carrying
Amount
 Accumulated
Amortization
 Net
Carrying
Value
 

Amortizable intangible assets:

Amortizable intangible assets:

 

Amortizable intangible assets:

 

Customer-related

 $600.6 $(246.5)$354.1 

Customer-related

 $606.5 $(304.6)$301.9 

Other(1)

 50.0 (12.0) 38.0 

Other(1)

 59.1 (18.6) 40.5 
               
 

Total

 650.6 (258.5) 392.1  

Total

 665.6 (323.2) 342.4 
               

Indefinite-lived intangible assets:

Indefinite-lived intangible assets:

 

Indefinite-lived intangible assets:

 

Trade name

 2,190.0  2,190.0 

Trade name

 2,190.0  2,190.0 

Other(2)

 15.6  15.6 

Other(2)

 18.2  18.2 
               
 

Total

 2,205.6  2,205.6  

Total

 2,208.2  2,208.2 
               
 

Total other intangible assets, net

 $2,856.2 $(258.5)$2,597.7  

Total other intangible assets, net

 $2,873.8 $(323.2)$2,550.6 
               

(1)
Other amortizable intangible assets primarily consist of our Advantage trade name and concession rights, reacquired franchise rights, non-compete agreements and technology-related intangibles.

(2)
Other indefinite-lived intangible assets primarily consist of reacquired franchise rights.

Amortization of other intangible assets for the three months ended September 30,March 31, 2011 and 2010, and 2009, was approximately $16.3$16.8 million and $17.0 million, respectively, and for the nine months ended September 30, 2010 and 2009, was approximately $49.0 million and $50.1$16.4 million, respectively. Based on our amortizable intangible assets as of September 30, 2010,March 31, 2011, we expect amortization expense to be approximately $16.2$49.4 million for the remainder of 20102011, $64.9 million in 2012, $63.6 million in 2013, $60.7 million in 2014, $59.5 million in 2015 and range from $58.2$13.2 million to $64.5 million for each of the next five fiscal years.in 2016.

During the ninethree months ended September 30, 2010,March 31, 2011, we added eight international car rental locations by acquiring former franchiseesfrom an external acquisition. This transaction has been accounted for using the acquisition method of accounting in accordance with GAAP and operating results of the acquired locations from the date of acquisition are included in our domestic car rental operationsconsolidated statement of operations. The allocation of the purchase price to the tangible and four equipment rental locations related to external acquisitions done within our equipment rental operations. Total intangible net assets acquired during the nine months ended September 30, 2010 was $6.6 million, of which $4.0 millionis preliminary and $2.6 million was allocatedsubject to amortizable intangible assets and indefinite-lived intangible assets,finalization. This


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited


respectively. Eachacquisition is not material to the consolidated amounts presented within our statement of these transactions has been accountedoperations for using the acquisition method of accounting in accordance with GAAP and operating results of the acquired locations from the dates of acquisition are included in our Consolidated Statements of Operations.three months ended March 31, 2011.

Note 6—5—Taxes on Income

The effective tax rate for the three and nine months ended September 30,March 31, 2011 and 2010 was (1.9)%18.8% and (3.0)%, respectively. The effective tax rate for the three and nine months ended September 30, 2009 was 9.0% and 19.2%7.0%, respectively. The benefit for taxes on income was $3.0of $30.0 million in the three months ended September 30, 2010, compared to a provision for taxes on income of $6.9March 31, 2011 increased from $11.0 million in the three months ended September 30, 2009. The change wasMarch 31, 2010, primarily due to thechanges in geographic earnings mix of income before income taxesand changes in various taxinglosses in certain non-U.S. jurisdictions and discretefor which tax benefits recorded in the three months ended September 30, 2010 compared to the three months ended September 30, 2009. The provision for taxes on income was $0.2 million in the nine months ended September 30, 2010, compared to a benefit for taxes on income of $19.9 million in the nine months ended September 30, 2009. The year-over-year increase in tax expense was primarily due to a lower loss before income taxes and a reduction in discrete benefits in the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009.cannot be realized.

Note 7—6—Depreciation of Revenue Earning Equipment and Lease Charges

Depreciation of revenue earning equipment and lease charges includes the following (in millions of dollars):

 
 Three Months Ended
September 30,
 
 
 2010 2009 

Depreciation of revenue earning equipment

 $471.3 $480.3 

Adjustment of depreciation upon disposal

  10.6  0.8 

Rents paid for vehicles leased

  19.1  18.0 
      
 

Total

 $501.0 $499.1 
      




 Nine Months Ended
September 30,
 
 Three Months Ended
March 31,
 


 2010 2009 
 2011 2010 

Depreciation of revenue earning equipment

Depreciation of revenue earning equipment

 $1,332.8 $1,350.5 

Depreciation of revenue earning equipment

 $418.7 $427.9 

Adjustment of depreciation upon disposal

 38.0 64.5 

Adjustment of depreciation upon disposal of revenue earning equipment

Adjustment of depreciation upon disposal of revenue earning equipment

 (6.2) 14.8 

Rents paid for vehicles leased

Rents paid for vehicles leased

 46.1 53.2 

Rents paid for vehicles leased

 23.6 16.5 
           

Total

 $1,416.9 $1,468.2 

Total

 $436.1 $459.2 
           

The adjustment of depreciation upon disposal of revenue earning equipment for the three months ended September 30,March 31, 2011 and 2010, included a net gain of $6.1 million and 2009, included a net loss of $7.1 million and a net gain of $2.5$11.2 million, respectively, on the disposal of vehicles used in our car rental operations and a net lossesgain of $3.5$0.1 million and $3.3a net loss of $3.6 million, respectively, on the disposal of industrial and construction equipment used in our equipment rental operations. The adjustment of depreciation upon disposal of revenue earning equipment for the nine months ended September 30, 2010 and 2009, included net losses of $27.6 million and $24.2 million, respectively, on the disposal of vehicles used in our car rental operations and net losses of $10.4 million and $40.3 million, respectively, on the disposal of industrial and construction equipment used in our equipment rental operations.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

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 ninethree months ended September 30, 2010,March 31, 2011, 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 resulted in a net increasesdecrease of $5.7 million and $16.6$0.6 million in depreciation expense for the three and nine months ended September 30, 2010, respectively.March 31, 2011. During the ninethree months ended September 30, 2010,March 31, 2011, depreciation rate changes in certain of our equipment rental operations resulted in a net increasesdecrease of $2.7$1.0 million in depreciation expense.

For the three months ended September 30,March 31, 2011 and 2010, and 2009, our worldwide car rental operations sold approximately 41,60030,600 and 45,20042,300 non-program cars, respectively, an 8.0% year-over-yeara 27.7% year over year decrease primarily due to an increase in rental demand which required us to maintain our fleet size. For the nine months ended September 30, 2010 and 2009, our worldwide car rental operations sold approximately 126,900 and 113,000 non-program cars, respectively, a 12.3% year-over-year increase primarily due to a higher average fleet size.demand.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

Note 8—7—Debt

Our debt consists of the following (in millions of dollars):

 
 September 30,
2010
 December 31,
2009
 

Corporate Debt

       

Senior Term Facility, average interest rate: 2010, 2.0%; 2009, 2.0% (effective average interest rate: 2010, 2.0%; 2009, 2.0%); net of unamortized discount: 2010, $10.4; 2009, $13.9

 $1,338.0 $1,344.7 

Senior ABL Facility; net of unamortized discount: 2010, $6.2; 2009, $9.6

  (6.2) (9.6)

Senior Notes, average interest rate: 2010, 8.7%; 2009, 8.7%

  2,037.3  2,054.7 

2010 Senior Notes, average interest rate: 2010, 7.5%

  700.0   

Senior Subordinated Notes, average interest rate: 2010, 10.5%; 2009, 10.5%

  518.5  518.5 

Promissory Notes, average interest rate: 2010, 7.5%; 2009, 7.3% (effective average interest rate: 2010, 7.5%; 2009, 7.4%); net of unamortized discount: 2010, $2.8; 2009, $3.3

  342.8  391.4 

Convertible Senior Notes, average interest rate: 2010, 5.25%; 2009, 5.25%; (effective average interest rate: 2010, 6.5%; 2009, 6.8%); net of unamortized discount: 2010, $92.9; 2009, $107.3

  381.9  367.4 

Other borrowings, average interest rate: 2010, 4.8%; 2009, 7.6%

  22.4  22.3 
      
  

Total Corporate Debt

  5,334.7  4,689.4 
      

Fleet Debt

       

U.S. Fleet Debt, average interest rate: 2010, 4.0%; 2009, 4.7% (effective average interest rate: 2010, 4.0%; 2009, 4.7%); net of unamortized discount: 2010, $13.4; 2009, $16.7

  4,588.7  4,058.3 

International Fleet Debt(1), average interest rate: 2009, 2.1% (effective average interest rate: 2009, 2.2%); net of unamortized discount: 2009, $8.7

    705.3 

International ABS Fleet Financing Facility, average interest rate: 2010, 4.5%; 2009, 3.6%; (effective average interest rate: 2010, 4.5%; 2009, 3.6%); net of unamortized discount: 2010, $0.2; 2009, $5.7

  130.8  383.2 

European Securitization, average interest rate: 2010, 4.5%; (effective average interest rate: 4.5%); net of unamortized discount: 2010, $1.2

  401.1   

Fleet Financing Facility, average interest rate: 2010, 1.5%; 2009, 1.5% (effective average interest rate: 2010, 1.5%; 2009, 1.5%); net of unamortized discount: 2010, $0.4; 2009, $0.8

  162.6  147.2 

Brazilian Fleet Financing Facility, average interest rate: 2010, 11.3%; 2009, 13.3%

  86.9  69.3 

Canadian Fleet Financing Facility, average interest rate: 2010, 1.0%; 2009, 0.5%

  117.0  55.6 

Belgian Fleet Financing Facility(1), average interest rate: 2009, 1.8%

    33.7 

Capitalized Leases, average interest rate: 2010, 4.0%; 2009, 4.8%

  386.3  222.4 

Euro Notes(1), average interest rate: 2010, 8.5% (effective average interest rate: 2010, 8.5%); net of unamortized discount: 2010, $2.7

  540.7   

European Credit Facility(1), average interest rate: 2010, 4.4%

  298.1   
      
  

Total Fleet Debt

  6,712.2  5,675.0 
      
 

Total Debt

 $12,046.9 $10,364.4 
      
Facility
 Average
Interest
Rate at
March 31,
2011(1)
 Fixed or
Floating
Interest
Rate
 Maturity March 31,
2011
 December 31,
2010
 

Corporate Debt

              
 

Senior Term Facility(2)

  3.75%Floating 3/2018 $1,400.0 $1,345.0 
 

Senior ABL Facility(2)

  N/A Floating 3/2016     
 

Senior Notes(3)

  7.56%Fixed 1/2014–1/2021  3,143.6  3,229.6 
 

Senior Subordinated Notes

  10.50%Fixed 1/2016    518.5 
 

Promissory Notes

  7.48%Fixed 6/2012–1/2028  224.7  345.6 
 

Convertible Senior Notes

  5.25%Fixed 6/2014  474.8  474.8 
 

Other Corporate Debt

  4.26%Floating Various  42.2  22.0 
 

Unamortized Net (Discount) Premium (Corporate)(4)

         (83.1) (104.8)
             

Total Corporate Debt

         5,202.2  5,830.7 
             

Fleet Debt

              

U.S. ABS Program

              
 

U.S. Fleet Variable Funding Notes:

              
  

Series 2009-1(5)

  1.27%Floating 3/2013  1,538.0  1,488.0 
  

Series 2010-2(5)

  1.30%Floating 3/2013  145.0  35.0 
 

U.S. Fleet Medium Term Notes

              
  

Series 2009-2 Notes(5)

  4.95%Fixed 3/2013–3/2015  1,384.3  1,384.3 
  

Series 2010-1 Notes(5)

  3.77%Fixed 2/2014–2/2018  749.8  749.8 

Other Fleet Debt

              
 

U.S. Fleet Financing Facility

  1.50%Floating 12/2011  163.0  163.0 
 

European Revolving Credit Facility

  4.58%Floating 6/2013  155.3  168.6 
 

European Fleet Notes

  8.50%Fixed 7/2015  564.5  529.0 
 

European Securitization(5)

  4.18%Floating 7/2012  202.8  236.9 
 

Canadian Securitization(5)

  1.19%Floating 11/2011  82.6  80.4 
 

Australian Securitization(5)

  6.29%Floating 12/2012  170.8  183.2 
 

Brazilian Fleet Financing Facility

  13.52%Floating 7/2011  18.6  77.8 
 

Capitalized Leases

  4.92%Floating 4/2011–2/2013  389.8  398.1 
 

Unamortized Discount (Fleet)

         (16.7) (18.4)
             

Total Fleet Debt

         5,547.8  5,475.7 
             

Total Debt

        $10,750.0 $11,306.4 
             

Note:
For further information on the definitions and terms of our debt, see Note 34 of the Notes to our audited annual consolidated financial statements included in our Form 10-K under the caption "Item 8—Financial Statements and Supplementary Data" and Note 1—Background and Liquidity of this Form 10-Q, or this "Report.Data."

(1)
The International Fleet Debt and Belgian Fleet Financing FacilityAs applicable, reference is to the March 31, 2011 weighted average interest rate (weighted by principal balance).

(2)
December 31, 2010 balance refers to the former facilities which were refinanced in the three months ended June 30, 2010 with the proceeds of the Euro Notes and the European Credit Facility.on March 11, 2011, see "First Quarter Events," below.

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(3)
References to our "Senior Notes" include the series of Hertz's unsecured senior notes set forth in the table below. As of March 31, 2011, the outstanding principal amount for each such series of the Senior Notes is also specified below.

Senior Notes
Outstanding Principal
8.875% Senior Notes due January 2014$642.3 million
7.875% Senior Notes due January 2014$301.3 million (€213.5 million)
7.50% Senior Notes due October 2018$700 million
7.375% Senior Notes due January 2021$500 million
6.75% Senior Notes due April 2019$1,000 million
(4)
As of March 31, 2011 and December 31, 2010, $82.3 million and $87.7 million, respectively, of the unamortized corporate discount relates to the 5.25% Convertible Senior Notes.

(5)
Maturity reference is to the "expected final maturity date" as opposed to the subsequent "legal maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness expect the relevant indebtedness to be repaid. The legal final maturity date is the date on which the relevant indebtedness is legally due and payable.

Maturities

The aggregate amounts of maturities of debt for each of the twelve-month periods ending September 30March 31 (in millions of dollars) are as follows: 2011, $4,191.0 (including $3,190.2

2012 $3,859.3 (including $3,356.1 of other short-term borrowings)
2013 $773.9
2014 $743.9
2015 $842.7
2016 $953.4
After 2016 $3,676.6

We are highly leveraged and a substantial portion of other short-term borrowings); 2012, $179.6; 2013, $1,969.3; 2014, $2,749.6; 2015, $1,413.5; after 2015, $1,674.1.our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations and capital expenditures. We believe that cash generated from operations, together with amounts available under various liquidity facilities will be adequate to permit us to meet our debt maturities over the next twelve months.

Our short-term borrowings of $3,190.2 million as of September 30, 2010March 31, 2011 include, among other items, the amounts outstanding under our International ABS Fleet Financing Facility,the European Securitization, Australian Securitization, U.S. Fleet Financing Facility, Brazilian Fleet Financing Facility, Canadian Fleet Financing Facility,Securitization, Capitalized Leases and European Revolving Credit Facility. These amounts are consideredreflected as short-term in nature since they haveborrowings, regardless of the facility maturity dates of three months or less; howeverdate, as these facilities are revolving in nature and/or the outstanding borrowings have maturities of three months or less. Short-term borrowings also include the Convertible Senior Notes which became convertible on January 1, 2011 and do not expire at the timeremain as such through June 30, 2011. As of March 31, 2011, short-term borrowings had a weighted average interest rate of 3.0%.

In March 2011, Hertz issued an additional $500 million aggregate principal of the short-term debt maturity except for our International ABS Fleet Financing Facility and Brazilian Fleet Financing Facility6.75% Senior Notes due 2019 in a private offering, the proceeds of which maturewere used in December 2010.April 2011 to redeem $480 million principal amount of its outstanding 8.875% Senior Notes due 2014. The redeemed portion of the 8.875% Senior Notes has been included in the 2012 maturities in the table above.

Letters of Credit

As of September 30, 2010,March 31, 2011, there were outstanding standby letters of credit totaling $678.0$516.9 million. Of this amount, $423.5$467.6 million has been issued for the benefit of certain of our noteholders of our various asset-backed securities, or "ABS," facilities, or our "ABS Program," ($200.0 million of which was issued by Ford and $223.5 million of which was issued under the Senior Credit Facilities)Facilities ($226.6 million of which was issued for the benefit of the ABS Program) and the remainder is primarily to support self-insurance programs (including insurance policies with respect to which we have indemnified the policy issuers for any losses) in the United States, Canada and Europe and to support airport concession obligations in the United States, Canada and Europe. In November 2010, the "Ford" letter of credit by its terms will expire in conjunction with the maturity of the 2005 Notes.

U.S. Fleet Debt

In June 2010, Hertz Vehicle Financing, LLC, or "HVF," our wholly-owned subsidiary, issued $184.3 million in aggregate principal amount of 3-year and 5-year Subordinated Series 2009-2 Rental Car Asset Backed Notes, Class B, or the "Series 2009-2 Class B Notes." The 3-year notes carry a 4.94% coupon (5.00% yield at issuance) and the 5-year notes carry a 5.93% coupon (6.01% yield at issuance) with expected final maturities in 2013 and 2015, respectively. The net proceeds of the offering were used to purchase vehicles under our ABS Program, used to pay other ABS indebtedness or distributed to Hertz and used for general corporate purposes. The Series 2009-2 Class B Notes are included in U.S. Fleet Debt. As of September 30, 2010, $184.3 million in borrowings were outstanding under the Series 2009-2 Class B Notes.

Euro Notes and European Credit Facility

In June 2010, Hertz issued EUR 400 million (the equivalent of $543.4 million as of September 30, 2010) aggregate principal amount of 8.5% Senior Secured Notes due 2015, or the "Euro Notes," and entered into a EUR 220 million (the equivalent of $298.9 million) revolving credit facility that matures in 2013, or the "European Credit Facility." The net proceeds of the Euro Notes and European Credit Facility were used to refinance our International Fleet Debt and Belgian Fleet Financing Facility, both of which were due to mature in December 2010, and the excess was used for general corporate purposes. The Euro Notes and the European Credit Facility are the primary fleet financing for our rental car operations in Germany, Italy, Spain, Belgium, Luxembourg and Switzerland. The Euro Notes and the European Credit Facility are guaranteed on a senior unsecured basis by Hertz and certain U.S. subsidiaries of Hertz and on a senior secured basis by certain non-U.S. subsidiaries of Hertz.


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(including insurance policies with respect to which we have agreed to indemnify the policy issuers for any losses) as well as airport concession obligations in the United States, Canada and Europe. As of March 31, 2011, none of these letters of credit have been drawn upon.

ThirdFirst Quarter Events

On January 1, 2011, our Convertible Senior Notes became convertible. This conversion right was triggered because our closing common stock price per share exceeded $10.77 for at least 20 trading days during the 30 consecutive trading day period ending on December 31, 2010. Since this same trigger was met in the first quarter of 2011, the Convertible Senior Notes continue to be convertible through June 30, 2011, and may be convertible thereafter, if one or more of the conversion conditions specified in the indenture is satisfied during future measurement periods. Our policy has been and continues to be to settle conversions of Convertible Senior Notes using a combination of cash and our common stock, which calls for settling the fixed dollar amount per $1,000 in principal amount in cash and settling in shares the excess conversion, if any.

In JulyJanuary 2011, Hertz redeemed in full its outstanding ($518.5 million principal amount) 10.5% Senior Subordinated Notes due 2016 which resulted in premiums paid of $27.2 million and the write-off of unamortized debt costs of $8.6 million. In January and February 2011, Hertz redeemed $1,105 million principal amount of its outstanding 8.875% Senior Notes due 2014 which resulted in premiums paid of $24.5 million and the write-off of unamortized debt costs of $14.4 million. Hertz used the proceeds from the September 2010 issuance of $700 million aggregate principal amount of 7.50% Senior Notes, the December 2010 issuance of $500 million aggregate principal amount of 7.375% Senior Notes and the February 2011 issuance of $500 million aggregate principal amount of 6.75% Senior Notes (see below) for these redemptions. Total premiums paid during the three months ended March 31, 2011, of $51.7 million are recorded in "Other (income) expense, net" on our consolidated statement of operations.

In February 2011, Hertz entered intoissued $500 million aggregate principal amount of 6.75% Senior Notes due 2019. The 6.75% Senior Notes are guaranteed on a EUR 400senior unsecured basis by the domestic subsidiaries of Hertz that guarantee its Senior Credit Facilities.

In February 2011, Hertz used existing corporate liquidity to pay off the maturing amount of the Brazilian Fleet Financing Facility.

In March 2011, Hertz issued an additional $500 million (the equivalentaggregate principal of $543.4 million as of September 30, 2010) asset-backed securitization facility, or "European Securitization," which maturesthe 6.75% Senior Notes due 2019 in 2012, thea private offering. The proceeds of which were used in April 2011 to refinance the portion of our existing International ABS Fleet Financing Facility relating to France and the Netherlands, which was due to mature in December 2010.

In addition, in July 2010, HVF issued approximately $750redeem $480 million in aggregate principal amount of 3-year, 5-yearits outstanding 8.875% Senior Notes due 2014. See Note 17—Subsequent Events.

In March 2011, Hertz refinanced its 2005 Senior Term Facility and 7-year Series 2010-1 Rental Car Asset Backed Notes, or the "Series 2010-1 Notes." The 3-year, 5-year and 7-year notes have expected final maturities in 2014, 2016 and 2018, respectively. The net proceeds2005 Senior ABL Facility. A description of the offering were used to purchase vehicles undernew Senior Term Facility and Senior ABL Facility is set forth below. During the ABS Programthree months ended March 31, 2011, we recorded an expense of HVF, to pay other ABS indebtedness or distributed to Hertz and used for general corporate purposes. As of September 30, 2010, $749.6$9.3 million in borrowings were outstanding under"Interest expense" on our consolidated statement of operations associated with the Series 2010-1 Notes. The Series 2010-1 Notes are included as partwrite-off of debt costs in connection with the refinancing of our U.S. Fleet Debt.

In September 2010, Hertz entered into amendments2005 Senior Term Facility and 2005 Senior ABL Facility. Additionally, a portion of the unamortized debt costs associated with the 2005 Senior Term Facility and 2005 Senior ABL Facility are continuing to itsbe amortized over the terms of the new Senior Term Facility and Senior ABL Facility. The amendments provide, among other things, for additional capacity underdetermination of whether these costs were expensed or further deferred was dependent upon whether the covenants interms of the old and new instruments were considered to be substantially different. In regards to the Senior Term Facility, the determination as to whether the 2005 Senior Term Facility and the new Senior ABLTerm Facility


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Unaudited


were considered to be substantially different was made on a lender by lender basis using the "net method" which compares the cash flows related to the lowest common principal balance between the old and new instruments.

In March 2011, Hertz entered into a credit agreement that provides a $1,400.0 million secured term loan facility (as amended, the "Senior Term Facility"). In addition, the Senior Term Facility includes a pre-funded synthetic letter of credit facility in an aggregate principal amount of $200.0 million. Subject to the satisfaction of certain conditions and limitations, the Senior Term Facility allows for the addition of incremental term and/or revolving loans. Hertz used approximately $1,345.0 million of borrowings under the Senior Term Facility to incur refinancingrefinance indebtedness under the 2005 Senior Term Facility. We reflected this transaction on a gross basis in our Consolidated Statement of Cash Flows in "Proceeds from issuance of long-term debt" and acquisition indebtedness. The amendment"Payment of long-term debt." During the three months ended March 31, 2011, we recorded financing costs of $6.6 million in "Interest expense" on our consolidated statement of operations associated with the new Senior Term Facility.

In March 2011, Hertz, Hertz Equipment Rental Corporation and certain other of our subsidiaries entered into a credit agreement that provides for aggregate maximum borrowings of $1,800.0 million (subject to borrowing base availability) on a revolving basis under an asset-based revolving credit facility (as amended, the "Senior ABL Facility"). Up to $1,500.0 million of the Senior ABL Facility increasesis available for the overall letterissuance of letters of credit sublimitsubject to certain conditions including issuing lender participation. Subject to the satisfaction of certain conditions and limitations, the Senior ABL Facility allows for Australian dollar denominated lettersthe addition of credit.incremental revolving and/or term loan commitments. In addition, the Senior ABL Facility permits Hertz to increase the amount of commitments under the Senior ABL with the consent of each lender providing an additional commitment, subject to satisfaction of certain conditions.

In addition, in September 2010,March 2011, Hertz issued $700 million aggregate principal amount of 7.5% Senior Notes due 2018, or "2010 Senior Notes." The net proceeds ofamended the offerings were used for general corporate purposes, including repayment of consolidated indebtedness.Canadian Securitization to extend the maturity date from May 2011 to November 2011.

Registration Rights

Pursuant to the terms of aexchange and registration rights agreementagreements entered into in connection with the issuanceseparate issuances of the 20107.5% Senior Notes due 2018, the 7.375% Senior Notes due 2021 and the 6.75% Senior Notes due 2019, Hertz has agreed to file a registration statement under the Securities Act of 1933, as amended, to permit either the exchange of the 2010 Senior Notessuch notes for registered notes having terms substantially identical to the 2010 Senior Notes or, in the alternative, the registered resale of the 2010 Senior Notes.such notes. Hertz's failure to meet its obligations under the exchange and registration rights agreement,agreements, including by failing to have the respective registration statement become or declared effective by September 30, 2011a specified date or failing to complete the respective exchange offer by October 30, 2011,a specified date, will result in Hertz incurring special interest on the 2010 Senior Notessuch notes at a per annum rate of 0.25% for the first 90 days of any period where a default has occurred and is continuing, which rate will be increased by an additional 0.25% during each subsequent 90 day period, up to a maximum of 0.50%. On March 23, 2011, Hertz filed a registration statement for such notes. We do not believe the special interest obligation is probable, and as such, we have not recorded any amounts with respect to this registration payment arrangement.

Guarantees and Security

There have been no material changes to the guarantees and security provisions of the debt instruments and credit facilities under which our indebtedness as of September 30, 2010March 31, 2011 has been issued from the terms as disclosed in our Annual Report, except as described above.

Covenants

Certain of our debt instruments and credit facilities contain a number of covenants that, among other things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make dividends and other restricted payments, create liens, make investments, make acquisitions, engage in mergers, change the nature of their business, make capital expenditures, or engage in certain transactions withForm 10-K.


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Unaudited


affiliates. SomeFinancial Covenant Compliance

Under the new terms of these agreements also require the maintenance of certain financial covenants. As of September 30, 2010, we were in compliance with all of these financial covenants.

As of September 30, 2010, we had an aggregate principal amount outstanding of $1,348.4 million pursuant to our amended Senior Term Facility and no amounts outstanding in our Senior ABL Facility. As of September 30, 2010, Hertz was requiredFacility, we are not subject to ongoing financial maintenance covenants; however, under the Senior Term Facility to have a consolidated leverage ratio of not more than 5.25:1 and a consolidated interest expense coverage ratio of not less than 2.00:1. In addition, under our Senior ABL Facility if there was less than $200.0 millionwe are subject to a springing financial maintenance covenant upon the occurrence of available borrowing capacity under that facility ascertain triggering events. As of September 30, 2010, Hertz was required to have a consolidated leverage ratio of not more than 5.25:1 and a consolidated fixed charge coverage ratio of not less than 1:1 for the quarter then ended. Under the Senior Term Facility, as of September 30, 2010, weMarch 31, 2011, no triggering event had a consolidated leverage ratio of 4.20:1 and a consolidated interest expense coverage ratio of 3.57:1. Since we had maintained sufficient borrowing capacity under our Senior ABL Facility as of September 30, 2010, and expect to maintain such capacity in the future, the consolidated fixed charge coverage ratio was not deemed relevant for presentation. For further information on the terms of our senior credit facilities, see Note 3occurred requiring testing of the Notes to our audited annual consolidatedspringing financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data."maintenance covenant.

DerivativesBorrowing Capacity and Availability

We utilize certain derivative instruments to enhance our ability to manage risks relating to cash flow and interest rate exposure. See Note 14—Financial Instruments.

Credit Facilities

As of September 30, 2010,March 31, 2011, the following credit facilities were available for the use of Hertz and its subsidiaries (in millions of dollars):



 Remaining
Capacity
 Availability
Under
Borrowing
Base
Limitation
 
 Remaining
Capacity
 Availability Under
Borrowing Base
Limitation
 

Corporate Debt

Corporate Debt

 

Corporate Debt

 

Senior Term Facility

 $ $ 

Senior ABL Facility

Senior ABL Facility

 1,591.2 851.7 

Senior ABL Facility

 $1,800.0 $896.4 
           

Total Corporate Debt

 1,591.2 851.7 

Total Corporate Debt

 1,800.0 896.4 
           

Fleet Debt

Fleet Debt

 

Fleet Debt

 

U.S. Fleet Debt

 545.1 77.5 

International ABS Fleet Financing Facility

 1.0 1.0 

U.S. Fleet Variable Funding Notes

U.S. Fleet Variable Funding Notes

 455.1 90.5 

U.S. Fleet Financing Facility

U.S. Fleet Financing Facility

 2.0 2.0 

European Revolving Credit Facility

European Revolving Credit Facility

 154.4 154.4 

European Securitization

European Securitization

 77.9 68.3 

European Securitization

 314.6 71.6 

Fleet Financing Facility

 2.0 2.0 

Canadian Securitization

Canadian Securitization

 148.3 4.8 

Australian Securitization

Australian Securitization

 86.4 7.6 

Brazilian Fleet Financing Facility

Brazilian Fleet Financing Facility

 0.1  

Brazilian Fleet Financing Facility

 0.9 0.9 

Canadian Fleet Financing Facility

 101.5 13.5 

Capitalized Leases

Capitalized Leases

 42.6  

Capitalized Leases

 108.1 28.9 
           

Total Fleet Debt

 770.2 162.3 

Total Fleet Debt

 1,269.8 360.7 
           

Total

Total

 $2,361.4 $1,014.0 

Total

 $3,069.8 $1,257.1 
           

Our borrowing capacity and availability primarily comes from our "revolving credit facilities," which are a combination of asset-backed securitization facilities and asset-based revolving credit facilities. Creditors under each of our revolving credit facilities have a claim on a specific pool of assets as collateral. Our ability to borrow under each revolving credit facility is a function of, among other things, the value of the assets in the relevant collateral pool. We refer to the amount of debt we can borrow given a certain pool of assets as the "borrowing base."

We refer to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., the amount of debt we could borrow assuming we possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility.

We refer to "Availability Under Borrowing Base Limitation" and "borrowing base availability" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt we could borrow given the collateral we possess at such time).

As of March 31, 2011, the Senior Term Facility had approximately $3.2 million available under the letter of credit facility and the Senior ABL Facility had $1,095.2 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.


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Unaudited

As of September 30, 2010, the Senior Term Facility had approximately $11.4 million available under the letter of credit facility and the Senior ABL Facility had $406.2 million available under the letter of credit facility sublimit.

Our liquidity as of September 30, 2010 was $3,105.2 million, which consisted of $1,483.3 million of cash and cash equivalents, $851.7 million of unused commitments under our Senior ABL Facility and $770.2 million of unused commitments under our fleet financing facilities. Taking into consideration the borrowing base limitations in our Senior ABL Facility and in our Fleet Debt, the amount that we had available for immediate use as of September 30, 2010 under our Senior ABL Facility was $851.7 million and we had $162.3 million of over-enhancement that was available under our Fleet Debt. Accordingly, as of September 30, 2010, we had $2,497.3 million ($1,483.3 million in cash and cash equivalents, $851.7 million available under our Senior ABL Facility and $162.3 million available under our various Fleet Debt facilities) in liquidity that was available for our immediate use. Future availability of borrowings under these facilities will depend on borrowing base requirements and other factors, many of which are outside our control.

Also, substantiallySubstantially all of our revenue earning equipment and certain related assets are owned by special purpose entities, or are subject to liensencumbered in favor of our lenders under our various credit facilities. Substantially all our other assets in the United States are also subject to liens in favor of our lenders under our various credit facilities. None of these assets would be available to satisfy the claims of our general creditors if we failed to perform our obligations to such creditors.

Some of these special purpose entities are consolidated variable interest entities, of which Hertz is the primary beneficiary, whose sole purpose is to provide commitments to lend in various currencies subject to borrowing bases comprised of rental vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, our International Fleet Financing No. 1 B.V., International Fleet Financing No. 2 B.V., Hertz Fleet Limited and HA Funding Pty, Ltd. variable interest entities had total assets primarily comprised of loans receivable and revenue earning equipment of $461.6$503.0 million and $367.6$652.1 million, respectively, and total liabilities primarily comprised of debt of $569.2$502.5 million and $710.3$651.6 million, respectively. For further information on the terms of our debt, see Note 3 of the Notes to our audited annual consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data."

Accrued Interest

As of September 30, 2010 and December 31, 2009, accrued interest was $88.4 million and $120.9 million, respectively, which is reflected in our condensed consolidated balance sheet in "Accrued liabilities."


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Unaudited

Note 9—8—Employee Retirement Benefits

The following table sets forth the net periodic pension and postretirement (including health care, life insurance and auto) expense (in millions of dollars):

 
 Pension Benefits  
  
 
 
 Postretirement
Benefits (U.S.)
 
 
 U.S. Non-U.S. 
 
 Three Months Ended September 30, 
 
 2010 2009 2010 2009 2010 2009 

Components of Net Periodic Benefit Cost:

                   
 

Service cost

 $4.6 $5.7 $1.4 $1.4 $0.1 $ 
 

Interest cost

  6.0  7.0  2.6  2.5  0.3  0.2 
 

Expected return on plan assets

  (6.6) (5.4) (2.5) (2.0)    
 

Net amortizations

  0.2  0.1  (0.1) (0.1) 0.2  (0.1)
 

Settlement loss

    0.8         
              
 

Net pension/postretirement expense

 $4.2 $8.2 $1.4 $1.8 $0.6 $0.1 
              


 
 Pension Benefits  
  
 
 
 Postretirement
Benefits (U.S.)
 
 
 U.S. Non-U.S. 
 
 Nine Months Ended September 30, 
 
 2010 2009 2010 2009 2010 2009 

Components of Net Periodic Benefit Cost:

                   
 

Service cost

 $18.0 $16.5 $3.9 $4.1 $0.2 $0.1 
 

Interest cost

  19.6  21.0  7.7  7.1  0.7  0.6 
 

Expected return on plan assets

  (20.0) (17.1) (7.4) (5.6)    
 

Net amortizations

  3.5  0.3  (0.2) (0.3)   (0.3)
 

Settlement loss

  0.4  1.5         
              
 

Net pension/postretirement expense

 $21.5 $22.2 $4.0 $5.3 $0.9 $0.4 
              
 
 Pension Benefits  
  
 
 
 Postretirement
Benefits (U.S.)
 
 
 U.S. Non-U.S. 
 
 Three Months Ended March 31, 
 
 2011 2010 2011 2010 2011 2010 

Components of Net Periodic Benefit Cost:

                   
 

Service cost

 $6.2 $6.7 $1.7 $1.3 $0.1 $0.1 
 

Interest cost

  6.5  6.8  2.8  2.6  0.2  0.2 
 

Expected return on plan assets

  (7.1) (6.7) (3.1) (2.5)    
 

Net amortization

  2.0  1.7  (0.3) (0.1)   (0.1)
 

Settlement loss

  0.3  0.3         
              
 

Net pension/postretirement expense

 $7.9 $8.8 $1.1 $1.3 $0.3 $0.2 
              

Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations and union agreements. From time to time we make contributions beyond those legally required. For the three and nine months ended September 30,March 31, 2011 and 2010, we contributed to and made benefit payments of $11.2$44.8 million and $57.8$36.0 million, respectively, to our worldwide pension plans, including discretionary contributions of $2.3$12.3 million and $5.5$1.8 million, respectively, to our U.K.United Kingdom, or "U.K.," defined benefit pension plan and benefit payments made through unfunded plans. For the three and nine months ended September 30, 2009, we contributed to and made benefit payments of $11.7 million and $28.9 million, respectively, to our funded worldwide plans. Of the contributions to worldwide plans, we contributed $6.5 million to the U.S. defined benefit plans during the three months ended September 30, 2009. For the three and nine months ended September 30, 2009, we made discretionary contributions of $1.3 million and $3.9 million, respectively, to our U.K. defined benefit pension plan. Based upon the significant decline in asset values in 2008, which were in line with the overall market declines, it is likely we have and will continue to make cash contributions in 20102011 and possibly in future years.

We expect to contribute up to $54.1 million to our U.S.sponsor a defined benefit pension plan in the full yearU.K. In January 2011, we tentatively agreed with the trustees of 2010.that plan to cease all future benefit accruals and to close the plan to members, contingent on the outcome of the consultation process with employees that ends in May. We will introduce a defined contribution plan with company matching contributions to replace the defined benefit pension plan. The level of 2010 and futurecompany matching contributions will vary, and is dependent on a number of factors including actual and projected investment returns, interest rate fluctuations, plan demographics, funding regulations and the resultsgenerally be 100% of the final actuarial valuation.employee contributions, up to 8% of pay, except that current members of the defined benefit plan will receive an enhanced match for five years.

Our obligation for the U.K. pension plan was $163.4 million, with a fair value of assets of about $145.6 million, as of December 31, 2010. We recognized expense of $1.3 million in 2010.


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Unaudited

If the proposal to close the scheme occurs during 2011, then this will result in somewhat lower contributions this year into the defined benefit plan, which will be offset by matching contributions to the new defined contribution plan.

We participate in various "multiemployer" pension plans administered by labor unions representing some of our employees. We make periodic contributions to these plans to allow them to meet their pension benefit obligations to their participants.plans. In the event that we withdraw from participation in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, and we would have to reflect that as an expense in our consolidated statement of operations and as a liability on our condensed consolidated balance sheet. Our withdrawal liability for any multiemployer plan would depend on the extent of the plan's funding of vested benefits. In the ordinary course of our renegotiation of collective bargaining agreements with labor unions that maintain these plans, we could decide to discontinue participation in aAt least one multiemployer plan and in that event, we could face a withdrawal liability. Some multiemployer plans, including one in which we participate areis reported to have, and other of our multiemployer plans could have, significant underfunded liabilities. Such underfunding couldmay increase in the sizeevent other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of our potentialwithdrawing employers to pay their withdrawal liability. In addition, such underfunding may increase as a result of lower than expected returns on pension fund assets or other funding deficiencies.

Note 10—9—Stock-Based Compensation

In March 2010,2011, we granted 527,574371,505 Restricted Stock Units, or "RSUs," to certain executives and employees at fair values ranging from $9.70$14.60 to $9.99$15.02 and 800,613693,313 Performance Stock Units, or "PSUs," at a fair value of $9.70$14.60 under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan, or the "Omnibus Plan." In May 2010, weFor the PSUs, 499,515 have a performance condition under which the number of units that will ultimately be awarded will vary from 0% to 150% of the original grant, based on the sum of 2011 and 2012 Corporate EBITDA results. The remaining 193,798 PSUs granted 182,606 RSUs tocontain a market condition whereby the 20 day average trailing stock price must equal or exceed a certain employeesprice target at fair values ranging from $11.87 to $12.38 underany time during the Omnibus Plan. In August 2010, we granted 33,083 RSUs to certain employees at a fair value of $9.08.five year performance period.

In March 2010,2011, we granted options to acquire 3,208,1552,108,944 shares of our common stock to certain executives and employees at exercise prices ranging from $9.70$14.60 to $9.99. In May 2010, we granted options to acquire 29,229 shares of our common stock to certain employees at exercise prices ranging from $11.87 to $12.38, and in August, we granted options to acquire 54,534 shares of our common stock to certain employees at an exercise price of $9.08,$15.02 under the Omnibus Plan.

A summary of the total compensation expense and associated income tax benefits recognized under our Hertz Global Holdings, Inc. Stock Incentive Plan and Hertz Global Holdings, Inc. Director Stock Incentive Plan, or the "Prior Plans," and the Omnibus Plan, including the cost of stock options, RSUs, and PSUs, is as follows (in millions of dollars):

  
 Three Months Ended September 30, 
  
 2010 2009 
 

Compensation Expense

 $8.7 $9.1 
 

Income Tax Benefit

  (3.4) (3.5)
       
  

Total

 $5.3 $5.6 
       


  
 Nine Months Ended September 30, 
  
 2010 2009 
 

Compensation Expense

 $28.0 $25.6 
 

Income Tax Benefit

  (10.8) (9.9)
       
  

Total

 $17.2 $15.7 
       
 
 Three Months Ended March 31, 
 
 2011 2010 

Compensation Expense

 $9.1 $9.0 

Income Tax Benefit

  (3.5) (3.5)
      
 

Total

 $5.6 $5.5 
      

As of September 30, 2010,March 31, 2011, there was approximately $50.0$48.0 million of total unrecognized compensation cost related to non-vested stock options, RSUs and PSUs granted by Hertz Holdings under the Prior


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Unaudited


Plans and the Omnibus Plan, including costs related to modifying the exercise prices of certain option grants in order to preserve the intrinsic value of the options, consistent with applicable tax law, to reflect special cash dividends of $4.32 per share paid on June 30, 2006 and $1.12 per share paid on November 21, 2006. These remaining costs areThe total unrecognized compensation cost is expected to be recognized over the remaining 1.41.7 years, on a weighted average basis, of the requisite service period that began on the grant dates.


For the three and nine months ended September 30, 2010, we recognized compensation cost

Table of approximately $0.1 million ($0.1 million, net of tax) and $0.4 million ($0.3 million, net of tax), respectively, for the amount of the discount on the stock purchased by our employees under the Hertz Global Holdings, Inc. Employee Stock Purchase Plan, or "ESPP." For the three and nine months ended September 30, 2009, we recognized compensation cost of approximately $0.1 million ($0.1 million, net of tax) and $0.3 million ($0.2 million, net of tax), respectively, for the amount of the discount on the stock purchased by our employees under the ESPP.Contents


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited

Note 11—10—Segment Information

Our operating segments are aggregated into reportable business segments based primarily upon similar economic characteristics, products, services, customers, and delivery methods. We have identified two reportable segments: rental of cars, crossovers and light trucks, or "car rental," and rental of industrial, construction and material handling equipment, or "equipment rental." Other reconciling items includes general corporate assets and expenses, certain interest expense (including net interest on corporate debt), as well as other business activities, such as our third-partythird party claim management services.

Adjusted pre-tax income (loss) is the measure utilized by management in making decisions about allocating resources to segments and measuring their performance. We believe this measure best reflects the financial results from ongoing operations. Adjusted pre-tax income (loss) is calculated as income (loss) before income taxes plus other reconciling items, non-cash purchase accounting charges, non-cash debt charges and certain one-time charges and non-operational items. The contribution of our reportable segments to revenues and adjusted pre-tax income (loss) and the


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Unaudited


reconciliation to consolidated amounts for the three and nine months ended September 30, 2010 and 2009 are summarized below (in millions of dollars).



 Three Months Ended September 30, 
 Three Months Ended March 31, 


 Revenues Adjusted Pre-Tax Income 
 Revenues Adjusted Pre-Tax Income
(Loss)
 


 2010 2009 2010 2009 
 2011 2010 2011 2010 

Car rental

Car rental

 $1,903.5 $1,757.7 $309.3 $258.3 

Car rental

 $1,510.3 $1,421.7 $61.3 $27.1 

Equipment rental

Equipment rental

 281.2 280.5 33.7 25.2 

Equipment rental

 268.2 237.0 10.2 (5.0)
                   
 

Total reportable segments

 2,184.7 2,038.2 343.0 283.5  

Total reportable segments

 1,778.5 1,658.7 71.5 22.1 

Other

Other

 1.6 3.2     

Other

 1.5 2.2     
               
 

Total

 $2,186.3 $2,041.4      

Total

 $1,780.0 $1,660.9     
               

Adjustments:

Adjustments:

 

Adjustments:

 

Other reconciling items(1)

     (89.4) (88.2)

Other reconciling items(1)

     (87.5) (91.3)

Purchase accounting(2)

     (23.8) (21.7)

Purchase accounting(2)

     (20.6) (22.1)

Non-cash debt charges(3)

     (46.4) (48.5)

Non-cash debt charges(3)

     (59.9) (48.8)

Restructuring charges

     (14.6) (35.7)

Restructuring charges

     (4.9) (10.7)

Restructuring related charges(4)

     (0.6) (11.4)

Restructuring related charges(4)

     (0.5) (5.3)

Derivative losses(5)

     (0.2) (1.9)

Derivative losses(5)

      (1.7)

Management transition costs

      (0.3)

Acquisition related costs

     (2.8)  

Acquisition related costs(6)

     (9.7)  

Management transition costs

     (2.5)  
     

Premiums paid on debt(6)

     (51.7)  
 

Income before income taxes

     $158.3 $75.8       
      

Loss before income taxes

     $(158.9)$(157.8)
     

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Unaudited


 
 Nine Months Ended September 30, 
 
 Revenues Adjusted Pre-Tax Income (Loss) 
 
 2010 2009 2010 2009 

Car rental

 $4,938.2 $4,515.3 $512.7 $368.4 

Equipment rental

  784.1  837.0  43.0  50.6 
          
  

Total reportable segments

  5,722.3  5,352.3  555.7  419.0 

Other

  4.5  8.5       
            
  

Total

 $5,726.8 $5,360.8       
            

Adjustments:

             
 

Other reconciling items(1)

        (275.6) (259.3)
 

Purchase accounting(2)

        (68.4) (69.5)
 

Non-cash debt charges(3)

        (144.9) (121.2)
 

Restructuring charges

        (45.5) (87.2)
 

Restructuring related charges(4)

        (7.9) (31.6)
 

Management transition costs

          (1.0)
 

Derivative gains (losses)(5)

        (2.5) 3.0 
 

Acquisition related costs(6)

        (16.7)  
 

Gain on debt buyback(7)

          48.5 
 

Third-party bankruptcy accrual(8)

          (4.3)
            
  

Loss before income taxes

       $(5.8)$(103.6)
            

(1)
Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as other business activities such as our third-party claim management services.

(2)
Represents the purchase accounting effects of the Acquisition on our results of operations relating to increased depreciation and amortization of tangible and intangible assets and accretion of revalued workers' compensation and public liability and property damage liabilities. Also represents the purchase accounting effects of subsequent acquisitions on our results of operations relating to increased amortization of intangible assets.

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Unaudited

(3)
Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. For the three and nine months ended September 30,March 31, 2010, also includes $18.0$20.9 million and $56.9 million, respectively, associated with the amortization of amounts pertaining to the de-designation of the HVF interest rate swaps as effective hedging instruments. For the three and nine months ended September 30, 2009, also includes $22.4 million and $52.2 million, respectively, associated with the amortization of amounts pertaining to the de-designation of the HVFHertz Vehicle Financing LLC, or "HVF," interest rate swaps as effective hedging instruments.

(4)
Represents incremental one-time costs incurred directly supporting our business transformation initiatives. Such costs include transition costs incurred in connection with our business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes.

(5)
In 2010, representsRepresents the mark-to-market adjustment on our interest rate cap. In 2009, represents the mark-to-market adjustments on our interest rate cap and gasoline swap.

(6)
Represents costs incurred in connection with the Dollar Thrifty Automotive Group, Inc. transaction which has now been terminated.

(7)
Representspremiums paid to redeem our 10.5% Senior Subordinated Notes and a gain (net of transaction costs) recorded in connection with the buyback of portionsportion of our 8.875% Senior Notes and Senior Subordinated Notes.

(8)
Represents an allowance for uncollectible program car receivables related to a bankrupt European dealer affiliated with a U.S. car manufacturer.

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Unaudited

Total assets increased $2,124.2decreased $504.6 million from December 31, 20092010 to September 30, 2010.March 31, 2011. The increasedecrease was primarily related to increasesa decrease in other cash and cash equivalents relating to the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes, partly offset by an increase in our car rental segment's revenue earning equipment and receivables, as well as increases in other cash and cash equivalents and restricted cash and cash equivalents.equipment.

Note 12—11—Total Equity

(in Millions)
 Number
of Shares
 Common
Stock
 Preferred
Stock
 Additional
Paid-In
Capital
 Accumulated
Deficit
 Accumulated
Other
Comprehensive
Income (Loss)
 Non-
controlling
Interest
 Total
Equity
 

December 31, 2009

  410.2 $4.1 $ $3,141.7 $(1,062.3)$(3.3)$17.2 $2,097.4 
 

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

              (18.9)       (18.9)
 

Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $26.9

                 41.9     41.9 
 

Translation adjustment changes

                 (16.6)    (16.6)
 

Unrealized gain on Euro-denominated debt, net of tax of $6.8

                 10.5     10.5 
 

Defined benefit pension plans, net

                 (0.4)    (0.4)
                         
 

Total Comprehensive Income

                       16.5 
                         
 

Dividend payment to noncontrolling interest

                    (12.6) (12.6)
 

Net income relating to noncontrolling interest

                    13.0  13.0 
 

Employee stock purchase plan

  0.2        2.2           2.2 
 

Net settlement on vesting of restricted stock

           (5.7)          (5.7)
 

Restricted stock

  1.6                      
 

Stock-based employee compensation charges, net of tax of $0

           28.0           28.0 
 

Exercise of stock options

  0.3        3.2           3.2 
 

Common shares issued to Directors

  0.0        1.0           1.0 
 

Phantom shares issued to Directors

  0.0        0.3           0.3 
 

Proceeds from disgorgement of stockholder short-swing profits, net of tax of $0

           0.1           0.1 
                  

September 30, 2010

  412.3 $4.1 $ $3,170.8 $(1,081.2)$32.1 $17.6 $2,143.4 
                  
 
  
 Common Stock  
  
 Accumulated
Other
Comprehensive
Income (Loss)
  
  
 
 
 Preferred
Stock
 Additional
Paid-In
Capital
 Accumulated
Deficit
 Non-
controlling
Interest
 Total
Equity
 
(in Millions)
 Shares Amount 

December 31, 2010

 $  413.5 $4.1 $3,183.2 $(1,110.4)$37.9 $16.5 $2,131.3 
 

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

              (132.6)       (132.6)
 

Translation adjustment changes, net of tax of $0

                 42.5     42.5 
 

Unrealized gain on Euro-denominated debt, net of tax of $7.4

                 (11.6)    (11.6)
 

Defined benefit pension plans, net of tax of $0

                 0.1     0.1 
                         
 

Total Comprehensive Loss

                       (101.6)
                         
 

Net income relating to noncontrolling interest

                    3.7  3.7 
 

Employee stock purchase plan

     0.1     1.0           1.0 
 

Net settlement on vesting of restricted stock

     1.0     (10.7)          (10.7)
 

Stock-based employee compensation charges, net of tax of $0

           9.1           9.1 
 

Exercise of stock options, net of tax of $0

     0.3     1.8           1.8 
 

Common shares issued to Directors

           0.1           0.1 
                  

March 31, 2011

 $  414.9 $4.1 $3,184.5 $(1,243.0)$68.9 $20.2 $2,034.7 
                  

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Unaudited

 

(in Millions)
 Number
of Shares
 Common
Stock
 Preferred
Stock
 Additional
Paid-In
Capital
 Accumulated
Deficit
 Accumulated
Other
Comprehensive
Income (Loss)
 Non-
controlling
Interest
 Total
Equity
 

December 31, 2008

  323.0 $3.2 $ $2,503.8 $(936.3)$(100.1)$17.7 $1,488.3 
 

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

              (95.1)       (95.1)
 

Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $16.0

                 24.4     24.4 
 

Translation adjustment changes

                 80.3     80.3 
 

Unrealized loss on Euro-denominated debt, net of tax of $5.3

                 (8.2)    (8.2)
 

Defined benefit pension plans, net

                 (0.6)    (0.6)
                         
 

Total Comprehensive Income

                       0.8 
                         
 

Dividend payment to noncontrolling interest

                    (11.9) (11.9)
 

Net income relating to noncontrolling interest

                    11.3  11.3 
 

Proceeds from debt offering, net of tax of $44.7

           69.7           69.7 
 

Proceeds from sale of common stock

  85.0  0.9     527.9           528.8 
 

Employee stock purchase plan

  0.4        2.2           2.2 
 

Stock-based employee compensation charges, net of tax of $0

           26.6           26.6 
 

Exercise of stock options

  1.1        4.8           4.8 
 

Common shares issued to Directors

  0.1        0.2           0.2 
 

Phantom shares issued to Directors

  0.0        0.1           0.1 
                  

September 30, 2009

  409.6 $4.1 $ $3,135.3 $(1,031.4)$(4.2)$17.1 $2,120.9 
                  
 
  
 Common Stock  
  
 Accumulated
Other
Comprehensive
Income (Loss)
  
  
 
 
 Preferred
Stock
 Additional
Paid-In
Capital
 Accumulated
Deficit
 Non-
controlling
Interest
 Total
Equity
 
(in Millions)
 Shares Amount 

December 31, 2009

 $  410.2 $4.1 $3,141.7 $(1,062.3)$(3.3)$17.2 $2,097.4 
 

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

              (150.4)       (150.4)
 

Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $9.5

                 14.6     14.6 
 

Translation adjustment changes, net of tax of $0

                 (39.0)    (39.0)
 

Unrealized gain on Euro-denominated debt, net of tax of $7.6

                 11.9     11.9 
 

Defined benefit pension plans, net of tax of $0

                 (0.4)    (0.4)
                         
 

Total Comprehensive Loss

                       (163.3)
                         
 

Dividend payment to noncontrolling interest

                    (3.0) (3.0)
 

Net income relating to noncontrolling interest

                    3.6  3.6 
 

Employee stock purchase plan

     0.1     0.7           0.7 
 

Net settlement on vesting of restricted stock

     1.0     (5.3)          (5.3)
 

Stock-based employee compensation charges, net of tax of $0

     0.1     9.0           9.0 
 

Exercise of stock options, net of tax of $0

           0.7           0.7 
 

Common shares issued to Directors

          0.1           0.1 
 

Phantom shares issued to Directors

           0.1           0.1 
                  

March 31, 2010

 $  411.4 $4.1 $3,147.0 $(1,212.7)$(16.2)$17.8 $1,940.0 
                  

Accumulated other comprehensive income (loss) as of September 30, 2010March 31, 2011 and December 31, 20092010 includes accumulated translation gains of $115.5$157.3 million and $132.1$114.9 million, respectively, unrealized losses on cash flow hedgespension benefits of $(7.8)$(70.1) million and $(49.8) million, respectively, changes due to the pension mark-to-market adjustment of $(66.9) million and $(66.5)$(70.2) million, respectively, and unrealized losses on our Euro-denominated debt of $(8.6)$(18.4) million and $(19.2)$(6.8) million, respectively.

Note 13—12—Restructuring

As part of our ongoing effort to implement our strategy of reducing operating costs, we have evaluated our workforce and operations and made adjustments, including headcount reductions and business process re-engineeringreengineering resulting in optimized work flow at rental locations and maintenance facilities as well as streamlined our back-office operations and evaluated potential outsourcing opportunities. When


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited


we made adjustments to our workforce and operations, we incurred incremental expenses that delay the benefit of a more efficient workforce and operating structure, but we believe that increased operating efficiency and reduced costs associated with the operation of our business are important to our long-term competitiveness.

For further information on actions taken in 2009, see Note 11 of the Notes to our audited annual consolidated financial statements included in our Annual Report under caption "Item 8—Financial Statements and Supplementary Data."

During the nine months ended September 30, 2010, our equipment rental business incurred charges for losses on available for sale equipment and the disposal of surplus equipment and recognition of future facility lease obligations related to branch closures in North America. Additionally, our European car rental business has incurred charges primarily associated with employee severance and relocation as a result of the pan-European migration of in-country back office operations to our shared services center in Dublin, Ireland. During the nine months ended September 30, 2010, restructuring charges included employee termination liabilities covering approximately 445 employees.

For the three months ended September 30, 2010, our consolidated statement of operations includes restructuring charges relating to the initiatives discussed above of $14.6 million which is composed of $7.5 million in revenue earning equipment and fixed asset impairment charges, $2.8 million in facility closure and lease obligation costs, $2.7 million of termination benefits, $1.3 million in relocation and temporary labor costs and $0.3 million of other restructuring charges. The after-tax effect of the restructuring charges reduced diluted earnings per share by $0.03 for the three months ended September 30, 2010.

For the nine months ended September 30, 2010, our consolidated statement of operations includes restructuring charges relating to the initiatives discussed above of $45.5 million which is composed of $20.0 million in revenue earning equipment and fixed asset impairment charges, $11.4 million in facility closure and lease obligation costs, $7.5 million of termination benefits, $3.8 million in relocation and temporary labor costs, $0.9 million in consulting costs and $1.9 million of other restructuring charges. The after-tax effect of the restructuring charges increased diluted loss per share by $0.08 for the nine months ended September 30, 2010.

For the three months ended September 30, 2009, our consolidated statement of operations included restructuring charges relating to the initiatives discussed above of $35.7 million which was composed of $18.8 million of involuntary termination benefits, $11.2 million in facility closures and lease obligation costs, $2.7 million in asset impairment charges, $0.8 million in pension liability settlements, $0.8 million in relocation and $1.4 million of other restructuring charges. The after-tax effect of the restructuring charges reduced diluted earnings per share by $0.07 for the three months ended September 30, 2009.

For the nine months ended September 30, 2009, our consolidated statement of operations included restructuring charges relating to the initiatives discussed above of $87.2 million which was composed of $37.4 million of involuntary termination benefits, $23.2 million in facility closures and lease obligation costs, $8.7 million in asset impairment charges, $6.9 million in consulting costs, $4.5 million in lease termination costs, $2.3 million in relocation costs, $1.7 million in contract termination costs and $2.5 million of other restructuring charges. The after-tax effect of the restructuring charges increased diluted loss per share by $0.19 for the nine months ended September 30, 2009.


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During 2007 through 2010, we announced several initiatives to improve our competitiveness and industry leadership through targeted job reductions. These initiatives included, but were not limited to, job reductions at our corporate headquarters and back-office operations in the U.S. and Europe. As part of our re-engineering optimization we outsourced selected functions globally. In addition, we streamlined operations and reduced costs by initiating the closure of targeted car rental locations and equipment rental branches throughout the world. The largest of these closures occurred in 2008 which resulted in closures of approximately 250 off-airport locations and 22 branches in our U.S. equipment rental business. These initiatives impacted approximately 8,500 employees.

During the first quarter of 2011, we continued to streamline operations and reduce costs with the closure of several car rental and equipment rental locations globally as well as a reduction in our workforce by approximately 100 employees.

From January 1, 2007 through March 31, 2011, we incurred $479.0 million ($240.7 million for our car rental segment, $184.9 million for our equipment rental segment and $53.4 million of other) of restructuring charges.

Additional efficiency and cost saving initiatives are being developed during 2011. In April 2011, we closed eleven equipment rental locations and expect to close an additional one or two locations in the remainder of the second quarter of 2011. We estimate that these equipment rental location closures will result in $20 to $30 million of restructuring charges in the second quarter of 2011.

Restructuring charges in our consolidated statement of operations can be summarized as follows (in millions of dollars):

 
 Three Months Ended September 30, 
 
 2010 2009 

By Caption:

       
 

Direct operating

 $12.5 $16.5 
 

Selling, general and administrative

  2.1  19.2 
      
  

Total

 $14.6 $35.7 
      
 
 Three Months ended March 31, 
 
 2011 2010 

By Type:

       
 

Involuntary termination benefits

 $1.0 $3.4 
 

Pension and post retirement expense

    0.3 
 

Consultant costs

  0.1  0.5 
 

Asset writedowns

  0.7  0.7 
 

Facility closure and lease obligation costs

  3.1  3.6 
 

Relocation costs

    1.3 
 

Other

    0.9 
      
  

Total

 $4.9 $10.7 
      

 

 
 Nine Months Ended September 30, 
 
 2010 2009 

By Caption:

       
 

Direct operating

 $37.7 $51.7 
 

Selling, general and administrative

  7.8  35.5 
      
  

Total

 $45.5 $87.2 
      
 
 Three Months ended March 31, 
 
 2011 2010 

By Caption:

       
 

Direct operating

 $4.3 $7.0 
 

Selling, general and administrative

  0.6  3.7 
      
  

Total

 $4.9 $10.7 
      

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 Three Months Ended September 30, 
 
 2010 2009 

By Segment:

       
 

Car rental

 $4.0 $25.4 
 

Equipment rental

  10.6  9.1 
 

Other reconciling items

    1.2 
      
  

Total

 $14.6 $35.7 
      
 
 Three Months ended March 31, 
 
 2011 2010 

By Segment:

       
 

Car rental

 $1.0 $5.3 
 

Equipment rental

  3.9  4.9 
 

Other reconciling items

    0.5 
      
  

Total

 $4.9 $10.7 
      


During the three months ended March 31, 2011 and 2010, the after-tax effect of the restructuring charges increased the loss per share by $0.01 and $0.02, respectively.

 
 Nine Months Ended September 30, 
 
 2010 2009 

By Segment:

       
 

Car rental

 $13.4 $50.3 
 

Equipment rental

  31.4  28.9 
 

Other reconciling items

  0.7  8.0 
      
  

Total

 $45.5 $87.2 
      

The following table sets forth the activity affecting the restructuring accrual during the ninethree months ended September 30, 2010March 31, 2011 (in millions of dollars). We expect to pay the remaining restructuring obligations relating to involuntary termination benefits over the next twelve months. The remainder of the restructuring accrual relates to future lease obligations which will be paid over the remaining term of the applicable leases.

 
 Involuntary
Termination
Benefits
 Pension
and Post
Retirement
Expense
 Consultant
Costs
 Other Total 

Balance as of January 1, 2010

 $19.6 $ $0.4 $9.7 $29.7 
 

Charges incurred

  7.5  0.6  0.9  36.5  45.5 
 

Cash payments

  (18.8)   (1.3) (11.4) (31.5)
 

Other(1)

  (0.3) (0.3)   (25.2) (25.8)
            

Balance as of September 30, 2010

 $8.0 $0.3 $ $9.6 $17.9 
            
 
 Involuntary
Termination
Benefits
 Pension
and Post
Retirement
Expense
 Consultant
Costs
 Other Total 

Balance as of January 1, 2011

 $6.3 $0.2 $0.1 $10.9 $17.5 
 

Charges incurred

  1.0    0.1  3.8  4.9 
 

Cash payments

  (3.4)   (0.1) (0.4) (3.9)
 

Other(1)

  0.2  0.1    (2.5) (2.2)
            

Balance as of March 31, 2011

 $4.1 $0.3 $0.1 $11.8 $16.3 
            

(1)
Consists of decreases of $20.0($0.7) million for the impairment of revenue earning equipmentasset writedowns and other assets, $4.8($1.9) million for facility closures, $1.4 million loss in foreign currency translation and a $0.4 million for executive pension liability settlements, partly offset by increases in involuntary termination benefitsan increase of $0.7$0.4 million and consultant costs of $0.1 million.due to foreign currency translation.

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Note 14—13—Financial Instruments

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Fair value approximates the amount indicated on the balance sheet at September 30, 2010March 31, 2011 and December 31, 20092010 because of the short-term maturity of these instruments. Money market accounts, whose fair value at September 30, 2010,March 31, 2011, is measured using Level 1 inputs, totaling $858.8$239.4 million and $572.6$53.3 million are included in "Cash and cash equivalents" and "Restricted cash and cash equivalents," respectively. Money market accounts, whose fair value at December 31, 2009,2010, is measured using Level 1 inputs, totaling $106.8$1,747.9 million and $294.4$24.1 million are included in "Cash and cash equivalents" and "Restricted cash and cash equivalents," respectively. Level 1 inputs are observable inputs such as quoted prices in active markets.

Debt

For borrowings with an initial maturity of 93 days or less, fair value approximates carrying value because of the short-term nature of these instruments. For all other debt, fair value is estimated based on quoted market rates as well as borrowing rates currently available to us for loans with similar terms and average maturities (Level 2 inputs). The aggregate fair value of all debt at September 30, 2010March 31, 2011 was $12,468.3$11,552.9 million, compared to its aggregate carrying valueunpaid principal balance of $12,177.1$10,849.8 million. The aggregate fair value of all


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debt at December 31, 2009 approximated $10,795.72010 was $12,063.5 million, compared to its aggregate carrying valueunpaid principal balance of $10,530.4$11,429.6 million.

Derivative Instruments and Hedging Activities

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2010 and December 31, 2009 (in millions of dollars):

 
 Fair Value of Derivative Instruments(1) 
 
 Asset Derivatives(2) Liability Derivatives(2) 
 
 September 30,
2010
 December 31,
2009
 September 30,
2010
 December 31,
2009
 

Derivatives designated as hedging instruments under ASC 815:

             
 

HVF interest rate swaps

 $ $ $0.9 $12.8 
          

Derivatives not designated as hedging instruments under ASC 815:

             
 

Gasoline swaps

  0.7  2.2     
 

Interest rate caps

  0.3  8.2  0.2  5.6 
 

Foreign exchange forward contracts

  1.3  7.6  26.8  5.7 
 

Foreign exchange options

  0.1       
          
  

Total derivatives not designated as hedging instruments under ASC 815

  2.4  18.0  27.0  11.3 
          

Total derivatives

 $2.4 $18.0 $27.9 $24.1 
          
 
 Fair Value of Derivative Instruments(1) 
 
 Asset Derivatives(2) Liability Derivatives(2) 
 
 March 31, 2011 December 31, 2010 March 31, 2011 December 31, 2010 

Derivatives not designated as hedging instruments under ASC 815:

             
 

Gasoline swaps

 $4.7 $3.1 $ $ 
 

Interest rate caps

  5.8  7.2  5.8  7.2 
 

Foreign exchange forward contracts

  1.5  2.6  4.7  11.1 
 

Foreign exchange options

  0.2  0.1     
          
  

Total derivatives not designated as hedging instruments under ASC 815

 $12.2 $13.0 $10.5 $18.3 
          

(1)
All fair value measurements were primarily based upon significant observable (Level 2) inputs.

(2)
All asset derivatives are recorded in "Prepaid expenses and other assets" and all liability derivatives are recorded in "Accrued liabilities" on our condensed consolidated balance sheets.


 
 Amount of Gain or
(Loss) Recognized in
Other Comprehensive
Income (Loss)
on Derivative
(Effective Portion)
 Amount of Gain or
(Loss) Reclassified
from Accumulated
Other Comprehensive
Income (Loss)
into Income
(Effective Portion)
 
 
 Three Months Ended March 31, 
 
 2011 2010 2011 2010 

Derivatives in ASC 815 Cash Flow Hedging Relationship:

             
 

HVF interest rate swaps

 $ $(9.6)$ $(26.9)(1)

Note:
As of December 31, 2010, the HVF interest rate swaps and associated debt matured. The location of the effective portion reclassified from "Accumulated other comprehensive income" into income is in "Interest expense" on our consolidated

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(2)
All asset derivatives are recorded in "Prepaid expenses and other assets" and all liability derivatives are recorded in "Accrued liabilities" on our condensed consolidated balance sheets.
(1)
RepresentsIncludes the amortization of amounts in "Accumulated other comprehensive income (loss)"income" associated with the de-designation of thea previous cash flow hedging relationship as described below.relationship.


 
  
 Amount of Gain or
(Loss) Recognized in
Income on Derivative
 
 
  
 Three Months Ended
September 30,
 
 
 Location of Gain or (Loss)
Recognized on Derivative
 
 
 2010 2009 

Derivatives Not Designated as Hedging Instruments under ASC 815:

         
 

Gasoline swaps

 Direct operating $1.7 $0.1 
 

Interest rate caps

 Selling, general and administrative  (0.2) (2.0)
 

Foreign exchange forward contracts

 Selling, general and administrative  (18.5) (15.9)
 

Foreign exchange options

 Selling, general and administrative  (0.1) 0.1 
        
  

Total

   $(17.1)$(17.7)
        



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 Amount of Gain or
(Loss) Recognized in
Income on Derivative
 
 
  
 Nine Months Ended
September 30,
 
 
 Location of Gain or (Loss)
Recognized on Derivative
 
 
 2010 2009 

Derivatives Not Designated as Hedging Instruments under ASC 815:

         
 

Gasoline swaps

 Direct operating $ $5.0 
 

Interest rate caps

 Selling, general and administrative  (2.5) (2.0)
 

Foreign exchange forward contracts

 Selling, general and administrative  (19.9) (3.5)
 

Foreign exchange options

 Selling, general and administrative  (0.2) 0.2 
        
  

Total

   $(22.6)$(0.3)
        
 
  
 Amount of Gain or
(Loss) Recognized in
Income on Derivative
 
 
  
 Three Months Ended
March 31,
 
 
 Location of Gain or (Loss)
Recognized on Derivative
 
 
 2011 2010 

Derivatives Not Designated as Hedging Instruments under ASC 815:

         
 

Gasoline swaps

 Direct operating $3.1 $0.8 
 

Interest rate caps

 Selling, general and administrative    (1.7)
 

Foreign exchange forward contracts

 Selling, general and administrative  (0.6) 8.7 
 

Foreign exchange options

 Selling, general and administrative    (0.1)
        
  

Total

   $2.5 $7.7 
        

In connectionconjunction with the Acquisitionrefinanced Series 2009-1 Notes and the issuance of $3,550.0 million of floating rate U.S. Fleet Debt, our subsidiary HVF entered into certain interest rate swap agreements, or the "HVF Swaps," effective December 21, 2005, which qualify as cash flow hedging instruments in accordance with GAAP. These agreements mature at various terms, in connection with the scheduled maturity of the associated debt obligations, through November 2010. Under these agreements, until February 2009, HVF was paying monthly interest at a fixed rate of 4.5% per annum in exchange for monthly interest at one-month LIBOR, effectively transforming the floating rate U.S. Fleet Debt to fixed rate obligations. In March 2009, HVF made a cash payment to have the fixed rate on these swaps reset to the then current market rates of 0.872% and 1.25% for the swaps that matured in February 2010 and that will mature in November 2010, respectively. $80.4 million of this payment was made to an affiliate of MLGPE which is a counterparty to the HVF Swaps. Concurrently with this payment, the hedging relationship was de-designated and the amount remaining in "Accumulated other comprehensive income (loss)" associated with this cash flow hedging relationship was frozen and is being amortized into "Interest expense" over the respective terms of the associated debt in accordance with GAAP. We expect to amortize approximately $12.0 million from "Accumulated other comprehensive income (loss)" into "Interest expense" over the next two months. Additionally, a new hedging relationship was designated between the HVF Swaps, which also qualifies for cash flow hedge accounting in accordance with GAAP. Both at the inception of the hedge and on an ongoing basis, we measure ineffectiveness by comparing the fair value of the HVF Swaps and the fair value of hypothetical swaps, with similar terms, using the Hypothetical Method in accordance with GAAP. The hypothetical swaps represent a perfect hedge of the variability in interest payments associated with the U.S. Fleet Debt. Subsequent to the resetting of the swaps at current market rates, we anticipate that there will be no ineffectiveness in the hedging relationship because the critical terms of the HVF Swaps match the terms of the hypothetical swaps.

As of September 30, 2010 and December 31, 2009, the balance reflected in "Accumulated other comprehensive income (loss)," relating to the HVF Swaps, including the amount frozen due to the designation of the previous cash flow hedging relationship, was a loss of $7.8 million (net of tax of $5.0 million) and a loss of $49.7 million (net of tax of $31.8 million), respectively. The fair values of the HVF Swaps were calculated using the income approach and applying observable market data (i.e. the 1-month LIBOR yield curve and credit default swap spreads).

In connection with the entrance into the HVF Swaps, Hertz entered into seven differential interest rate swap agreements, or the "differential swaps." These differential swaps were required to be put in place to protect the counterparties to the HVF Swaps in the event of an "amortization event" under the asset-


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backed notes agreements. An "event of bankruptcy" (as defined in the ABS Base Indenture) with respect to MBIA or Ambac would constitute an "amortization event" under the portion of the U.S. Fleet Debt facilities guaranteed by the affected insurer. In the event of an "amortization event," the amount by which the principal balance on the floating rate portion of the U.S. Fleet Debt is reduced, exclusive of the originally scheduled amortization, becomes the notional amount of the differential swaps and is transferred to Hertz. There was no payment associated with these differential swaps and their notional amounts are and will continue to be zero unless (1) there is an amortization event, which causes the amortization of the loan balance, or (2) the debt is prepaid.

On September 18, 2009, HVF completed the sale of the Series 2009-1 Notes. In order to satisfy rating agency requirements related to its bankruptcy-remote status,2010-2 Notes, HVF purchased an interest rate cap for $11.7$6.7 million, with a maximum notional amount equal to the refinanced Series 2009-1 Notes and the new Series 2010-2 Notes with a combined maximum principal amount of $2.1 billion, with a strike rate of 5% and a term until Januaryexpected maturity date of March 25, 2013. Additionally, Hertz sold a 5% interest rate cap for $6.5$6.2 million, with a notional amount equal to 33.3% of the notional amount of the HVF interest rate cap through January 2012, and then subsequently with a matching notional amount and term to the HVF interest rate cap. Also in December 2010, the Australian Securitization was completed and our Australian operating subsidiary purchased an interest rate cap through itsfor $0.5 million, with a maximum notional amount equal to the Australian Securitization maximum principal amount of A$250 million, a strike rate of 7% and expected maturity date of January 25, 2013.December 2012. Additionally, Hertz sold a 7% interest rate cap, for $0.4 million with a matching notional amount and term to the Australian operating subsidiary's interest rate cap. The fair valuevalues of theseall interest rate caps waswere calculated using a discounted cash flow method and applying observable market data (i.e. the 1-month LIBOR yield curve and credit default swap spreads). Gains and losses resulting from changes in the fair value of these interest rate caps are included in our results of operations in the periods incurred.

We purchase unleaded gasoline and diesel fuel at prevailing market rates. In January 2009, we beganrates and maintain a program to manage our exposure to changes in fuel prices through the use of derivative commodity instruments. We currently have in place swaps to cover a portion of our fuel price exposure through June 2011. We presently hedge a portion of our overall unleaded gasoline and diesel fuel purchases with commodity swaps and have contracts in place that settle on a monthly basis. As of September 30, 2010,March 31, 2011, our outstanding commodity instruments for unleaded gasoline and diesel fuel totaled approximately 12.35.5 million gallons and 0.7 million gallons, respectively.gallons. The fair value of these commodity instruments was calculated using a discounted cash flow method and applying observable market data (i.e., NYMEX RBOB Gasoline and U.S. Department of Energy surveys, etc.)Gasoline). Gains and losses resulting from changes in the fair value of these commodity instruments are included in our results of operations in the periods incurred.

We manage our foreign currency risk primarily by incurring, to the extent practicable, operating and financing expenses in the local currency in the countries in which we operate, including making fleet and equipment purchases and borrowing for working capital needs. Also, we have purchased foreign exchange options to manage exposure to fluctuations in foreign exchange rates for selected marketing


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programs. The effect of exchange rate changes on these financial instruments would not materially affect our consolidated financial position, results of operations or cash flows. Our risks with respect to foreign exchange options are limited to the premium paid for the right to exercise the option and the future performance of the option's counterparty. Premiums paid for options outstanding as of September 30, 2010,March 31, 2011, were approximately $0.2 million. We limit counterparties to the transactions to financial institutions that have strong credit ratings. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, the total notional amount of these foreign exchange options was $4.9$5.8 million and $0.3$3.5 million, respectively. As of September 30, 2010,March 31, 2011, these foreign exchange options mature through January 2012. The fair value of the foreign exchange options was calculated using a discounted cash flow method and applying observable market data (i.e. foreign currency exchange rates). Gains and losses resulting from changes in the fair value of these options are included in our results of operations in the periods incurred.


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We also manage exposure to fluctuations in currency risk on intercompany loans we make to certain of our subsidiaries by entering into foreign currency forward contracts at the time of the loans which are intended to offset the impact of foreign currency movements on the underlying intercompany loan obligations. As of September 30, 2010,March 31, 2011, the total notional amount of these forward contracts was $1,391.4$763.8 million, maturing within four months. The fair value of these foreign currency forward contracts was calculated based on foreign currency forward exchange rates.

On October 1, 2006, we designated our 7.875% Senior Euro Notes due 2014 as an effective net investment hedge of our Euro-denominated net investment in our international operations. As a result of this net investment hedge designation, as of September 30, 2010March 31, 2011 and December 31, 2009,2010, losses of $8.6$18.4 million (net of tax of $7.9$12.5 million) and $19.2$6.8 million (net of tax of $14.7$5.1 million), respectively, attributable to the translation of our 7.875% Senior Euro Notes due 2014 into the U.S. dollar are recorded in our condensed consolidated balance sheet in "Accumulated other comprehensive income (loss).income."

Note 15—14—Related Party Transactions

Relationship with Hertz Investors, Inc. and the Sponsors

Other than as disclosed below, in the ninethree months ended September 30, 2010,March 31, 2011, there were no material changes to our relationship with Hertz Investors, Inc. or the Sponsors.

Director Compensation Policy

ForOn March 31, 2011, the three and nine months ended September 30, 2010, we recognized $0.5Sponsors sold 50 million and $1.4of our common shares to Goldman, Sachs & Co. as the sole underwriter in the registered public offering of those shares. Following this offering, the Sponsors continue to own an aggregate of approximately 160 million respectively,shares, or approximately 39% of expense relating to the Director Compensation Policy in our consolidated statement of operations in "Selling, general and administrative" expenses. For the three and nine months ended September 30, 2009, we recognized $0.4 million and $1.2 million, respectively, of expense relating to the Director Compensation Policy in our consolidated statement of operations in "Selling, general and administrative" expenses.outstanding common stock.

Financing Arrangements with Related Parties

Affiliates of ML Global Private Equity, L.P.BAMLCP (which is one of the Sponsors), including Merrill Lynch & Co., Inc., Bank of America, N.A. and its related fundscertain of their affiliates (which are stockholders of Hertz Holdings), have provided various investment and of Merrill Lynch & Co., Inc., commercial banking and financial advisory services to us for which they have received customary fees and commissions. In addition, these parties have acted as agents, lenders, purchasers and/or "ML," one of the underwriters to us under our respective financing arrangements, for which they have received customary fees, commissions, expenses and/or other compensation. More specifically, these parties have acted in the initial public offering of our common stock and the June 2007 secondary offering by the Sponsors, were lenders under the Hertz Holdings Loan Facility (which was repaid with the proceeds of our initial public offering); are lenders under the original and amended Senior Term Facility, the original and amended Senior ABL Facility and the Fleet Financing Facility; acted as initial purchasersfollowing capacities, or similar capacities, with respect to our financing arrangements: lenders and/or agents under the offeringsSenior Credit Facilities, the U.S. Fleet Financing Facility and certain of the U.S. Fleet Variable Funding Notes; purchasers and/or underwriters under the Senior Notes, the Senior Subordinated Notes and certain of the Series 2008-1U.S. Fleet Medium Term Notes; acted asand structuring advisors andand/or agents under ourthe ABS Program; and acted as dealer managers and solicitation agents for Hertz's tender offers for its existing debt securities in connection with the Acquisition.

Banc of America Securities LLC, an affiliate of MLGPE, acted as one of the joint lead book runners in the issuance of the Series 2009-2 Notes and Series 2009-2 Class B Notes, and as a co-lead manager for the issuance of a portion of the 2010 Senior Notes, for which they received customary fees and expenses.

As of September 30, 2010 and December 31, 2009, approximately $255 million and $246 million, respectively, of our outstanding debt was with related parties.

See Note 8—Debt.Program.


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As of March 31, 2011 and December 31, 2010, approximately $191 million and $255 million, respectively, of our outstanding debt was with related parties.

See Note 7—Debt.

Note 16—Commitments15—Contingencies and ContingenciesOff-Balance Sheet Commitments

Off-Balance Sheet Commitments

As of September 30, 2010March 31, 2011 and December 31, 2009,2010, the following guarantees (including indemnification commitments) were issued and outstanding:outstanding.

Indemnification Obligations

In the ordinary course of business, we execute contracts involving indemnification obligations customary in the relevant industry and indemnifications specific to a transaction such as the sale of a business. These indemnification obligations might include claims relating to the following: environmental matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships; and financial matters. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-partythird party claim. We regularly evaluate the probability of having to incur costs associated with these indemnification obligations and have accrued for expected losses that are probable and estimable. The types of indemnification obligations for which payments are possible include the following:

Sponsors; Directors

Hertz has entered into customary indemnification agreements with Hertz Holdings, the Sponsors and our stockholders affiliated with the Sponsors, pursuant to which Hertz Holdings and Hertz will indemnify the Sponsors, our stockholders affiliated with the Sponsors and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. We also entered into indemnification agreements with each of our directors. We do not believe that these indemnifications are reasonably likely to have a material impact on us.

Environmental

We have indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which we may be held responsible could be substantial. The probable expenses that we expect to incur for such matters have been accrued, and those expenses are reflected in our condensed consolidated financial statements. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, the aggregate amounts accrued for environmental liabilities including liability for environmental indemnities, reflected in our condensed consolidated balance sheetsheets in "Accrued liabilities" were $1.7$1.5 million and $2.0$1.6 million, respectively. The accrual generally represents the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions,


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited


including on-going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the sites. For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited


responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).remediation.

Legal Proceedings

From time to time we are a party to various legal proceedings. We are currently a defendant in numerous actions and have received numerous claims on which actions have not yet been commenced for public liability and property damage arising from the operation of motor vehicles and equipment rented from us and our licensees. The obligation for public liability and property damage on self-insured U.S. and international vehicles and equipment, as stated on our balance sheet, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded on a non-discounted basis. Reserve requirements are based on actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. At September 30, 2010March 31, 2011 and December 31, 20092010 our liability recorded for public liability and property damage matters was $286.5$282.1 million and $277.8$278.7 million, respectively. The increase in the reserve balance primarily reflects the timing of payment activity during the period and the effects of foreign currency translation. We believe that our analysis was based on the most relevant information available, combined with reasonable assumptions, and that we may prudently rely on this information to determine the estimated liability. We note the liability is subject to significant uncertainties. The adequacy of the liability reserve is regularly monitored based on evolving accident claim history and insurance related state legislation changes. If our estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.

For a detailed description of certain of our legal proceedings please see Note 1011 of the Notes to our audited annual consolidated financial statements included in our Annual ReportForm 10-K under the caption "Item 8—Financial Statements and Supplementary Data."

The following recent developments pertaining to legal proceedings described in our Annual Report are furnished on a supplemental basis:

In August 2010, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of the complaint as to all defendants in theIn re Tourism Assessment Fee Litigation. The deadline for plaintiffs to request a rehearing of this decision has passed.

Aside from the above mentioned, thereThere were no material changes in the legal proceedings described in our Annual Report and in our quarterly reports on Form 10-Q for the periods ended March 31, 2010 and June 30, 2010,10-K and we are not otherwise required to disclose any pending legal proceedings in response to Item 103 of Regulation S-K.

In addition to those described in our Form 10-K, various other legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries. Other than with respect to the aggregate claims for public liability and property damage pending against us, management does not believe that any of the matters resolved, or pending against us, are material to us and our subsidiaries taken as a whole.

We have established reserves for matters where we believe that the losses are probable and reasonably estimated. Other than with respect to the reserve established for claims for public liability and property damage, none of those reserves are material. For matters where we have not established a reserve, the ultimate outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any,


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited


cannot be reasonably estimated. Litigation is subject to many uncertainties and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above or in our Annual Report,Form 10-K, could be decided unfavorably againstto us or any of our subsidiaries involved. Accordingly, it is possible that an adverse outcome


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited


from such a proceeding could exceed the amount accrued in an amount that could be material to our consolidated financial condition, results of operations or cash flows in any particular reporting period.

Note 17—16—Earnings (Loss) Per Share

Basic earnings (loss) per share has been computed based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share has been computed based upon the weighted average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, except when the effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted earnings (loss)loss per share (in millions of dollars, except per share amounts):

 
 Three Months Ended
September 30,
 
 
 2010 2009 

Basic and diluted earnings per share:

       

Numerator:

       
 

Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $156.6 $64.5 
      

Denominator:

       
 

Weighted average shares used in basic computation

  412.2  407.4 
 

Add: Stock options, RSUs and PSUs

  7.6  8.0 
 

Add: Potential issuance of common stock upon conversion of Convertible Senior Notes

  10.6  9.8 
      
 

Weighted average shares used in diluted computation

  430.4  425.2 
      

Earnings per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, basic

 $0.38 $0.16 

Earnings per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, diluted

 $0.36 $0.15 

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unaudited



 Nine Months Ended
September 30,
 
 Three Months Ended
March 31,
 


 2010 2009 
 2011 2010 

Basic and diluted loss per share:

Basic and diluted loss per share:

 

Basic and diluted loss per share:

 

Numerator:

Numerator:

 

Numerator:

 

Loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $(18.9)$(95.1)

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $(132.6)$(150.4)
           

Denominator:

Denominator:

 

Denominator:

 

Weighted average shares used in basic and diluted computation

 411.6 358.5 

Weighted average shares used in basic and diluted computation

 414.1 410.7 
           

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, basic

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, basic

 $(0.05)$(0.27)

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, basic

 $(0.32)$(0.37)

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, diluted

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, diluted

 $(0.05)$(0.27)

Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, diluted

 $(0.32)$(0.37)

Diluted earnings (loss)loss per share computations for the three and nine months ended September 30,March 31, 2011 and 2010 excluded the weighted-average impact of the assumed exercise of approximately 9.521.6 million and 23.621.8 million shares, respectively, of stock options, RSUs and PSUs, respectively, because such impact would be antidilutive. Additionally, for the ninethree months ended September 30,March 31, 2011 and 2010, there was no impact to the diluted earnings (loss)loss per share computations associated with the outstanding Convertible Senior Notes, because such impact would be antidilutive. Diluted earnings (loss) per share computations for the three and nine months ended September 30, 2009 excluded the weighted-average impact of the assumed exercise of approximately 8.1 million and 22.6 million shares, respectively, of stock options, RSUs and PSUs, because such impact would be antidilutive. Additionally, for the nine months ended September 30, 2009, there was no impact to the diluted earnings (loss) per share computations associated with the Convertible Senior Notes, because such impact would be antidilutive.anti-dilutive.

Note 18—17—Subsequent Events

OnIn April 25, 2010, we entered into a definitive merger agreement, or2011, Hertz redeemed $480 million principal amount of its outstanding 8.875% Senior Notes due 2014 which resulted in premiums paid of $10.7 million and the "Merger Agreement," under which we agreed to acquire Dollar Thrifty Automotive Group, Inc. or "Dollar Thrifty," subject to certain conditions, including the condition that Dollar Thrifty shareholders vote to adopt the Merger Agreement. The Merger Agreementwrite-off of unamortized debt costs of $5.8 million.

In April 2011, Lois I. Boyd was subsequently amended on September 10, 2010, to increase the consideration payable by us to Dollar Thrifty stockholders. On September 30, 2010, stockholders of Dollar Thrifty did not vote in favor of the proposal to adopt the Merger Agreement. As a result, on October 1, 2010, we terminated the Merger Agreement. We incurred legal, accounting, financial advisorynamed Executive Vice President and other expenses of approximately $20.5 million during the nine months ended September 30, 2010 in connection with the terminated Dollar Thrifty transaction.President, Hertz Equipment Rental Corporation.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations

The following discussion and analysis provides information that we believe to be relevant to an understanding of our consolidated financial condition and results of operations. Unless the context otherwise requires, in this Report on Form 10-Q, (i) "Hertz Holdings" means Hertz Global Holdings, Inc., our top-level holding company, (ii) "Hertz" means The Hertz Corporation, our primary operating company and a direct wholly-owned subsidiary of Hertz Investors, Inc., which is wholly-owned by Hertz Holdings, (iii) "we," "us" and "our" mean (a) prior to December 21, 2005, Hertz and its consolidated subsidiaries and (b) on and after December 21, 2005, Hertz Holdings and its consolidated subsidiaries, including Hertz, (iv) "HERC" means Hertz Equipment Rental Corporation, Hertz's wholly-owned equipment rental subsidiary, together with our various other wholly-owned international subsidiaries that conduct our industrial, construction and material handling equipment rental business, (v) "cars" means cars, crossovers and light trucks (including sport utility vehicles and, outside North America, light commercial vehicles), (vi) "program cars" means cars purchased by car rental companies under repurchase or guaranteed depreciation programs with car manufacturers, (vii) "non-program cars" mean cars not purchased under repurchase or guaranteed depreciation programs for which the car rental company is exposed to residual risk and (viii) "equipment" means industrial, construction and material handling equipment.

You should read the following discussion and analysis together with the section below entitled "Cautionary Note Regarding Forward-Looking Statements," with the financial statements and the related notes thereto contained elsewhere in this Form 10-Q, or this "Report."

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained or incorporated by reference in this Report and in reports we subsequently file with the United States Securities and Exchange Commission, or the "SEC," on Forms 10-K, 10-Q and file or furnish on Form 8-K, and in related comments by our management, include "forward-looking statements." Forward-looking statements include information concerning our liquidity and our possible or assumed future results of operations, including descriptions of our business strategies. These statements often include words such as "believe," "expect," "project," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar expressions. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. We believe these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on SEC Forms 10-K, 10-Q and 8-K.

Some important factors that could affect our actual results include, among others, those that may be disclosed from time to time in subsequent reports filed with the SEC, those described under "Item 1A—Risk Factors" included in Hertz Holdings' Annual Report on Form 10-K and Form 10-K/A for the fiscal year ended December 31, 2009,2010, filed with the SEC, on February 26, 2010 and March 1, 2010, respectively,25, 2011, or collectively known as our "Annual Report,"Form 10-K," and in Part II, "Item 1A- 1ARisk Factors" included in Hertz Holdings' Quarterly Report on thethis Form 10-Q for the quarterly period ended June 30, 2010, or "Second Quarter Form 10-Q" and the following, which were derived in part from the risks set forth in the Annual Report and the Second Quarter Form 10-Q:10-K:


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of

                 Operations (Continued)


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Corporate History

We areHertz Holdings was incorporated in Delaware in 2005 to serve as the top-level holding company for the consolidated Hertz business. Hertz was incorporated in Delaware in 1967. Hertz is a successor to corporations that have been engaged in the car and truck rental and leasing business since 1918 and the equipment rental business since 1965. Ford Motor Company, "Ford," acquired an ownership interest in Hertz in 1987. Prior to this, Hertz was a subsidiary of United Continental Holdings, was incorporatedInc. (formerly Allegis Corporation), which acquired Hertz's outstanding capital stock from RCA Corporation in Delaware in 2005 and had no operations prior to the Acquisition (as defined below).1985.

On December 21, 2005, investment funds associated with or designated by:

or collectively the "Sponsors," acquired all of Hertz's common stock from Ford Holdings LLC. We refer to the acquisition of all of Hertz's common stock by the Sponsors as the "Acquisition." Following

In March 2011, the Sponsors sold 50,000,000 shares of their Hertz Holdings common stock to Goldman, Sachs & Co. as the sole underwriter in the registered public offering of those shares.

As a result of our initial public offering in November 2006 and subsequent offerings in June 2007, May 2009, and June 2009 and March 2011, the Sponsors currently ownreduced their holdings to approximately 51%39% of the outstanding shares of common stock of Hertz Holdings.

In January 2009, Bank of America Corporation, or "Bank of America," acquired Merrill Lynch & Co., Inc., the parent company of MLGPE.BAMLCP. Accordingly, Bank of America is now an indirect beneficial owner of our common stock held by MLGPEBAMLCP and certain of its affiliates.

Overview of Our Business

We are engaged principally in the business of renting cars and renting equipment.

Our revenues primarily are derived from rental and related charges and consist of:


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Our equipment rental business also derives revenues from the sale of new equipment and consumables.

Our expenses primarily consist of:


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Our profitability is primarily a function of the volume, mix and pricing of rental transactions and the utilization of cars and equipment. Significant changes in the purchase price or residual values of cars and equipment or interest rates can have a significant effect on our profitability depending on our ability to adjust pricing for these changes. We continue to balance our mix of non-program and program vehicles based on market conditions. Our business requires significant expenditures for cars and equipment, and consequently we require substantial liquidity to finance such expenditures. See "Liquidity and Capital Resources" below.

In the U.S., as of September 30,March 31, 2011, the percentage of non-program cars was 77% as compared to 66% as of March 31, 2010. Internationally, as of March 31, 2011 and 2010, the percentage of non-program cars remained the same at 65%. In the U.S., as of December 31, 2010, the percentage of non-program cars was 64%72% as compared to 66%67% as of September 30,December 31, 2009. Internationally, as of September 30,December 31, 2010, the percentage of non-program cars was 60%70%, compared to 59% as of September 30, 2009. In the U.S.,71% as of December 31, 2009,2009.

In recent periods we have decreased the percentage of program cars in our car rental fleet and we expect this percentage to continue to decrease in the future. Non-program cars typically have lower acquisition costs and lower depreciation rates than comparable program cars. As a result of decreasing our reliance on program cars, we reduce our risk related to the creditworthiness of the vehicle manufacturers. With fewer program cars in our fleet, we have an increased risk that the market value of a car at the time of its disposition will be less than its estimated residual value. Program cars generally provide us with flexibility to reduce the size of our fleet by returning cars sooner than originally expected without risk of loss in the event of an economic downturn or to respond to changes in rental demand. This flexibility will be reduced as the percentage of non-program cars was 67%in our car rental fleet increases. Furthermore, it is expected that the average age of our fleet will increase since the average holding period for non-program vehicles is longer than program vehicles. However, the longer holding period does not necessarily equate to higher costs due to the stringent turnback requirements imposed by vehicle manufacturers for program cars.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

In the three months ended March 31, 2011, our vehicle depreciation costs decreased as compared to 74% as of December 31, 2008. Internationally, as of December 31, 2009, the percentageprior year period due to improved residual values, a continued move towards a greater proportion of non-program cars was 71%, compared to 68% as of December 31, 2008.vehicles, mix optimization and improved procurement and remarketing efforts.

For the ninethree months ended September 30, 2010,March 31, 2011, we experienced a 9.1%4.4% increase in transaction days versus the prior period in the United States, andwhile rental rate revenue per transaction day, or "RPD," increased 0.3%declined by 1.5%. During the ninethree months ended September 30, 2010,March 31, 2011, in our European operations, we experienced a 3.6%5.8% improvement in transaction days and a 1.8% improvement0.8% increase in our car rental RPD compared to the ninethree months ended September 30, 2009.March 31, 2010.

Our U.S. off-airport operations represented $816.6$262.1 million and $722.0$231.7 million of our total car rental revenues in the ninethree months ended September 30,March 31, 2011 and 2010, and 2009, respectively. As of September 30, 2010,March 31, 2011, we have 1,890approximately 1,960 off-airport locations. Our strategy includes selected openings of new off-airport locations, the disciplined evaluation of existing locations and the pursuit of same-store sales growth. Our strategy also includes increasing penetration in the off-airport market and growing the online leisure market with our Advantage brand, particularly in the longer length weekly sector, which is characterized by lower vehicle costs and lower transaction costs at a lower RPD. Increasing our penetration in these sectors is consistent with our long-term strategy to generate profitable growth. When we open a new off-airport location, we incur a number of costs, including those relating to site selection, lease negotiation, recruitment of employees, selection and development of managers, initial sales activities and integration of our systems with those of the companies who will reimburse the location's replacement renters for their rentals. A new off-airport location, once opened, takes time to generate its full potential revenues and, as a result, revenues at new locations do not initially cover their start-up costs and often do not, for some time, cover the costs of their ongoing operations.

In early 2010, Toyota announced recalls of several of its models. As such, we temporarily took a portion of our Toyota fleet out of service. Approximately 13% of our total U.S. car rental fleet was affected by the largest of these recalls. We rapidly made repairs to the recalled vehicles and returned them to our car rental fleet. There was a short-term impact on our business to cover the costs associated with repairing these vehicles; however, we believe that this recall will not have a long-term material impact on our business. Also, we unfortunately turned away some, but not a significant number of rentals as a result of this recall. See "Item 1A—Risk Factors" included in our Annual Report and Second Quarter Form 10-Q.

HERC experienced lowerhigher rental volumes, andwhile pricing remained relatively flat worldwide for the ninethree months ended September 30, 2010March 31, 2011 compared to the prior year period.


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ITEM 2.    Management's Discussionperiod as commercial construction markets continued to be suppressed and Analysis of Financial Conditioncredit markets for capital expansion remained tight. Pricing remains challenging and Results of
                 Operations (Continued)
irrational at times although as fleet levels begin to align with demand, we expect to see upward movement in the industry. Volume improvements were primarily due to the industrial recovery, HERC specialty services as well as government work, coordinating with efforts to balance our customer portfolio.

HERC locations:

 
 Total U.S. Canada France Spain Italy China 

December 31, 2009

  322  214  35  66  4    3 
 

Net increase (decrease)

  (9) (9)   (1)     1 
 

Additions relating to acquisitions

  1          1   
                

September 30, 2010

  314  205  35  65  4  1  4 
                
 
 Total U.S. Canada France Spain Italy China 

December 31, 2010

  322  210  38  65  4  1  4 
 

Net increase

  1  1           
                

March 31, 2011

  323  211  38  65  4  1  4 
                

Our car rental and equipment rental operations are seasonal businesses, with decreased levels of business in the winter months and heightened activity during the spring and summer. We have the ability to dynamically manage fleet capacity, the most significant portion of our cost structure, to meet market demand. For instance, to accommodate increased demand, we increase our available fleet and staff during the second and third quarters of the year. As business demand declines, fleet and staff are decreased accordingly. A number of our other major operating costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes. In addition, our management expects to utilize enhanced process improvements, including efficiency initiatives and the use of our information technology systems, to help manage our variable costs.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


Approximately two-thirds of our typical annual operating costs represent variable costs, while the remaining one-third is fixed or semi-fixed. We also maintain a flexible workforce, with a significant number of part time and seasonal workers. However, certain operating expenses, including minimum concession fees, rent, insurance, and administrative overhead, remain fixed and cannot be adjusted for seasonal demand.

During the nine months ended September 30, 2010, ourfirst quarter of 2011, we continued to streamline operations and reduce costs with the closure of several car rental and equipment rental business incurred charges for losses on available for sale equipment and the disposal of surplus equipment and recognition of future facility lease obligations related to branch closures in North America. Additionally, our European car rental business has incurred charges primarily associated with employee severance and relocationlocations globally as well as a result of the pan-European migration of in-country back office operations toreduction in our shared services center in Dublin, Ireland. During the nine months ended September 30, 2010, restructuring charges included employee termination liabilities coveringworkforce by approximately 445100 employees.

For the three and nine months ended September 30,March 31, 2011 and 2010, our consolidated statement of operations includes restructuring charges relating to the initiatives discussed above of $14.6$4.9 million and $45.5 million, respectively. For the three and nine months ended September 30, 2009, our consolidated statement of operations includes restructuring charges relating to the initiatives discussed above of $35.7 million and $87.2$10.7 million, respectively.

Additional efficiency and cost saving initiatives are being developed during 2011. In April 2011, we closed eleven equipment rental locations and expect to close an additional one or two locations in the remainder of the second quarter of 2011. We estimate that these equipment rental location closures will result in $20 to $30 million of restructuring charges in the second quarter of 2011. See Note 13 of12 to the Notes to our condensed consolidated financial statements included in this Report.

On April 25, 2010, we entered into a definitive merger agreement, or the "Merger Agreement," under which we agreed to acquire Dollar Thrifty Automotive Group, Inc. or "Dollar Thrifty," subject to certain conditions, including the condition that Dollar Thrifty shareholders vote to adopt the Merger Agreement. The Merger Agreement was subsequently amended on September 10, 2010, to increase the consideration payable by us to Dollar Thrifty stockholders. On September 30, 2010, stockholders of Dollar Thrifty did not vote in favor of the proposal to adopt the Merger Agreement. As a result, on October 1, 2010, we terminated the Merger Agreement. We incurred legal, accounting, financial advisory and other expenses of approximately $20.5 million during the nine months ended September 30, 2010 in connection with the terminated Dollar Thrifty transaction.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

RESULTS OF OPERATIONS

Three Months Ended September 30, 2010March 31, 2011 Compared with Three Months Ended September 30, 2009March 31, 2010

Summary

The following table sets forth the percentage of total revenues represented by the various line items set forth in our consolidated statements of operations for the three months ended September 30,March 31, 2011 and 2010 and 2009 (in millions of dollars):

 
  
  
 Percentage of Revenues 
 
 Three Months Ended
September 30,
 Three Months Ended
September 30,
 
 
 2010 2009 2010 2009 

Revenues:

             
 

Car rental

 $1,862.6 $1,724.9  85.2% 84.5%
 

Equipment rental

  281.1  280.3  12.9  13.7 
 

Other

  42.6  36.2  1.9  1.8 
          
  

Total revenues

  2,186.3  2,041.4  100.0  100.0 
          

Expenses:

             
 

Direct operating

  1,157.5  1,118.6  52.9  54.8 
 

Depreciation of revenue earning equipment

  501.0  499.1  22.9  24.4 
 

Selling, general and administrative

  168.7  179.7  7.7  8.8 
 

Interest expense

  202.2  169.3  9.3  8.3 
 

Interest and other income, net

  (1.4) (1.1)    
          
  

Total expenses

  2,028.0  1,965.6  92.8  96.3 
          

Income before income taxes

  158.3  75.8  7.2  3.7 

(Provision) benefit for taxes on income

  3.0  (6.9) 0.2  (0.3)
          

Net income

  161.3  68.9  7.4  3.4 

Less: Net income attributable to noncontrolling interest

  (4.7) (4.4) (0.2) (0.2)
          

Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $156.6 $64.5  7.2% 3.2%
          
 
  
  
 Percentage of Revenues 
 
 Three Months Ended
March 31,
 Three Months Ended
March 31,
 
 
 2011 2010 2011 2010 

Revenues:

             
 

Car rental

 $1,478.9 $1,396.6  83.1% 84.1%
 

Equipment rental

  268.1  237.0  15.1  14.3 
 

Other

  33.0  27.3  1.8  1.6 
          
  

Total revenues

  1,780.0  1,660.9  100.0  100.0 
          

Expenses:

             
 

Direct operating

  1,073.7  1,013.0  60.3  61.0 
 

Depreciation of revenue earning equipment and lease charges

  436.1  459.2  24.5  27.6 
 

Selling, general and administrative

  182.2  167.7  10.2  10.1 
 

Interest expense

  196.9  181.1  11.1  10.9 
 

Interest income

  (1.9) (2.3) (0.1) (0.1)
 

Other (income) expense, net

  51.9    2.9   
          
  

Total expenses

  1,938.9  1,818.7  108.9  109.5 
          

Loss before income taxes

  (158.9) (157.8) (8.9) (9.5)

Benefit for taxes on income

  30.0  11.0  1.7  0.6 
          

Net loss

  (128.9) (146.8) (7.2) (8.9)

Less: Net income attributable to noncontrolling interest

  (3.7) (3.6) (0.2) (0.2)
          

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $(132.6)$(150.4) (7.4)% (9.1)%
          

Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

The following table sets forth certain of our selected car rental, equipment rental and other operating data for the three months ended or as of September 30, 2010March 31, 2011 and 2009:2010:



 Three Months Ended
or as of September 30,
 
 Three Months Ended
or as of March 31,
 


 2010 2009 
 2011 2010 

Selected Car Rental Operating Data:

Selected Car Rental Operating Data:

 

Selected Car Rental Operating Data:

 

Worldwide number of transactions (in thousands)

 6,969 6,489 

Worldwide number of transactions (in thousands)

 6,028 5,857 
 

Domestic

 5,016 4,629  

Domestic

 4,479 4,397 
 

International

 1,953 1,860  

International

 1,549 1,460 

Worldwide transaction days (in thousands)(a)

 36,441 33,668 

Worldwide transaction days (in thousands)(a)

 29,648 28,116 
 

Domestic

 23,637 21,705  

Domestic

 20,821 19,939 
 

International

 12,804 11,963  

International

 8,827 8,177 

Worldwide rental rate revenue per transaction day(b)

 $45.53 $45.02 

Worldwide rental rate revenue per transaction day(b)

 $42.26 $42.69 
 

Domestic

 $44.21 $43.47  

Domestic

 $41.34 $41.96 
 

International

 $47.96 $47.82  

International

 $44.41 $44.49 

Worldwide average number of company-operated cars during the period

 487,100 447,800 

Worldwide average number of company-operated cars during the period

 427,400 417,700 
 

Domestic

 312,400 285,500  

Domestic

 295,700 293,700 
 

International

 174,700 162,300  

International

 131,700 124,000 

Adjusted pre-tax income (in millions of dollars)(c)

 $309.3 $258.3 

Adjusted pre-tax income (in millions of dollars)(c)

 $61.3 $27.1 

Worldwide revenue earning equipment, net (in millions of dollars)

 $8,119.4 $7,157.1 

Worldwide revenue earning equipment, net (in millions of dollars)

 $7,714.2 $7,649.0 

Selected Worldwide Equipment Rental Operating Data:

Selected Worldwide Equipment Rental Operating Data:

 

Selected Worldwide Equipment Rental Operating Data:

 

Rental and rental related revenue (in millions of dollars)(d)

 $259.9 $256.7 

Rental and rental related revenue (in millions of dollars)(d)

 $243.1 $215.6 

Same store revenue growth (decline), including growth initiatives(e)

 2.6% (34.1)%

Same store revenue growth (decline), including growth initiatives(e)

 10.6% (17.8)%

Average acquisition cost of rental equipment operated during the period (in millions of dollars)

 $2,691.9 $2,833.7 

Average acquisition cost of rental equipment operated during the period (in millions of dollars)

 $2,756.8 $2,780.0 

Adjusted pre-tax income (in millions of dollars)(c)

 $33.7 $25.2 

Adjusted pre-tax income (loss) (in millions of dollars)(c)

 $10.2 $(5.0)

Revenue earning equipment, net (in millions of dollars)

 $1,681.4 $1,893.1 

Revenue earning equipment, net (in millions of dollars)

 $1,687.1 $1,743.4 

(a)
Transaction days represents the total number of days that vehicles were on rent in a given period.

(b)
Car rental rate revenue consists of all revenue, net of discounts, associated with the rental of cars including charges for optional insurance products, but excluding revenue derived from fueling and concession and other expense pass-throughs, NeverLost units in the U.S. and certain ancillary revenue. Rental rate revenue per transaction day is calculated as total rental rate revenue, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management as it represents the best measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control. The optional insurance products are packaged within certain negotiated corporate, government and membership programs and within certain retail rates being charged. Based upon these existing programs and rate packages, management believes that these optional insurance products should be consistently included in the daily pricing of car rental transactions. On the other hand, non-rental rate revenue items such as refueling and concession pass-through expense items are driven by factors beyond the control of management (i.e. the price of fuel and the concession fees charged by airports). Additionally, NeverLost units are an optional revenue product which management does not consider to be part of their daily pricing of car rental transactions. The following table reconciles our car rental

Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

  
 Three Months Ended
September 30,
 
  
 2010 2009 
 

Car rental segment revenues

 $1,903.5 $1,757.7 
 

Non-rental rate revenue

  (297.5) (257.2)
 

Foreign currency adjustment

  53.0  15.1 
       
 

Rental rate revenue

 $1,659.0 $1,515.6 
       
 

Transaction days (in thousands)

  36,441  33,668 
 

Rental rate revenue per transaction day (in whole dollars)

 $45.53 $45.02 
  
 Three Months Ended
March 31,
 
  
 2011 2010 
 

Car rental segment revenues

 $1,510.3 $1,421.7 
 

Non-rental rate revenue

  (248.0) (222.9)
 

Foreign currency adjustment

  (9.5) 1.5 
       
 

Rental rate revenue

 $1,252.8 $1,200.3 
       
 

Transaction days (in thousands)

  29,648  28,116 
 

Rental rate revenue per transaction day (in whole dollars)

 $42.26 $42.69 
(c)
Adjusted pre-tax income is calculated as income (loss) before income taxes plus non-cash purchase accounting charges, non-cash debt charges and certain one-time charges and non-operational items. Adjusted pre-tax income is the measure utilized by management in making decisions about allocating resources to segments and measuring their performance. Management believes this measure best reflects the financial results from ongoing operations. The following table reconciles income before income taxes by segmentcontribution of our reportable segments to adjusted pre-tax income by segment for the three months ended September 30, 2010(loss) and 2009reconciliation to consolidated amounts are presented below (in millions of dollars):

  
 Three Months Ended
September 30, 2010
 
  
 Car
Rental
 Equipment
Rental
 
 

Income before income taxes

 $261.2 $7.6 
 

Adjustments:

       
  

Purchase accounting(1)

  9.1  13.9 
  

Non-cash debt charges(2)

  34.4  1.6 
  

Restructuring charges

  4.0  10.6 
  

Restructuring related charges(3)

  0.6   
       
 

Adjusted pre-tax income

 $309.3 $33.7 
       


  
 Three Months Ended
September 30, 2009
 
  
 Car
Rental
 Equipment
Rental
 
 

Income before income taxes

 $174.2 $3.0 
 

Adjustments:

       
  

Purchase accounting(1)

  10.4  10.8 
  

Non-cash debt charges(2)

  37.7  2.2 
  

Restructuring charges

  25.4  9.1 
  

Restructuring related charges(3)

  10.6  0.1 
       
 

Adjusted pre-tax income

 $258.3 $25.2 
       
  
 Three Months Ended
March 31,
 
  
 2011 2010 
 

Adjusted pre-tax income (loss):

       
  

Car rental

 $61.3 $27.1 
  

Equipment rental

  10.2  (5.0)
       
   

Total reportable segments

  71.5  22.1 
 

Adjustments:

       
  

Other reconciling items(1)

  (87.5) (91.3)
  

Purchase accounting(2)

  (20.6) (22.1)
  

Non-cash debt charges(3)

  (59.9) (48.8)
  

Restructuring charges

  (4.9) (10.7)
  

Restructuring related charges(4)

  (0.5) (5.3)
  

Derivative losses(5)

    (1.7)
  

Acquisition related costs

  (2.8)  
  

Management transition costs

  (2.5)  
  

Premiums paid on debt(6)

  (51.7)  
       
    

Loss before income taxes

 $(158.9)$(157.8)
       


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

(d)
Equipment rental and rental related revenue consists of all revenue, net of discounts, associated with the rental of equipment including charges for delivery, loss damage waivers and fueling, but excluding revenue arising from the sale of equipment, parts and supplies and certain other ancillary revenue. Rental and rental related revenue is adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management as it is utilized in the measurement of rental revenue generated per dollar invested in fleet on an annualized basis and is comparable with the reporting of other industry participants. The following table reconciles our equipment rental segment revenues to our equipment rental and rental related revenue (based on December 31, 20092010 foreign exchange rates) for the three months ended September 30,March 31, 2011 and 2010 and 2009 (in millions of dollars):

  
 Three Months Ended
September 30,
 
  
 2010 2009 
 

Equipment rental segment revenues

 $281.2 $280.5 
 

Equipment sales and other revenue

  (24.1) (26.5)
 

Foreign currency adjustment

  2.8  2.7 
       
 

Rental and rental related revenue

 $259.9 $256.7 
       
  
 Three Months Ended
March 31,
 
  
 2011 2010 
 

Equipment rental segment revenues

 $268.2 $237.0 
 

Equipment sales and other revenue

  (23.4) (22.1)
 

Foreign currency adjustment

  (1.7) 0.7 
       
 

Rental and rental related revenue

 $243.1 $215.6 
       
(e)
Same store revenue growth (decline) representsor decline is calculated as the year over year change in revenue for locations that are open at the current period total same store revenue over the prior period total same store revenue as a percentageend of the prior period.period reported and have been operating under our direction for more than twelve months. The same store revenue amounts are adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends.

REVENUES



 Three Months Ended
September 30,
  
  
 
 Three Months Ended
March 31,
  
  
 
(in millions of dollars)
(in millions of dollars)
 2010 2009 $ Change % Change (in millions of dollars)
 2011 2010 $ Change % Change 

Revenues by Segment:

 

Revenues by Segment

Revenues by Segment

 

Car rental

 $1,903.5 $1,757.7 $145.8 8.3%

Car rental

 $1,510.3 $1,421.7 $88.6 6.2%

Equipment rental

 281.2 280.5 0.7 0.2%

Equipment rental

 268.2 237.0 31.2 13.2%

Other reconciling items

 1.6 3.2 (1.6) (50.0)%

Other reconciling items

 1.5 2.2 (0.7) (31.8)%
                   
 

Total revenues

 $2,186.3 $2,041.4 $144.9 7.1% 

Total revenues

 $1,780.0 $1,660.9 $119.1 7.2%
                   

Car Rental Segment

Revenues from our car rental segment increased 8.3%6.2%, primarily as a result of increases in car rental transaction days worldwide of 8.2%, worldwide RPD of 1.1%5.4%, refueling fees of $11.0$8.3 million and airport concession recovery fees of $10.7$8.2 million partly offset byas well as the effects of foreign currency translation of approximately $38.0 million.$14.4 million, partly offset by a decrease in worldwide RPD.

RPD for worldwide car rental for the three months ended September 30,March 31, 2011 decreased 1.0% from 2010, increased 1.1% from 2009, due to increasesdecreases in U.S. RPD of 1.7% and in International RPD of 0.3%1.5% and 0.2%, respectively. The decrease in International was lessened by an increase in Europe RPD of 0.8%. U.S. off-airport RPD improved by 4.8%0.6% and U.S. airport RPD increased 0.7%decreased 1.3%. U.S. airport RPD decreased due to the lower RPD that our Advantage brand generates, as well as the competitive pricing environment.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Equipment Rental Segment

Revenues from our equipment rental segment increased 0.2%13.2%, primarily due to a 3.2%14.3% increase in equipment rental volume and the effects of foreign currency translation of approximately $0.3 million, partly offset by a 2.9% decline$2.9 million. The increase in pricing and a decrease in equipment sales of $2.0 million.volume was primarily due to strong industrial performance.

Other

Revenues from all other sources decreased $1.6 million,31.8%, primarily due to a decrease in revenues from our third-party claim management services.

EXPENSES



 Three Months Ended
September 30,
  
  
 
 Three Months Ended
March 31,
  
  
 
(in millions of dollars)
(in millions of dollars)
 2010 2009 $ Change % Change (in millions of dollars)
 2011 2010 $ Change % Change 

Expenses:

Expenses:

 

Expenses:

 

Fleet related expenses

 $284.3 $253.8 $30.5 12.0%

Fleet related expenses

 $249.9 $229.0 $20.9 9.1%

Personnel related expenses

 353.0 347.0 6.0 1.7%

Personnel related expenses

 366.0 346.4 19.6 5.6%

Other direct operating expenses

 520.2 517.8 2.4 0.5%

Other direct operating expenses

 457.8 437.6 20.2 4.6%
                   
 

Direct operating

 1,157.5 1,118.6 38.9 3.5% 

Direct operating

 1,073.7 1,013.0 60.7 6.0%
 

Depreciation of revenue earning equipment

 501.0 499.1 1.9 0.4% 

Depreciation of revenue earning equipment and lease charges

 436.1 459.2 (23.1) (5.0)%
 

Selling, general and administrative

 168.7 179.7 (11.0) (6.2)% 

Selling, general and administrative

 182.2 167.7 14.5 8.6%
 

Interest expense

 202.2 169.3 32.9 19.4% 

Interest expense

 196.9 181.1 15.8 8.7%
 

Interest and other income, net

 (1.4) (1.1) (0.3) 27.1% 

Interest income

 (1.9) (2.3) 0.4 (18.6)%
          

Other (income) expense, net

 51.9  51.9 NM 
 

Total expenses

 $2,028.0 $1,965.6 $62.4 3.2%          
          

Total expenses

 $1,938.9 $1,818.7 $120.2 6.6%
         

Total expenses increased 3.2%6.6%, however,and total expenses as a percentage of revenues decreased from 96.3%109.5% for the three months ended September 30, 2009March 31, 2010 to 92.8%108.9% for the three months ended September 30, 2010.March 31, 2011.

Direct Operating Expenses

Car Rental Segment

Direct operating expenses for our car rental segment of $903.8 million for the three months ended March 31, 2011 increased 3.5%5.2% from $859.4 million for the three months ended March 31, 2010 as a result of increases in personnel related expenses, fleet related expenses and other direct operating expenses.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Equipment Rental Segment

Direct operating expenses for our equipment rental segment of $170.8 million for the three months ended March 31, 2011 increased 8.7% from $157.1 million for the three months ended March 31, 2010 as a result of increases in fleet related expenses, personnel relatedother direct operating expenses and other direct operatingpersonnel related expenses.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Depreciation of Revenue Earning Equipment and Lease Charges

Car Rental Segment

Depreciation of revenue earning equipment and lease charges for our car rental segment of $432.7$368.9 million for the three months ended September 30, 2010 increased 1.7%March 31, 2011 decreased 5.0% from $425.4$388.3 million for the three months ended September 30, 2009.March 31, 2010. The increasedecrease was primarily relateddue to an 8.8% increaseimprovement in the sizecertain vehicle residual values and a higher mix of our average fleet,non-program cars, partly offset by the effects of foreign currency translation.translation of approximately $3.5 million.

Equipment Rental Segment

Depreciation of revenue earning equipment and lease charges in our equipment rental segment of $68.3$67.2 million for the three months ended September 30, 2010March 31, 2011 decreased 7.3%5.2% from $73.7$70.9 million for the three months ended September 30, 2009.March 31, 2010. The decrease was primarily due to a 5.0% reduction0.8% decrease in the average acquisition cost of rental equipment operated during the period.period and higher residual values on the disposal of used equipment.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 6.2%increased 8.6%, due to a decreaseincreases in administrative expenses and sales promotion expenses, partly offset by an increasea decrease in advertising.

Interest Expense

Car Rental Segment

Interest expense for our car rental segment of $113.7$75.4 million for the three months ended September 30, 2010 increased 49.6%March 31, 2011 decreased 15.6% from $76.0$89.3 million for the three months ended September 30, 2009.March 31, 2010. The increasedecrease was primarily due to an increasea decrease in the weighted average debt outstanding as a result of an increased fleet size.outstanding.

Equipment Rental Segment

Interest expense for our equipment rental segment of $9.1$11.1 million for the three months ended September 30, 2010 decreased 34.5%March 31, 2011 increased 8.8% from $13.9$10.2 million for the three months ended September 30, 2009.March 31, 2010. The decreaseincrease was primarily due to a portion of the write-off of the unamortized debt costs in connection with the refinancing of our Senior ABL Facility which was allocated to our equipment rental segment, partly offset by a reduction in the weighted average debt outstanding as a result of reduceda decreased fleet size.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Other

Other interest expense relating to interest on corporate debt of $79.4$110.4 million for the three months ended September 30, 2010 remained the same asMarch 31, 2011 increased 35.3% from $81.6 million for the three months ended September 30, 2009.March 31, 2010. The increase was primarily due to the write-off of unamortized debt costs in connection with the refinancing of our Senior Term Facility and Senior ABL Facility, financing costs incurred in connection with the new Senior Term Facility and the write-off of unamortized debt costs in connection with the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes in 2011.

Interest and Income

Interest income decreased $0.4 million.

Other Income,(Income) Expense, Net

Interest and other income,Other (income) expense, net increased $0.3 million.$51.9 million primarily due to premiums paid in connection with the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes during 2011.

ADJUSTED PRE-TAX INCOME (LOSS)

Car Rental Segment

Adjusted pre-tax income for our car rental segment of $309.3$61.3 million increased $34.2 million from $27.1 million for the three months ended September 30, 2010 increased 19.7% from $258.3 million for the three months ended September 30, 2009.March 31, 2010. The increase was primarily due to stronger volumes, increased pricingimproved residual values and disciplined cost management.management, partly offset by decreased pricing. Adjustments to our car rental segment income before income taxes on a GAAP basis for the three months ended September 30,March 31, 2011 and 2010, totaled $20.3 million (non-cash debt charges of $10.2 million, purchase accounting of $8.1 million, restructuring and 2009, totaled $48.1related charges of $1.5 million and $84.1loss on derivatives of $0.5 million) and $57.2 million (non-cash debt charges of $37.0 million, restructuring and related charges of $10.4 million and purchase accounting of $9.8 million), respectively. See footnote c(c) to the table under "Results of Operations" for a summary and description of these adjustments.

Equipment Rental Segment

Adjusted pre-tax income for our equipment rental segment of $33.7$10.2 million increased $15.2 million from adjusted pre-tax loss of $5.0 million for the three months ended September 30, 2010 increased 33.7% from $25.2 million for the three months ended September 30, 2009.March 31, 2010. The increase was primarily due to stronger volumes, and disciplinedstrong cost management performance.performance and higher residual values on the disposal of used equipment, while pricing remained relatively flat. Adjustments to our equipment rental segment incomeloss before income taxes on a GAAP basis for the three months ended September 30,March 31, 2011 and 2010, and 2009, totaled $26.1$18.0 million (purchase accounting of $11.6 million, restructuring charges of $3.9 million and $22.2non-cash debt charges of $2.5 million) and $18.4 million (purchase accounting of $11.5 million, restructuring and related charges of $5.0 million and non-cash debt charges of $1.9 million), respectively. See footnote c(c) to the table under "Results of Operations" for a summary and description of these adjustments.

(PROVISION) BENEFIT FOR TAXES ON INCOME, NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS AND NET INCOME ATTRIBUTABLE TO HERTZ HOLDINGS, INC. AND SUBSIDIARIES' COMMON STOCKHOLDERS

 
 Three Months Ended
September 30,
  
  
 
(in millions of dollars)
 2010 2009 $ Change % Change 

Income before income taxes

 $158.3 $75.8 $82.5  108.9%

(Provision) benefit for taxes on income

  3.0  (6.9) 9.9  144.4%
           

Net income

  161.3  68.9  92.4  133.9%

Less: Net income attributable to noncontrolling interests

  (4.7) (4.4) (0.3) 5.0%
           

Net income attributable to Hertz Holdings, Inc. and Subsidiaries' common stockholders

 $156.6 $64.5 $92.1  142.7%
           

Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

(Provision) BENEFIT FOR TAXES ON INCOME, NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST AND NET LOSS ATTRIBUTABLE TO HERTZ HOLDINGS, INC. AND SUBSIDIARIES' COMMON STOCKHOLDERS

 
 Three Months Ended
March 31,
  
  
 
(in millions of dollars)
 2011 2010 $ Change % Change 

Loss before income taxes

 $(158.9)$(157.8)$(1.1) 0.7%

Benefit for taxes on income

  30.0  11.0  19.0  171.7%
           

Net loss

  (128.9) (146.8) 17.9  (12.2)%

Less: Net income attributable to noncontrolling interest

  (3.7) (3.6) (0.1) 2.7%
           

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $(132.6)$(150.4)$17.8  (11.8)%
           

Benefit for Taxes on Income

The benefit for taxes on income for the three months ended September 30, 2010 was $3.0 million and the provision for taxes on income in the three months ended September 30, 2009 was $6.9 million. The change was primarily due to the mix of income before income taxes in various taxing jurisdictions and discrete benefits in the three months ended September 30, 2010 as compared to the mix of income before income taxes in various taxing jurisdictions and discrete benefits in the three months ended September 30, 2009. The effective tax rate for the three months ended September 30, 2010March 31, 2011 was (1.9)%18.8% as compared to 9.0%7.0% in the three months ended September 30, 2009.March 31, 2010. The change in tax rates is generallybenefit for taxes on income increased $19.0 million, primarily due to the factors noted above.changes in geographic earnings mix and changes in losses in certain non-U.S. jurisdictions for which tax benefits cannot be realized.

Net Income Attributable to Noncontrolling InterestsInterest

Net income attributable to noncontrolling interestsinterest increased 5.0%2.7% due to an increase in our majority-owned subsidiary Navigation Solutions, L.L.C.'s net income for the three months ended September 30, 2010March 31, 2011 as compared to the three months ended September 30, 2009.March 31, 2010.

Net IncomeLoss Attributable to Hertz Global Holdings, Inc. and Subsidiaries' Common Stockholders

The net incomeloss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders increased $92.1 million,decreased 11.8% primarily due to higher rental volumevolumes in our worldwide car and equipment rental operations, increased pricing in our worldwide car rental operationsimproved residual values on the disposal of used equipment and certain vehicles and disciplined cost management, partly offset by lower pricing in our worldwide equipmentcar rental operations.operations, costs incurred in connection with the refinancing of our Senior Term Facility and Senior ABL Facility and the write-off of unamortized debt costs and premiums paid in connection with the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes during 2011. The impact of changes in exchange rates on net loss was mitigated by the fact that not only revenues but also most expenses outside of the United States were incurred in local currencies.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Nine Months Ended September 30, 2010 Compared with Nine Months Ended September 30, 2009

Summary

The following table sets forth the percentage of total revenues represented by the various line items set forth in our consolidated statements of operations for the nine months ended September 30, 2010 and 2009 (in millions of dollars):

 
  
  
 Percentage of Revenues 
 
 Nine Months Ended
September 30,
 Nine Months Ended
September 30,
 
 
 2010 2009 2010 2009 

Revenues:

             
 

Car rental

 $4,842.2 $4,436.7  84.5% 82.8%
 

Equipment rental

  783.8  836.4  13.7  15.6 
 

Other

  100.8  87.7  1.8  1.6 
          
  

Total revenues

  5,726.8  5,360.8  100.0  100.0 
          

Expenses:

             
 

Direct operating

  3,245.5  3,062.5  56.7  57.1 
 

Depreciation of revenue earning equipment

  1,416.9  1,468.2  24.7  27.4 
 

Selling, general and administrative

  508.5  488.0  8.9  9.1 
 

Interest expense

  572.1  498.3  10.0  9.3 
 

Interest and other income, net

  (10.4) (52.6) (0.2) (1.0)
          
  

Total expenses

  5,732.6  5,464.4  100.1  101.9 
          

Loss before income taxes

  (5.8) (103.6) (0.1) (1.9)

Benefit for taxes on income

  (0.2) 19.9    0.3 
          

Net income (loss)

  (6.0) (83.7) (0.1) (1.6)

Less: Net income attributable to noncontrolling interest

  (12.9) (11.4) (0.2) (0.2)
          

Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders

 $(18.9)$(95.1) (0.3)% (1.8)%
          

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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

The following table sets forth certain of our selected car rental, equipment rental and other operating data for the nine months ended or as of September 30, 2010 and 2009:

 
 Nine Months Ended
or as of September 30,
 
 
 2010 2009 

Selected Car Rental Operating Data:

       
 

Worldwide number of transactions (in thousands)

  19,647  18,413 
  

Domestic

  14,434  13,299 
  

International

  5,213  5,114 
 

Worldwide transaction days (in thousands)(a)

  96,751  89,925 
  

Domestic

  65,638  60,162 
  

International

  31,113  29,763 
 

Worldwide rental rate revenue per transaction day(a)(b)

 $44.10 $43.87 
  

Domestic

 $42.47 $42.33 
  

International

 $47.54 $46.98 
 

Worldwide average number of company-operated cars during the period

  451,000  413,100 
  

Domestic

  302,000  272,100 
  

International

  149,000  141,000 
 

Adjusted pre-tax income (in millions of dollars)(a)(c)

 $512.7 $368.4 
 

Worldwide revenue earning equipment, net (in millions of dollars)

 $8,119.4 $7,157.1 

Selected Worldwide Equipment Rental Operating Data:

       
 

Rental and rental related revenue (in millions of dollars)(a)(d)

 $715.4 $774.8 
 

Same store revenue decline, including growth initiatives(a)

  (6.9)% (29.5)%
 

Average acquisition cost of rental equipment operated during the period (in millions of dollars)

 $2,728.5 $2,888.8 
 

Adjusted pre-tax income (in millions of dollars)(a)(c)

 $43.0 $50.6 
 

Revenue earning equipment, net (in millions of dollars)

 $1,681.4 $1,893.1 

(a)
For further details relating to car rental transaction days, car rental rate revenue per transaction day, adjusted pre-tax income, equipment rental and rental related revenue and equipment rental same store revenue decline, see "Three Months Ended September 30, 2010 Compared with Three Months Ended September 30, 2009—Summary."

(b)
The following table reconciles our car rental segment revenues to our rental rate revenue and rental rate revenue per transaction day (based on December 31, 2009 foreign exchange rates) for the nine months ended September 30, 2010 and 2009 (in millions of dollars, except as noted):

  
 Nine Months Ended
September 30,
 
  
 2010 2009 
 

Car rental segment revenues

 $4,938.2 $4,515.3 
 

Non-rental rate revenue

  (785.5) (681.2)
 

Foreign currency adjustment

  114.3  110.7 
       
 

Rental rate revenue

 $4,267.0 $3,944.8 
       
 

Transaction days (in thousands)

  96,751  89,925 
 

Rental rate revenue per transaction day (in whole dollars)

 $44.10 $43.87 

Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

(c)
The following table reconciles income (loss) before income taxes by segment to adjusted pre-tax income by segment for the nine months ended September 30, 2010 and 2009 (in millions of dollars):

  
 Nine Months Ended
September 30, 2010
 
  
 Car
Rental
 Equipment
Rental
 
 

Income (loss) before income taxes

 $355.2 $(31.6)
 

Adjustments:

       
  

Purchase accounting(1)

  28.6  37.4 
  

Non-cash debt charges(2)

  107.8  5.7 
  

Restructuring charges

  13.4  31.4 
  

Restructuring related charges(3)

  7.7  0.1 
       
 

Adjusted pre-tax income

 $512.7 $43.0 
       


  
 Nine Months Ended
September 30, 2009
 
  
 Car
Rental
 Equipment
Rental
 
 

Income (loss) before income taxes

 $164.4 $(23.5)
 

Adjustments:

       
  

Purchase accounting(1)

  29.7  38.1 
  

Non-cash debt charges(2)

  91.9  6.8 
  

Restructuring charges

  50.3  28.9 
  

Restructuring related charges(3)

  27.8  0.3 
  

Third-party bankruptcy accrual(4)

  4.3   
       
 

Adjusted pre-tax income

 $368.4 $50.6 
       

    (1)
    Represents the purchase accounting effects of the Acquisition on our results of operations relating to increased depreciation and amortization of tangible and intangible assets and accretion of revalued workers' compensation and public liability and property damage liabilities. Also represents the purchase accounting effects of subsequent acquisitions on our results of operations relating to increased amortization of intangible assets.

    (2)
    Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. For the nine months ended September 30, 2010 and 2009, also includes $56.9 million and $52.2 million, respectively, associated with the amortization of amounts pertaining to the de-designation of the HVF interest rate swaps as effective hedging instruments.

    (3)
    Represents incremental, one-time costs incurred directly supporting our business transformation initiatives. Such costs include transition costs incurred in connection with our business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes.

    (4)
    Represents an allowance for uncollectible program car receivables related to a bankrupt European dealer affiliated with a U.S. car manufacturer.

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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

(d)
The following table reconciles our equipment rental segment revenues to our equipment rental and rental related revenue (based on December 31, 2009 foreign exchange rates) for the nine months ended September 30, 2010 and 2009 (in millions of dollars):

  
 Nine Months Ended
September 30,
 
  
 2010 2009 
 

Equipment rental segment revenues

 $784.1 $837.0 
 

Equipment sales and other revenue

  (75.0) (82.7)
 

Foreign currency adjustment

  6.3  20.5 
       
 

Rental and rental related revenue

 $715.4 $774.8 
       

REVENUES

 
 Nine Months Ended
September 30,
  
  
 
(in millions of dollars)
 2010 2009 $ Change % Change 

Revenues by Segment:

             
 

Car rental

 $4,938.2 $4,515.3 $422.9  9.4%
 

Equipment rental

  784.1  837.0  (52.9) (6.3)%
 

Other reconciling items

  4.5  8.5  (4.0) (47.1)%
           
  

Total revenues

 $5,726.8 $5,360.8 $366.0  6.8%
           

Car Rental Segment

Revenues from our car rental segment increased 9.4%, primarily as a result of increases in car rental transaction days worldwide of 7.6%, worldwide RPD of 0.5%, refueling fees of $35.0 million and airport concession recovery fees of $26.6 million, partly offset by the effects of foreign currency translation of approximately $2.1 million.

RPD for worldwide car rental for the nine months ended September 30, 2010 increased 0.5% from 2009, due to increases in International RPD of 1.2% and U.S. RPD of 0.3%. U.S. off-airport RPD improved by 3.4% and U.S. airport RPD decreased 0.8%. U.S. airport RPD decreased due to the lower RPD that our Advantage brand generates.

Equipment Rental Segment

Revenues from our equipment rental segment decreased 6.3%, primarily due to a 5.4% decrease in equipment rental volume, a 5.4% decline in pricing and a decrease in equipment sales of $9.8 million, partly offset by the effects of foreign currency translation of approximately $16.5 million.

Other

Revenues from all other sources decreased $4.0 million, primarily due to a decrease in revenues from our third-party claim management services.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

EXPENSES

 
 Nine Months Ended
September 30,
  
  
 
(in millions of dollars)
 2010 2009 $ Change % Change 

Expenses:

             
 

Fleet related expenses

 $762.1 $655.3 $106.8  16.3%
 

Personnel related expenses

  1,056.4  981.1  75.3  7.7%
 

Other direct operating expenses

  1,427.0  1,426.1  0.9  0.1%
           
  

Direct operating

  3,245.5  3,062.5  183.0  6.0%
  

Depreciation of revenue earning equipment

  1,416.9  1,468.2  (51.3) (3.5)%
  

Selling, general and administrative

  508.5  488.0  20.5  4.2%
  

Interest expense

  572.1  498.3  73.8  14.8%
  

Interest and other income, net

  (10.4) (52.6) 42.2  (80.2)%
           
   

Total expenses

 $5,732.6 $5,464.4 $268.2  4.9%
           

Total expenses increased 4.9%, but total expenses as a percentage of revenues decreased from 101.9% for the nine months ended September 30, 2009 to 100.1% for the nine months ended September 30, 2010.

Direct Operating Expenses

Direct operating expenses increased 6.0% as a result of increases in fleet related expenses, personnel related expenses, other direct operating expenses and the effects of foreign currency translation of approximately $11.3 million.

Depreciation of Revenue Earning Equipment

Car Rental Segment

Depreciation of revenue earning equipment for our car rental segment of $1,210.7 million for the nine months ended September 30, 2010 decreased 0.8% from $1,220.6 million for the nine months ended September 30, 2009. The decrease was primarily related to an improvement in certain vehicle residual values, partly offset by the effects of foreign currency translation.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Equipment Rental Segment

Depreciation of revenue earning equipment in our equipment rental segment of $206.2 million for the nine months ended September 30, 2010 decreased 16.7% from $247.6 million for the nine months ended September 30, 2009. The decrease was primarily due to a 5.6% reduction in average acquisition cost of rental equipment operated during the period and higher residual values on the disposal of used equipment, partly offset by the effects of foreign currency translation.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 4.2%, due to increases in advertising, administrative expenses and sales promotion expenses and the effects of foreign currency translation of approximately $1.0 million.

Interest Expense

Car Rental Segment

Interest expense for our car rental segment of $301.4 million for the nine months ended September 30, 2010 increased 34.5% from $224.1 million for the nine months ended September 30, 2009. The increase was primarily due to an increase in the weighted average debt outstanding as a result of an increased fleet size.

Equipment Rental Segment

Interest expense for our equipment rental segment of $29.6 million for the nine months ended September 30, 2010 decreased 29.9% from $42.2 million for the nine months ended September 30, 2009. The decrease was primarily due to a reduction in the weighted average debt outstanding as a result of reduced fleet size.

Other

Other interest expense relating to interest on corporate debt of $241.1 million for the nine months ended September 30, 2010 increased 3.9% from $232.0 million for the nine months ended September 30, 2009. The increase was primarily due to interest expense on the Convertible Senior Notes issued in May 2009.

Interest and Other Income, Net

Interest and other income, net decreased $42.2 million primarily due to a gain of $48.5 million, net of transaction costs, recorded in connection with the buyback of portions of our Senior Notes and Senior Subordinated Notes in 2009.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

ADJUSTED PRE-TAX INCOME

Car Rental Segment

Adjusted pre-tax income for our car rental segment of $512.7 million for the nine months ended September 30, 2010 increased 39.2% from $368.4 million for the nine months ended September 30, 2009. The increase was primarily due to stronger volumes, increased pricing and disciplined cost management. Adjustments to our car rental segment income before income taxes on a GAAP basis for the nine months ended September 30, 2010 and 2009, totaled $157.5 million and $204.0 million, respectively. See footnote c to the table under "Results of Operations" for a summary and description of these adjustments.

Equipment Rental Segment

Adjusted pre-tax income for our equipment rental segment of $43.0 million for the nine months ended September 30, 2010 decreased 15.0% from $50.6 million for the nine months ended September 30, 2009. The decrease was primarily due to reductions in volume and pricing, partly offset by strong cost management performance and higher residual values on the disposal of used equipment. Adjustments to our equipment rental segment loss before income taxes on a GAAP basis for the nine months ended September 30, 2010 and 2009, totaled $74.6 million and $74.1 million, respectively. See footnote c to the table under "Results of Operations" for a summary and description of these adjustments.

(PROVISION) BENEFIT FOR TAXES ON INCOME, NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS AND NET LOSS ATTRIBUTABLE TO HERTZ HOLDINGS, INC. AND SUBSIDIARIES' COMMON STOCKHOLDERS

 
 Nine Months Ended
September 30,
  
  
 
(in millions of dollars)
 2010 2009 $ Change % Change 

Loss before income taxes

 $(5.8)$(103.6)$97.8  (94.4)%

(Provision) benefit for taxes on income

  (0.2) 19.9  (20.1) (100.9)%
           

Net income (loss)

  (6.0) (83.7) 77.7  (92.9)%

Less: Net income attributable to noncontrolling interests

  (12.9) (11.4) (1.5) 13.2%
           

Net loss attributable to Hertz Holdings, Inc. and Subsidiaries' common stockholders

 $(18.9)$(95.1)$76.2  (80.1)%
           

(Provision) Benefit for Taxes on Income

The provision for taxes on income was $0.2 million for the nine months ended September 30, 2010 and the benefit for taxes on income was $19.9 million for the nine months ended September 30, 2009. The change was primarily due to a lower loss before income taxes and a reduction in discrete benefits recorded in the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. The effective tax rate for the nine months ended September 30, 2010 was (3.0)% as compared to 19.2% in the nine months ended September 30, 2009. The change in tax rates is generally due to the factors noted above.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased 13.2% due to an increase in our majority-owned subsidiary Navigation Solutions, L.L.C.'s net income for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009.

Net Loss Attributable to Hertz Holdings, Inc. and Subsidiaries' Common Stockholders

The net loss attributable to Hertz Holdings, Inc. and Subsidiaries' common stockholders decreased 80.1% primarily due to higher rental volume and increased pricing in our worldwide car rental operations and disciplined cost management, partly offset by lower rental volume and pricing in our worldwide equipment rental operations. The impact of changes in exchange rates on net loss was mitigated by the fact that not only revenues but also most expenses outside of the United States were incurred in local currencies.

LIQUIDITY AND CAPITAL RESOURCES

Our domestic and international operations are funded by cash provided by operating activities and by extensive financing arrangements maintained by us in the United States Europe, Puerto Rico, Australia, New Zealand, Canada and Brazil.

Cash Flows

As of September 30, 2010, we had cash and cash equivalents of $1,483.3 million, an increase of $497.7 million from $985.6 million as of December 31, 2009. The following table summarizes such increase:

 
 Nine Months Ended
September 30,
  
 
(in millions of dollars)
 2010 2009 $ Change 

Cash provided by (used in):

          
 

Operating activities

 $1,786.6 $1,307.2 $479.4 
 

Investing activities

  (2,550.2) (843.8) (1,706.4)
 

Financing activities

  1,295.6  (187.7) 1,483.3 

Effect of exchange rate changes

  (34.3) 56.7  (91.0)
        

Net change in cash and cash equivalents

 $497.7 $332.4 $165.3 
        

During the nine months ended September 30, 2010, we generated $479.4 million more cash from operating activities compared with the same period in 2009. The increase was primarily due to a change in accounts payable driven by effective management of vendor terms taken in 2010 and a change in accrued liabilities due to cash payments in 2009 relating to the buydown of our rate on our interest rate swaps as well as increased restructuring payments in 2009. On November 2, 2010 we issued our earnings press release which included preliminary results for our net cash provided by operating activities in the third quarter of 2010 of $904.7 million. This amount was overstated by $168.7 million due to the treatment of non-cash revenue earning equipment expenditures in the statement of cash flows.

Our primary use of cash in investing activities was for the acquisition of revenue earning equipment, which consists of cars and equipment. During the nine months ended September 30, 2010, we used $1,706.4 million more cash for investing activities compared with the same period in 2009. The use of funds was primarily due to an increase in revenue earning equipment expenditures and theinternationally.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


year-over-year change in restrictedCash Flows

As of March 31, 2011, we had cash and cash equivalents partly offsetof $1,365.8 million, a decrease of $1,008.4 million from $2,374.2 million as of December 31, 2010. The following table summarizes such decrease:

 
 Three Months Ended
March 31,
  
 
(in millions of dollars)
 2011 2010 $ Change 

Cash provided by (used in):

          
 

Operating activities

 $165.6 $284.7 $(119.1)
 

Investing activities

  (303.9) (509.0) 205.1 
 

Financing activities

  (891.8) 72.1  (963.9)

Effect of exchange rate changes

  21.7  (32.7) 54.4 
        

Net change in cash and cash equivalents

 $(1,008.4)$(184.9)$(823.5)
        

During the three months ended March 31, 2011, we generated $119.1 million less cash from operating activities compared with the same period in 2010. The decrease was primarily driven by premiums paid to redeem debt in the three months ended March 31, 2011, timing of interest payments and gasoline and parts inventory purchases and a reimbursement received from a manufacturer in the three months ended March 31, 2010.

Our primary use of cash in investing activities is for the acquisition of revenue earning equipment, which consists of cars and equipment. During the three months ended March 31, 2011, we used $205.1 million less cash for investing activities compared with the same period in 2010. The decrease in the use of funds was primarily due to a decrease in revenue earning equipment expenditures and an increase in proceeds from the disposal of revenue earning equipment.equipment, partly offset by the year-over-year change in restricted cash and cash equivalents. The increasedecrease in revenue earning equipment expenditures andwas primarily due to continued efforts to increase utilization of existing fleet. The increase in proceeds from the disposal of revenue earning equipment was related to higher car rental volumes and a general improvement in the car rental market. The year-over-year change in restricted cash and cash equivalents was primarily related to opportunistically selling our fleet while residuals are at peak levels as well as refreshing the economic conditions which affected the demand for revenue earning equipment andage of our Like Kind Exchange Program, or "LKE Program."fleet. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, we had $739.6$190.9 million and $365.2$207.6 million, respectively, of restricted cash and cash equivalents to be used for the purchase of revenue earning vehicles and other specified uses under our fleet financing facilities, our LKELike Kind Exchange Program, or "LKE Program," and to satisfy certain of our self-insurance regulatory reserve requirements. The increasedecrease in restricted cash and cash equivalents of $374.4$16.7 million from December 31, 20092010 to September 30, 2010,March 31, 2011, primarily related to the timing of purchases and sales of revenue earning vehicles, partly offset by a decrease relating to the temporary suspension of our LKE program. See "Income Taxes" below.vehicles.

During the ninethree months ended September 30, 2010,March 31, 2011, we generated $1,483.3$963.9 million moreless cash from financing activities compared with the same period in 2009.2010. The increase wasdecrease is primarily due to increasespayment of long-term debt (includes redemption of $518.5 million principal amount of 10.5% Senior Subordinated Notes, redemption of $1,105 million principal amount of our outstanding 8.875% Senior Notes and a payment of $1.3 billion for the 2005 Senior Term Facility), a decrease in proceeds under the revolving lines of credit, net and payments of short-term borrowings, partly offset by an increase in proceeds from the issuance of long-term debt (includes $1.4 billion Senior Term Facility issued March 2011 and net proceeds under the revolving lines$1 billion of credit, partly offset by the payment of long-term debt, prior year's proceeds from the sale of common stock6.75% Senior Notes issued in February and convertible debt offering and repayment of short-term borrowings.

Financing

Our car rental and equipment rental operations are seasonal businesses with decreased levels of business in the winter months and typically heightened activity during the spring and summer. To accommodate increased demand, we maintain a larger fleet by holding vehicles and equipment and purchasing additional fleet which increases our financing requirements. These seasonal financing needs are funded by increasing the utilization of our various corporate and fleet credit facilities and the variable funding notes portion of our U.S. Fleet Debt facilities as defined in Note 3 of the Notes to our audited annual consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data." As business demand moderates during the winter, we reduce our fleet accordingly and dispose of vehicles and equipment. The disposal proceeds are used to reduce debt.

Our primary liquidity needs include servicing of corporate and fleet related debt, the payment of operating expenses and purchases of rental vehicles and equipment to be used in our operations. Our primary sources of funding are operating revenue, cash received on the disposal of vehicles and equipment, borrowings under our asset-backed borrowing arrangements and our revolving credit facilities.

As of September 30, 2010, we had $12,046.9 million of total indebtedness outstanding. Cash paid for interest during the nine months ended September 30, 2010, was $448.9 million, net of amounts capitalized. Accordingly, we are highly leveraged and a substantial portion of our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations and capital expenditures.

Our liquidity as of September 30, 2010 consisted of cash and cash equivalents, unused commitments under our Senior ABL Facility and unused commitments under our fleet financing facilities. For a description of these amounts, see Note 8 of the Notes to our condensed consolidated financial statements included in this Report as well as "Credit Facilities" below.March 2011).


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Based on our current availability under our various credit facilities and our business plan, we believe we have sufficient liquidity to meet our debt maturities over the next twelve months.

In June 2010, HVF, our wholly-owned subsidiary, issued $184.3 million in aggregate principal amount of 3-year and 5-year Subordinated Series 2009-2 Rental Car Asset Backed Notes, Class B, or the "Series 2009-2 Class B Notes." The 3-year notes carry a 4.94% coupon (5.00% yield at issuance) and the 5-year notes carry a 5.93% coupon (6.01% yield at issuance) with expected final maturities in 2013 and 2015, respectively. The net proceeds of the offering were used to purchase vehicles under our ABS Program, used to pay other ABS indebtedness or distributed to Hertz and used for general corporate purposes. The Series 2009-2 Class B Notes are included in U.S. Fleet Debt.

In June 2010, Hertz issued EUR 400 million (the equivalent of $543.4 million as of September 30, 2010) aggregate principal amount of 8.5% Senior Secured Notes due 2015, or the "Euro Notes," and entered into a EUR 220 million (the equivalent of $298.9 million) revolving credit facility that matures in 2013, or the "European Credit Facility." The net proceeds of the Euro Notes and European Credit Facility were used to refinance our International Fleet Debt and Belgian Fleet Financing Facility, both of which were due to mature in December 2010, and the excess was used for general corporate purposes. The Euro Notes and the European Credit Facility are the primary fleet financing for our rental car operations in Germany, Italy, Spain, Belgium, Luxembourg and Switzerland. The Euro Notes and the European Credit Facility are guaranteed on a senior unsecured basis by Hertz and certain U.S. subsidiaries of Hertz and on a senior secured basis by certain non-U.S. subsidiaries of Hertz.

In July 2010, Hertz entered into a EUR 400 million (the equivalent of $543.4 million as of September 30, 2010) asset-backed securitization facility, or "European Securitization," which matures in 2012, the proceeds of which were used to refinance the portion of our existing International ABS Fleet Financing Facility relating to France and the Netherlands, which was due to mature in December 2010.

In addition, in July 2010, HVF issued approximately $750 million in aggregate principal amount of 3-year, 5-year and 7-year Series 2010-1 Rental Car Asset Backed Notes, or "Series 2010-1 Notes." The 3-year, 5-year and 7-year notes have expected final maturities in 2014, 2016 and 2018, respectively. The net proceeds of the offering were used to purchase vehicles under the ABS Program of HVF, to pay other ABS indebtedness or distributed to Hertz and used for general corporate purposes. The Series 2010-1 Notes are included as part of our U.S. Fleet Debt.

In September 2010, Hertz entered into amendments to its Senior Term Facility and Senior ABL Facility. The amendments provide, among other things, for additional capacity under the covenants in the Senior Term Facility and Senior ABL Facility to incur refinancing and acquisition indebtedness. The amendment to the Senior ABL Facility increases the overall letter of credit sublimit and allows for Australian dollar denominated letters of credit.

In addition, in September 2010, Hertz issued $700 million aggregate principal amount of 7.5% Senior Notes due 2018, or "2010 Senior Notes." The net proceeds of the offerings were used for general corporate purposes, including repayment of consolidated indebtedness.

As of September 30, 2010, we have approximately $217.7 million of remaining international fleet debt outstanding that matures in December 2010. We are currently in discussions regarding our remaining refinancing options, and based on these discussions and our ability to access the capital markets, we expect to refinance the remaining debt maturing in December 2010 on or prior to maturity. In the event financing is not available or is not available on terms we deem acceptable, we would expect to utilize our corporate liquidity to repay these obligations.


Table of Contents

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

The agreements governing our corporate indebtedness require us to comply with two key covenants based on a consolidated leverage ratio and a consolidated interest expense coverage ratio. Our failure to comply with the obligations contained in any agreements governing our indebtedness could result in an event of default under the applicable instrument, which could result in the related debt becoming immediately due and payable and could further result in a cross default or cross acceleration of our debt issued under other instruments. However, as a result of the above-mentioned actions and planned future actions, we believe that we will remain in compliance with our corporate debt covenants and that cash generated from operations, together with amounts available under various liquidity facilities will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for the next twelve months. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with covenants and restrictions contained in our corporate debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

MBIA Insurance Corporation, or "MBIA," and Ambac Assurance Corporation, or "Ambac," provide credit enhancements in the form of financial guarantees for our 2005 Notes, with each providing guarantees for approximately half of the $875.0 million in principal amount of the 2005 Notes that was outstanding as of September 30, 2010, all of which matures during 2010.

An event of bankruptcy with respect to MBIA or Ambac between now and the maturities of the 2005 Notes in 2010 would result in an amortization event under the portion of the 2005 Notes guaranteed by the affected insurer. In addition, if an amortization event continues for 30 days or longer, the noteholders of the affected series of notes would have the right to require liquidation of a portion of the fleet sufficient to repay such notes, provided that the exercise of the right was exercised by a majority of the affected noteholders. Ambac has publicly stated that it has insufficient capital to finance its debt service and operating expense requirements beyond the second quarter of 2011 and may need to seek bankruptcy protection. Accordingly, if a bankruptcy of MBIA or Ambac were to occur prior to the 2005 Notes maturing, we expect that we would use our corporate liquidity and the borrowings under or proceeds from these recent financings to pay down the amounts owed under the affected series of 2005 Notes. The Series 2009-1 Notes, Series 2009-2 Notes, Series 2009-2 Class B Notes or the Series 2010-1 Notes are not guaranteed.

A significant number of cars that we purchase are subject to repurchase by car manufacturers under contractual repurchase or guaranteed depreciation programs. Under these programs, car manufacturers agree to repurchase cars at a specified price or guarantee the depreciation rate on the cars during a specified time period, typically subject to certain car condition and mileage requirements. We use this specified price or guaranteed depreciation rate to calculate our asset-backed financing capacity. If any manufacturer of our cars fails to fulfill its repurchase or guaranteed depreciation obligations, due to bankruptcy or otherwise, our asset-backed financing capacity could be decreased, or we may be required to materially increase the credit enhancement levels relating to the financing of the fleet vehicles provided by such bankrupt manufacturer under certain of our fleet financing facilities. For a discussion of the risks associated with a manufacturer's bankruptcy or our reliance on asset-backed financing, see "Item 1A—Risk Factors" included in our Annual Report and Second Quarter Form 10-Q.

We rely significantly on asset-backed financing to purchase cars for our domestic and international car rental fleet. The amount of financing available to us pursuant to these programs depends on a number of factors, many of which are outside our control, including recently adopted legislation, proposed SEC rules and regulations and other legislative and administrative developments. In this regard, there has


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


been uncertainty regarding the potential impact of recently proposed SEC rules and regulations governing the issuance of asset-backed securities and additional requirements contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act. While we will continue to monitor these developments and their impact on our ABS program, the SEC rules and regulations, once adopted and implemented, may impact our ability and/or desire to engage in asset-backed financings in the future. For further information concerning our asset-backed financing programs, see Note 3 of the Notes to our audited annual consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data." For a discussion of risks related to our reliance on asset-backed financing to purchase cars, see "Item 1A—Risk Factors" included in our Annual Report and Second Quarter Form 10-Q.

In the event of a bankruptcy of a car manufacturer, our liquidity would be impacted by several factors including reductions in fleet residual values, as discussed above, and the risk that we would be unable to collect outstanding receivables due to us from such bankrupt manufacturer. In addition, the program cars manufactured by any such company would need to be removed from our fleet or re-designated as non-program vehicles, which would require us to furnish additional collateral enhancement associated with these program vehicles. For a discussion of the risks associated with a manufacturer's bankruptcy or our reliance on asset-backed financing, see "Item 1A—Risk Factors" included in our Annual Report and Second Quarter Form 10-Q.

We have a significant amount of debt that will mature over the next several years. The aggregate amounts of maturities of debt for each of the twelve-month periods ending September 30 (in millions of dollars) are as follows: 2011, $4,191.0 (including $3,190.2 of other short-term borrowings); 2012, $179.6; 2013, $1,969.3; 2014, $2,749.6; 2015, $1,413.5; after 2015, $1,674.1. For a discussion of maturities, see Note 3 of the Notes to our audited annual consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data." Our short-term borrowings of $3,190.2 million as of September 30, 2010 include, among other items, the amounts outstanding under our International ABS Fleet Financing Facility, European Securitization, Fleet Financing Facility, Brazilian Fleet Financing Facility, Canadian Fleet Financing Facility, Capitalized Leases and European Credit Facility. These amounts are considered short-term in nature since they have maturity dates of three months or less; however these facilities are revolving in nature and do not expire at the time of the short-term debt maturity except for our International ABS Fleet Financing Facility and Brazilian Fleet Financing Facility which mature in December 2010. As a result of our successful refinancing efforts in 2009 and the first half of 2010 and the strategic cost reduction actions taken in the past as well as those planned for the remainder of 2010, we believe that we will remain in compliance with our debt covenants and that cash generated from operations, together with amounts available under various liquidity facilities will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for the next twelve months. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with covenants and restrictions contained in our debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

For further information on our indebtedness, see Note 8 of the Notes to our condensed consolidated financial statements included in this Report.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Covenants

Certain of our debt instruments and credit facilities contain a number of covenants that, among other things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make dividends and other restricted payments, create liens, make investments, make acquisitions, engage in mergers, change the nature of their business, make capital expenditures, or engage in certain transactions with affiliates. Some of these agreements also require the maintenance of certain financial covenants. As of September 30, 2010, we were in compliance with all of these financial covenants.

As of September 30, 2010, we had an aggregate principal amount outstanding of $1,348.4 million pursuant to our Senior Term Facility and no amounts outstanding in our Senior ABL Facility. As of September 30, 2010, Hertz was required under the Senior Term Facility to have a consolidated leverage ratio of not more than 5.25:1 and a consolidated interest expense coverage ratio of not less than 2.00:1. In addition, under our Senior ABL Facility, if there was less than $200.0 million of available borrowing capacity under that facility as of September 30, 2010, Hertz was required to have a consolidated leverage ratio of not more than 5.25:1 and a consolidated fixed charge coverage ratio of not less than 1:1 for the quarter then ended. Under the Senior Term Facility, as of September 30, 2010, we had a consolidated leverage ratio of 4.20:1 and a consolidated interest expense coverage ratio of 3.57:1. Since we had maintained sufficient borrowing capacity under our Senior ABL Facility as of September 30, 2010, and expect to maintain such capacity in the future, the consolidated fixed charge coverage ratio was not deemed relevant for presentation. For further information on the terms of our senior credit facilities, see Note 3 of the Notes to our audited annual consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data." In addition to the borrowings under our senior credit facilities, we have a significant amount of additional debt outstanding. For a discussion of the risks associated with our significant leverage, see "Item 1A—Risk Factors" included in our Annual Report and Second Quarter Form 10-Q.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Credit Facilities

As of September 30, 2010, the following credit facilities were available for the use of Hertz and its subsidiaries (in millions of dollars):

  
 Remaining
Capacity
 Availability
Under
Borrowing
Base
Limitation
 
 

Corporate Debt

       
 

Senior Term Facility

 $ $ 
 

Senior ABL Facility

  1,591.2  851.7 
       
  

Total Corporate Debt

  1,591.2  851.7 
       
 

Fleet Debt

       
 

U.S. Fleet Debt

  545.1  77.5 
 

International ABS Fleet Financing Facility

  1.0  1.0 
 

European Securitization

  77.9  68.3 
 

Fleet Financing Facility

  2.0  2.0 
 

Brazilian Fleet Financing Facility

  0.1   
 

Canadian Fleet Financing Facility

  101.5  13.5 
 

Capitalized Leases

  42.6   
       
  

Total Fleet Debt

  770.2  162.3 
       
  

Total

 $2,361.4 $1,014.0 
       

As of September 30, 2010, the Senior Term Facility had approximately $11.4 million available under the letter of credit facility and the Senior ABL Facility had $406.2 million available under the letter of credit facility sublimit.

Our liquidity as of September 30, 2010 was $3,105.2 million, which consisted of $1,483.3 million of cash and cash equivalents, $851.7 million of unused commitments under our Senior ABL Facility and $770.2 million of unused commitments under our fleet financing facilities. Taking into consideration the borrowing base limitations in our Senior ABL Facility and in our Fleet Debt, the amount that we had available for immediate use as of September 30, 2010 under our Senior ABL Facility was $851.7 million and we had $162.3 million of over-enhancement that was available under our Fleet Debt. Accordingly, as of September 30, 2010, we had $2,497.3 million ($1,483.3 million in cash and cash equivalents, $851.7 million available under our Senior ABL Facility and $162.3 million available under our various Fleet Debt facilities) in liquidity that was available for our immediate use. Future availability of borrowings under these facilities will depend on borrowing base requirements and other factors, many of which are outside our control.

Also, substantially all of our revenue earning equipment and certain related assets are owned by special purpose entities, or are subject to liens in favor of our lenders under our various credit facilities. Substantially all our other assets in the United States are also subject to liens in favor of our lenders under our various credit facilities. None of these assets would be available to satisfy the claims of our general creditors if we failed to perform our obligations to such creditors.

Some of these special purpose entities are consolidated variable interest entities, of which Hertz is the primary beneficiary, whose sole purpose is to provide commitments to lend in various currencies subject


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


to borrowing bases comprised of rental vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. As of September 30, 2010 and December 31, 2009, our International Fleet Financing No. 1 B.V., International Fleet Financing No. 2 B.V., Hertz Fleet Limited and HA Funding Pty, Ltd. variable interest entities had total assets primarily comprised of revenue earning equipment of $461.6 million and $367.6 million, respectively, and total liabilities primarily comprised of debt of $569.2 million and $710.3 million, respectively. For further information on the terms of our debt, see Note 3 of the Notes to our audited annual consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data."

Capital Expenditures

The following tables below set forth the revenue earning equipment and property and equipment capital expenditures and related disposal proceeds on a cash basis consistent with our consolidated statements of cash flows received byfor the first quarter forof 2011 and 2010 and 2009 (in millions of dollars).



 Revenue Earning Equipment Property and Equipment 


 Capital
Expenditures
 Disposal
Proceeds
 Net Capital
Expenditures
(Disposal
Proceeds)
 Capital
Expenditures
 Disposal
Proceeds
 Net Capital
Expenditures
 

2011

2011

 


 Revenue Earning Equipment Property and Equipment 

First Quarter

 $1,963.8 $(1,690.2)$273.6 $56.8 $(14.5)$42.3 


 Capital
Expenditures
 Disposal
Proceeds
 Net Capital
Expenditures
(Disposal
Proceeds)
 Capital
Expenditures
 Disposal
Proceeds
 Net Capital
Expenditures
               

2010

2010

 

2010

 

First Quarter

 $2,214.5 $(1,589.9)$624.6 $51.3 $(6.7)$44.6 

First Quarter

 $2,214.5 $(1,606.4)$608.1 $51.3 $(6.7)$44.6 

Second Quarter

 3,215.4 (1,819.2) 1,396.2 40.7 (8.5) 32.2               

Third Quarter

 1,714.5 (1,679.9) 34.6 42.3 (10.3) 32.0 
             

 $7,144.4 $(5,089.0)$2,055.4 $134.3 $(25.5)$108.8 
             

2009

 

First Quarter

 $1,399.6 $(2,026.1)$(626.5)$26.7 $(5.2)$21.5 

Second Quarter

 2,140.9 (1,171.5) 969.4 21.6 0.2 21.8 

Third Quarter

 1,654.0 (965.1) 688.9 20.7 (1.1) 19.6 
             

 $5,194.5 $(4,162.7)$1,031.8 $69.0 $(6.1)$62.9 
             

 

 
 Nine Months Ended
September 30,
  
  
 
 
 2010 2009 $ Change % Change 

Revenue earning equipment expenditures

             
 

Car rental

 $7,040.3 $5,133.9 $1,906.4  37.1%
 

Equipment rental

  104.1  60.6  43.5  71.8%
           
  

Total

 $7,144.4 $5,194.5 $1,949.9  37.5%
           
 
 Three Months Ended
March 31,
  
  
 
 
 2011 2010 $ Change % Change 

Revenue earning equipment expenditures

             
 

Car rental

 $1,792.2 $2,181.8 $(389.6) (17.9)%
 

Equipment rental

  171.6  32.7  138.9  424.8%
           
  

Total

 $1,963.8 $2,214.5 $(250.7) (11.3)%
           

The decrease in our car rental operations revenue earning equipment expenditures was primarily due to continued efforts to increase utilization of existing fleet during the three months ended March 31, 2011 as compared to the three months ended March 31, 2010. The increase in our equipment rental operations revenue earning equipment expenditures was primarily due to a continued improvement in economic conditions during the three months ended March 31, 2011 as compared to the three months ended March 31, 2010.

 
 Three Months Ended
March 31,
  
  
 
 
 2011 2010 $ Change % Change 

Property and equipment expenditures

             
 

Car rental

 $47.7 $44.4 $3.3  7.4%
 

Equipment rental

  8.6  3.3  5.3  160.6%
 

Other

  0.5  3.6  (3.1) (86.1)%
           
  

Total

 $56.8 $51.3 $5.5  10.7%
           

The increases in car rental and equipment rental property and equipment expenditures were primarily due to a continued improvement in economic conditions.

Financing

Our primary liquidity needs include servicing of corporate and fleet related debt, the payment of operating expenses and purchases of rental vehicles and equipment to be used in our operations. Our primary sources of funding are operating cash flows, cash received on the disposal of vehicles and


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


equipment, borrowings under our asset-backed securitizations and our asset-based revolving credit facilities and access to the credit markets generally.

As of March 31, 2011, we had $10,750.0 million of total indebtedness outstanding. Cash paid for interest during the three months ended March 31, 2011, was $205.8 million, net of amounts capitalized. Accordingly, we are highly leveraged and a substantial portion of our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations and capital expenditures.

Our liquidity as of March 31, 2011 consisted of cash and cash equivalents, unused commitments under our Senior ABL Facility and unused commitments under our fleet debt. For a description of these amounts, see Note 7 to the Notes to our condensed consolidated financial statements included in this Report as well as "Borrowing Capacity and Availability," below.

We have a significant amount of debt that will mature over the next several years. The aggregate amounts of maturities of debt for each of the twelve-month periods ending March 31 (in millions of dollars) are as follows:

2012 $3,859.3 (including $3,356.1 of other short-term borrowings)
2013 $773.9  
2014 $743.9  
2015 $842.7  
2016 $953.4  
After 2016 $3,676.6  

Our short-term borrowings as of March 31, 2011 include, among other items, the amounts outstanding under the European Securitization, Australian Securitization, U.S. Fleet Financing Facility, Brazilian Fleet Financing Facility, Canadian Securitization, Capitalized Leases and European Revolving Credit Facility. These amounts are reflected as short-term borrowings, regardless of the facility maturity date, as these facilities are revolving in nature and/or the outstanding borrowings have maturities of three months or less. Short-term borrowings also include the Convertible Senior Notes which became convertible on January 1, 2011 and remain as such through June 30, 2011.

In March 2011, Hertz issued an additional $500 million aggregate principal of the 6.75% Senior Notes due 2019 in a private offering, the proceeds of which were used in April 2011 to redeem $480 million principal amount of its outstanding 8.875% Senior Notes due 2014. The redeemed portion of the 8.875% Senior Notes has been included in the 2012 maturities in the table above.

The agreements governing our indebtedness require us to comply with certain covenants. Our failure to comply with the obligations contained in any agreements governing our indebtedness could result in an event of default under the applicable instrument, which could result in the related debt becoming immediately due and payable and could further result in a cross default or cross acceleration of our debt issued under other instruments.

As a result of our successful refinancing efforts in 2009, 2010 and the three months ended March 31, 2011 and the strategic cost reduction actions taken in the past, we believe that we will remain in compliance with our debt covenants and that cash generated from operations, together with amounts available under various facilities will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for the next twelve months.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

A significant number of cars that we purchase are subject to repurchase by car manufacturers under contractual repurchase or guaranteed depreciation programs. Under these programs, car manufacturers agree to repurchase cars at a specified price or guarantee the depreciation rate on the cars during a specified time period, typically subject to certain car condition and mileage requirements. We use book values derived from this specified price or guaranteed depreciation rate to calculate financing capacity under certain asset-backed and asset-based financing arrangements.

In the event of a bankruptcy of a car manufacturer, our liquidity would be impacted by several factors including reductions in fleet residual values and the risk that we would be unable to collect outstanding receivables due to us from such bankrupt manufacturer. In addition, the program cars manufactured by any such company would need to be removed from our fleet or re-designated as non-program vehicles, which would require us to furnish additional credit enhancement associated with these program vehicles. For a discussion of the risks associated with a manufacturer's bankruptcy or our reliance on asset-backed and asset-based financing, see "Item 1A—Risk Factors" included in our Form 10-K.

We rely significantly on asset-backed and asset-based financing arrangements to purchase cars for our domestic and international car rental fleet. The amount of financing available to us pursuant to these programs depends on a number of factors, many of which are outside our control, including recently adopted legislation, proposed SEC rules and regulations and other legislative and administrative developments. In this regard, there has been uncertainty regarding the potential impact of recently proposed SEC rules and regulations governing the issuance of asset-backed securities and additional requirements contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act. While we will continue to monitor these developments and their impact on our ABS program, the SEC rules and regulations, once adopted and implemented, may impact our ability and/or desire to engage in asset-backed financings in the future. For further information concerning our asset-backed financing programs and our indebtedness, see Note 4 to the Notes to our audited annual consolidated financial statements included in our Form 10-K under the caption "Item 8—Financial Statements and Supplementary Data." For a discussion of the risks associated with our reliance on asset-backed and asset-based financing and the significant amount of indebtedness, see "Item 1A—Risk Factors" in our Form 10-K.

For further information on our indebtedness, see Note 7 to the Notes to our condensed consolidated financial statements included in this Report.

Covenants

Certain of our debt instruments and credit facilities contain a number of covenants that, among other things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain restricted payments (including paying dividends, redeeming stock or making other distributions), create liens, make investments, make acquisitions, engage in mergers, fundamentally changing the nature of their business, make capital expenditures, or engage in certain transactions with certain affiliates.

Under the new terms of our amended Senior Term Facility and Senior ABL Facility, we are not subject to ongoing financial maintenance covenants; however, under the Senior ABL Facility we are subject to a springing financial maintenance covenant upon the occurrence of certain triggering events. As of March 31, 2011, no triggering event had occurred requiring testing of the springing financial maintenance covenant.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

In addition to borrowings under our Senior Credit Facilities, we have a significant amount of additional debt outstanding. For further information on the terms of our Senior Credit Facilities as well as our significant amount of debt outstanding, see Note 7 to the Notes to our condensed consolidated financial statements included in this Report and Note 4 to the Notes to our audited annual consolidated financial statements included in our Form 10-K under the caption "Item 8—Financial Statements and Supplementary Data." For a discussion of the risks associated with our significant indebtedness, see "Item 1A—Risk Factors" in our Form 10-K.

Borrowing Capacity and Availability

As of March 31, 2011, the following facilities were available for the use of Hertz and its subsidiaries (in millions of dollars):

 
 Nine Months Ended
September 30,
  
  
 
 
 2010 2009 $ Change % Change 

Property and equipment expenditures

             
 

Car rental

 $116.9 $62.5 $54.4  87.0%
 

Equipment rental

  9.7  4.4  5.3  120.5%
 

Other

  7.7  2.1  5.6  266.7%
           
  

Total

 $134.3 $69.0 $65.3  94.6%
           
  
 Remaining
Capacity
 Availability
Under
Borrowing
Base
Limitation
 
 

Corporate Debt

       
 

Senior ABL Facility

 $1,800.0 $896.4 
       
  

Total Corporate Debt

  1,800.0  896.4 
       
 

Fleet Debt

       
 

U.S. Fleet Variable Funding Notes

  455.1  90.5 
 

U.S. Fleet Financing Facility

  2.0  2.0 
 

European Revolving Credit Facility

  154.4  154.4 
 

European Securitization

  314.6  71.6 
 

Canadian Securitization

  148.3  4.8 
 

Australian Securitization

  86.4  7.6 
 

Brazilian Fleet Financing Facility

  0.9  0.9 
 

Capitalized Leases

  108.1  28.9 
       
  

Total Fleet Debt

  1,269.8  360.7 
       
  

Total

 $3,069.8 $1,257.1 
       

The increaseOur borrowing capacity and availability primarily comes from our "revolving credit facilities," which are a combination of asset-backed securitization facilities and asset-based revolving credit facilities. Creditors under each of our revolving credit facilities have a claim on a specific pool of assets as collateral. Our ability to borrow under each revolving credit facility is a function of, among other things, the value of the assets in the relevant collateral pool. We refer to the amount of debt we can borrow given a certain pool of assets as the "borrowing base."

We refer to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., the amount of debt we could borrow assuming we possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility.

We refer to "Availability Under Borrowing Base Limitation" and "borrowing base availability" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt we could borrow given the collateral we possess at such time).


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

As of March 31, 2011, the Senior Term Facility had approximately $3.2 million available under the letter of credit facility and the Senior ABL Facility had $1,095.2 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.

Substantially all of our car rental operations revenue earning equipment expenditures wasand certain related assets are owned by special purpose entities, or are encumbered in favor of our lenders under our various credit facilities.

Some of these special purpose entities are consolidated variable interest entities, of which Hertz is the primary beneficiary, whose sole purpose is to provide commitments to lend in various currencies subject to borrowing bases comprised of rental vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. As of March 31, 2011 and December 31, 2010, our International Fleet Financing No. 1 B.V., International Fleet Financing No. 2 B.V. and HA Funding Pty, Ltd. variable interest entities had total assets primarily due to higher rental volumes during the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009, which required us to increase our fleet levels. The increase in our equipment rental operationscomprised of loans receivable and revenue earning equipment expenditures wasof $503.0 million and $652.1 million, respectively, and total liabilities primarily due to increased demandcomprised of debt of $502.5 million and due to our efforts to meet the current year's goal in updating aged fleet during the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009.$651.6 million, respectively.

The increase in car rental property and equipment expenditures are due to increased spending in response to an increase in demand and the opening of new off-airport locations. The increased level of expenditures in our equipment rental operations was a result of increased in demand.

Off-Balance Sheet Commitments and Arrangements

As of September 30, 2010March 31, 2011 and December 31, 2009,2010, the following guarantees (including indemnification commitments) were issued and outstanding:

Indemnification Obligations

In the ordinary course of business, we execute contracts involving indemnification obligations customary in the relevant industry and indemnifications specific to a transaction such as the sale of a business. These indemnification obligations might include claims relating to the following: environmental matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships; and financial matters. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-partythird party claim. We regularly evaluate the probability of having to incur costs associated with these indemnification obligations and have accrued for expected losses that are probable and estimable. The types of indemnification obligations for which payments are possible include the following:

Sponsors; Directors

Hertz has entered into customary indemnification agreements with Hertz Holdings, the Sponsors and our stockholders affiliated with the Sponsors, pursuant to which Hertz Holdings and Hertz will indemnify the Sponsors, our stockholders affiliated with the Sponsors and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. We also entered into indemnification agreements with each of our directors. We do not believe that these indemnifications are reasonably likely to have a material impact on us.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Environmental

We have indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which we may be held responsible could be substantial. The probable expenses that we expect to incur for such matters have been accrued, and those expenses are reflected in our condensed consolidated financial statements. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, the aggregate amounts accrued for environmental liabilities, including liability for environmental indemnities, reflected in our condensed consolidated balance sheetsheets in "Accrued liabilities" were $1.7$1.5 million and $2.0$1.6 million, respectively. The accrual generally represents the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the sites. For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).

Risk Management

For a discussion of additional risks arising from our operations, including vehicle liability, general liability and property damage insurable risks, see "Item 1—Business—Risk Management" included in our Annual Report.Form 10-K.

Market Risks

We are exposed to a variety of market risks, including the effects of changes in interest rates, foreign currency exchange rates and fluctuations in gasoline prices. We manage our exposure to these market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure to counterparty nonperformance on such instruments. For more information on these exposures, see Note 12 of13 to the Notes to our audited annualcondensed consolidated financial statements included in our Annual Report under the caption "Item 8—Financial Statements and Supplementary Data."this Report.

Interest Rate Risk

From time to time, we may enter into interest rate swap agreements and/or interest rate cap agreements to manage interest rate risk. See Notes 87 and 14 of13 to the Notes to our condensed consolidated financial statements included in this Report and Notes 34 and 12 of13 to the Notes to our audited annual consolidated financial statements included in our Annual ReportForm 10-K under the caption "Item 8—Financial Statements and Supplementary Data."

We have a significant amount of debt (including under our U.S. Fleet Debt, European Credit Facility, other international fleet debt facilities, International ABS Fleet Financing Facility and Senior ABL Facility) with variable rates of interest based generally on LIBOR, Euro inter-bank offered rate, or "EURIBOR," or their equivalents for local currencies or bank conduit commercial paper rates plus an applicable margin. Increases in interest rates could therefore significantly increase the associated interest payments that we are required to make on this debt.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


their equivalents for local currencies plus an applicable margin. Increases in interest rates could therefore significantly increase the associated interest payments that we are required to make on this debt.

We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our earnings assuming various changes in market interest rates. Assuming a hypothetical increase of one percentage point in interest rates on our debt portfolio as of September 30, 2010,March 31, 2011, our net incomeloss would decreaseincrease by an estimated $20.1$17.4 million over a twelve-month period.

Consistent with the terms of the agreements governing the respective debt obligations, we may hedge a portion of the floating rate interest exposure under the Senior Credit Facilities, the U.S. Fleet Debt, European Credit Facility and International ABS Fleet Financing Facilityvarious debt facilities to provide protection in respect of such exposure.

Foreign Currency Risk

We have foreign currency exposure to exchange rate fluctuations worldwide and primarily with respect to the Euro, Canadian dollar, Australian dollar and British pound.

We manage our foreign currency risk primarily by incurring, to the extent practicable, operating and financing expenses in the local currency in the countries in which we operate, including making fleet and equipment purchases and borrowing for working capital needs. Also, we have purchased foreign exchange options to manage exposure to fluctuations in foreign exchange rates for selected marketing programs. The effect of exchange rate changes on these financial instruments would not materially affect our consolidated financial position, results of operations or cash flows. Our risks with respect to foreign exchange options are limited to the premium paid for the right to exercise the option and the future performance of the option's counterparty.

We also manage exposure to fluctuations in currency risk on intercompany loans we make to certain of our subsidiaries by entering into foreign currency forward contracts at the time of the loans which are intended to offset the impact of foreign currency movements on the underlying intercompany loan obligations.

On October 1, 2006, we designated our 7.875% Senior Euro Notes due 2014 as an effective net investment hedge of our Euro-denominated net investment in our international operations.

For the three months ended March 31, 2011, our consolidated statement of operations contained realized and unrealized losses relating to the effects of foreign currency of $2.6 million.

See Note 14 of13 to the Notes to our condensed consolidated financial statements included in this Report.

Other Risks

We purchase unleaded gasoline and diesel fuel at prevailing market rates. In January 2009, we began a program to manage our exposure to changes in fuel prices through the use of derivative commodity instruments. For the three months ended March 31, 2011, we recognized a gain of $3.1 million in "Direct operating" on our consolidated statement of operations relating to our gasoline swaps. See Note 14 of13 to the Notes to our condensed consolidated financial statements included in this Report.

Inflation

The increased cost of vehicles is the primary inflationary factor affecting us. Many of our other operating expenses are also expected to increase with inflation, including health care costs and gasoline. Management does not expect that the effect of inflation on our overall operating costs will be greater for us than for our competitors.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)

Income Taxes

In January 2006, we implemented a LKE Program for our U.S. car rental business. Pursuant to the program, we dispose of vehicles and acquire replacement vehicles in a form intended to allow such dispositions and replacements to qualify as tax-deferred "like-kind exchanges" pursuant to section 1031 of the Internal Revenue Code. The program has resulted in deferral of federal and state income taxes for fiscal years 2006, 2007, 2008 and 2009.2009 and part of 2010. A LKE Program for HERC has also been in place for several years. The program allows tax deferral if a qualified replacement asset is acquired within a specific time period after asset disposal. Accordingly, if a qualified replacement asset is not purchased within this limited time period, taxable gain is recognized. ForOver the last few years, for strategic purposes, such as cash management and fleet reduction, we have recognized some taxable gains in the program. TheIn 2009, the bankruptcy filing of an original equipment manufacturer, or "OEM," also resulted in minimal gain recognition. We had sufficient net operating losses to fully offset the taxable gains recognized. We cannot offer assurance that the expected tax deferral will continue or that the relevant law concerning the programs will remain in its current form. An extended reduction in our car rental fleet could result in reduced deferrals in the future, which in turn could require us to make material cash payments for federal and state income tax liabilities. Our inability to obtain replacement financing as our fleet financing facilities mature would likely result in an extended reduction in the fleet. In the event of an extended fleet reduction, we believe the likelihood of making material cash tax payments in the near future is low because of our significant net operating losses. For a discussion of risks related to our reliance on asset-backed financing to purchase cars, see "Item 1A—Risk Factors" included in our Annual Report and Second Quarter Form 10-Q.

In August 2010, we elected to temporarily suspend the U.S. car rental LKE Program allowing cash proceeds from sales of vehicles to be utilized for various business purposes, oneincluding paying down existing debt obligations, future growth initiatives and for general operating purposes. Purchases of which mayvehicles will continue to be future debt reduction. Existingfunded with a combination of asset-backed securitizations, asset-based revolving credit facilities and corporate liquidity. We expect that recent tax legislation, effective September 2010 through December 2011, will result in the LKE suspension having a neutral effect on our taxes. The new law allows 100% bonus depreciation for qualified asset acquisitions during the period the law is effective. We estimate recognized tax gains on vehicle dispositions resulting from the LKE suspension to be mainly offset by 100% tax depreciation on newly acquired vehicles. Our federal net operating losses will be used to offset the gains from the sales of vehicles during the suspension period. We will not have a significantloss position for U.S. tax liability from the temporary suspension ofpurposes should remain relatively unchanged when the LKE Program.program is re-instated.

On January 1, 2009, Bank of America acquired Merrill Lynch & Co., Inc., the parent company of MLGPE.BAMLCP. Accordingly, Bank of America is now an indirect beneficial owner of our common stock held by MLGPEBAMLCP and certain of its affiliates. For U.S. income tax purposes the transaction, when combined with other unrelated transactions during the previous 36 months, resulted in a change in control as that term is defined in Section 382 of the Internal Revenue Code. Consequently, utilization of all pre-2009 U.S. net operating losses is subject to an annual limitation. The limitation is not expected to result in a loss of net operating losses or have a material adverse impact on taxes.

Employee Retirement Benefits

Pension

We sponsor defined benefit pension plans worldwide. Pension obligations give rise to significant expenses that are dependent on assumptions discussed in Note 45 of the Notes to our audited annual consolidated financial statements included in our Annual ReportForm 10-K under the caption "Item 8—Financial Statements and Supplementary Data." Based on present assumptions, our 2010Our 2011 worldwide pre-tax pension expense is expected to be approximately $33.8$37.7 million, which would represent a decreasean increase of $2.1$5.5 million from 2009.2010. The anticipated decrease in expense compared to 2009 is primarily due to lower discount rates offset by increased contributions. We expect to contribute up to $54.1 million to our U.S. pension plan in the full year of 2010. These contributions are necessary primarily because of the significant decline in asset values.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)


anticipated increase in expense compared to 2010 is primarily due to lower expected rates of return on assets as well as adverse exchange rate movements.

We participate in various "multiemployer" pension plans administered by labor unions representing some of our employees. We make periodic contributions to these plans to allow them to meet their pension benefit obligations to their participants.plans. In the event that we withdraw from participation in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, and we would have to reflect that as an expense in our consolidated statement of operations and as a liability on our condensed consolidated balance sheet. Our withdrawal liability for any multiemployer plan would depend on the extent of the plan's funding of vested benefits. In the ordinary course of our renegotiation of collective bargaining agreements with labor unions that maintain these plans, we could decide to discontinue participation in aAt least one multiemployer plan and in that event, we could face a withdrawal liability. Some multiemployer plans, including one in which we participate areis reported to have, and other of our multiemployer plans could have, significant underfunded liabilities. Such underfunding couldmay increase in the sizeevent other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of our potentialwithdrawing employers to pay their withdrawal liability. In addition, such underfunding may increase as a result of lower than expected returns on pension fund assets or other funding deficiencies.

Recent Accounting Pronouncements

For a discussion of recentThere have been no new accounting pronouncements see Note 3issued or changes to existing guidance during the three months ended March 31, 2011 that would have a material impact on our financial position or results of the Notes to our condensed consolidated financial statements included in this Report.


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ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of
                 Operations (Continued)
operations.

Other Financial Information

TheWith respect to the unaudited interim financial information of Hertz Global Holdings, Inc. as of March 31, 2011 and for the three-month periods ended March 31, 2011 and 2010 included in this Report has not been audited byForm 10-Q, PricewaterhouseCoopers LLP or "PwC." In reviewing this interim financial information, PwC hasreported that they applied limited procedures in accordance with professional standards for reviews of such unaudited interim financial information. However, their separate report dated May 6, 2011 included in this Form 10-Q herein states that they did not audit and they do not express an opinion on such unaudited interim financial information. Accordingly, the degree of reliance on their reports on this informationreport should be restricted. PwCrestricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its reportstheir report on thesuch unaudited interim financial information because their reports dothat report is not constitute "reports"a "report" or "parts""part" of a registration statementsstatement prepared or certified by PwCPricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Securities Act of 1933.

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

There is no material change in the information reported under "Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk," included in our Annual ReportForm 10-K for the fiscal year ended December 31, 2009.2010. See "Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risks," included in this Report.


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ITEM 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

An evaluation of the effectiveness of our disclosure controls and procedures was performed under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

An evaluation of our internal controls over financial reporting was performed under the supervision of, and with the participation of, management, including our Chief Executive Officer and Chief Financial Officer, to determine whether any changes have occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that no changes in our internal control over financial reporting have occurred during the three months ended September 30, 2010March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II—OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

For a description of certain pending legal proceedings, see Note 10 of11 to the Notes to our annual audited consolidated financial statements included in our Annual Report.

The following recent developments pertaining to legal proceedings described in our Annual Report are furnished on a supplemental basis:Form 10-K.

In August 2010, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of the complaint as to all defendants in theIn re Tourism Assessment Fee Litigation. The deadline for plaintiffs to request a rehearing of this decision has passed.

Aside from the above mentioned, thereThere were no material changes in the legal proceedings described in our Annual Report and in our quarterly reports on Form 10-Q for the periods ended March 31, 2010 and June 30, 2010,10-K and we are not otherwise required to disclose any pending legal proceedings in response to Item 103 of Regulation S-K.

ITEM 1A. RISK FACTORS

There is no material change in the information reported under "Part I—Item 1A—Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 20092010 with the exception of the following:

Investment funds associated with or designated by the Sponsors will continue to exercise significant control over our board of directors, management, policies and significant transactions, and may have interests that differ from our other stockholders.

Investment funds associated with or designated by the Sponsors currently beneficially own, in the aggregate, approximately 39% of the outstanding shares of our common stock. These funds are party to a stockholders agreement pursuant to which each of the funds has agreed to vote in favor of the other funds' nominees to our board of directors. The Sponsors currently exercise, and will continue to exercise, significant influence over our board of directors and matters requiring stockholder approval and our management, policies and affairs for so long as the investment funds associated with or designated by the Sponsors continue to hold a significant amount of our common stock. There can be no assurance that the interests of the Sponsors will not conflict with those of our other stockholders. The Sponsors currently have the ability to significantly influence the vote on any transaction that requires the approval of stockholders, including many possible change in control transactions, and may discourage or prevent any such transaction regardless of whether or not our other stockholders believe that such a transaction is in the company's or their own best interests.

Additionally, the Sponsors may from time to time acquire and hold interests in businesses that compete directly with us. One or more of the Sponsors may also pursue acquisition opportunities and other corporate opportunities that may be complementary to our business and as a result, those opportunities may not be available to us.

Restrictive covenants in certain of the agreements and instruments governing our indebtedness may materially adversely affect our financial flexibility or may have other material adverse effects on our business, financial condition and results of operations.

Certain of our credit facilities and other asset-based and asset-backed financing arrangements contain covenants that, among other things, restrict our ability to: (i) dispose of assets; (ii) incur additional indebtedness; (iii) incur guarantee obligations; (iv) prepay other indebtedness or amend other financing arrangements; (v) pay dividends; (vi) create liens on assets; (vii) enter into sale and leaseback transactions; (viii) make investments, loans, advances or capital expenditures; (ix) make acquisitions; (x) engage in mergers or consolidations; (xi) change the business conducted by us; and (xii) engage in certain transactions with affiliates.

Our Senior ABL Facility contains a financial covenant that obligates us to maintain a specified fixed charge coverage ratio if we fail to maintain a specified minimum level of borrowing base availability thereunder. Our ability to comply with this covenant will depend on our ongoing financial and operating performance, which in turn are subject to, among other things, the risks identified in this section and


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ITEM 1A. RISK FACTORS (Continued)


under "Part II—I—Item 1A—Risk Factors"Factors—Risks Related to Our Business" included in our Annual Report on Form 10-Q for10-K.

The agreements governing our financing arrangements contain numerous covenants. The breach of any of these covenants or restrictions could result in a default under the quarterly period ended June 30, 2010.relevant agreement, which can, in turn, cause cross-defaults under our other financing arrangements. In such event, we may be unable to borrow under the Senior ABL Facility and certain of our other financing arrangements and may not be able to repay the amounts due under such arrangements. Therefore, we would need to raise refinancing indebtedness, which may not be available to us on favorable terms, on a timely basis or at all. This could have serious consequences to our financial condition and results of operations and could cause us to become bankrupt or insolvent. Additionally, such defaults could require us to sell assets, if possible, and otherwise curtail our operations in order to pay our creditors. Such alternative measures could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to purchase adequate supplies of competitively priced cars or equipment and the cost of the cars or equipment we purchase increases, our financial condition and results of operations may be materially adversely affected.

We are not a party to any long-term car supply arrangements with manufacturers. The price and other terms at which we can acquire cars thus varies based on market and other conditions. For example, certain car manufacturers have in the past, and may in the future, utilize strategies to de-emphasize sales to the car rental industry, which can negatively impact our ability to obtain cars on competitive terms and conditions. In addition, the earthquake and tsunami in Japan may cause disruptions in the overall supply of cars or equipment. Consequently, there is no guarantee that we can purchase a sufficient number of vehicles at competitive prices and on competitive terms and conditions. Reduced or limited supplies of equipment together with increased prices are risks that we also face in our equipment rental business. If we are unable to obtain an adequate supply of cars or equipment, or if we obtain less favorable pricing and other terms when we acquire cars or equipment and are unable to pass on any increased costs to our customers, then our financial condition and results of operations may be materially adversely affected.

ITEM 6.    EXHIBITS

(a)
Exhibits:

    The attached list of exhibits in the "Exhibit Index" immediately following the signature page to this Report is filed as part of this Form 10-Q and is incorporated herein by reference in response to this item.


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 6, 2011HERTZ GLOBAL HOLDINGS, INC.
(Registrant)



By:


/s/ ELYSE DOUGLAS

Elyse Douglas
Executive Vice President and
Chief Financial Officer
(principal financial officer and duly authorized officer)

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EXHIBIT INDEX

Exhibit
Number
 Description
4.6.113.2 Fifth Amendment, dated asAmended and Restated By-Laws of September 17, 2010, among The Hertz Corporation, Deutsche Bank AG, New York Branch, and the other parties signatory thereto,Global Holdings, Inc., effective March 31, 2011 (Incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on April 1, 2011).

10.1.1


Credit Agreement, dated as of December 21, 2005, by and betweenMarch 11, 2011, among The Hertz Corporation, the several lenders from time to time parties thereto, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, Lehman Commercial Paper Inc.,Wells Fargo Bank, National Association, as Syndication Agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Documentation Agent, Deutsche Bank Securities Inc., Lehman Brothers Inc., and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Joint Lead Arrangers, and BNP Paribas, The Royal Bank of Scotland plc,America, N.A., Barclays Bank PLC, Citibank, N.A., Credit Agricole Corporate and Calyon New York Branch, as Co-Arrangers, and DeutscheInvestment Bank Securities Inc., Lehman Brothers, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Goldman Sachs Credit Partners L.P., and JPMorgan Chase Bank, N.A., as Co-Documentation Agents, Deutsche Bank Securities Inc., Barclays Capital, Citigroup Global Markets Inc., Credit Agricole Corporate and Investment Bank, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Bookrunning Managers

Table of Contents (referred to as the Senior Term Facility) (Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. as filed on March 17, 2011).


Exhibit
Number
10.1.2
Description
4.7.13
 
Fifth Amendment,
Guarantee and Collateral Agreement, dated as of September 17, 2010, amongMarch 11, 2011, between Hertz Equipment Rental Corporation,Investors, Inc., The Hertz Corporation Matthews Equipment Limited, Western Shut-Down (1995) Limited, Hertz Canada Equipment Rental Partnership,and certain of its subsidiaries and Deutsche Bank AG New York Branch, Deutsche Bank AG, Canada Branch,as Administrative Agent and the other parties signatory thereto,Collateral Agent, relating to the Senior Term Facility (Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. as filed on March 17, 2011).

10.2.1


Credit Agreement, dated as of December 21, 2005, by andMarch 11, 2011, between Hertz Equipment Rental Corporation, The Hertz Corporation, the Canadian Borrowers parties thereto, the several lenders from time to time parties thereto, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, Deutsche Bank AG Canada Branch, as Canadian Agent and Canadian Collateral Agent, Lehman Commercial Paper Inc.Wells Fargo Bank, National Association, as Co-Collateral Agent and Syndication Agent, Bank of America, N.A., Barclays Bank PLC, Citibank, N.A. Credit Agricole Corporate and Investment Bank and JPMorgan Chase Bank, N.A., as Syndication Agent, Merrill Lynch & Co., Merrill Lynch, Pierce, FennerCo-Documentation Agents, Wells Fargo Capital Finance, LLC and Smith Incorporated, as Documentation Agent, Deutsche Bank Securities Inc., Lehman Brothersas Joint Lead Arrangers, and Wells Fargo Capital Finance, LLC, Deutsche Bank Securities Inc., Barclays Capital, Citigroup Global Markets Inc., Credit Agricole Corporate and Merrill Lynch & Co.,Investment Bank, J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner and Smith Incorporated as Joint Lead Arrangers, BNP Paribas, The Royal Bank of Scotland plc, and Calyon New York Branch,Bookrunning Managers (referred to as Co-Arrangers, and Deutsche Bank Securities Inc., Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Goldman Sachs Credit Partners L.P., and JPMorgan Chase Bank, N.A., as Joint Bookrunning Managers

4.9.35


Series 2010-1 Supplement, dated as of July 22, 2010, between Hertz Vehicle Financing LLC, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities Intermediary, to the Third Amended and Restated Base Indenture, dated as of September 18, 2009, between Hertz Vehicle Financing LLC., as Issuer, and The Bank of New York Mellon Trust Company, N.A. as TrusteeSenior ABL Facility) (Incorporated by reference to Exhibit 4.9.3599.3 to the QuarterlyCurrent Report on Form 10-Q8-K of Hertz Global Holdings, Inc., as filed on August 6, 2010.)March 17, 2011).

4.2010.2.2

 

ExchangeU.S. Guarantee and Registration RightsCollateral Agreement, dated as of September 30, 2010, by andMarch 11, 2011, between Hertz Investors, Inc., The Hertz Corporation Barclays Capital Inc. and the other financial institutions named therein,certain of its subsidiaries and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, relating to the 7.50% Senior Notes Due 2018ABL Facility (Incorporated by reference to Exhibit 99.4 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. as filed on March 17, 2011).

4.2110.2.3

 

Indenture,Canadian Guarantee and Collateral Agreement, dated as of September 30, 2010, byMarch 11, 2011, between Matthews Equipment Limited, Western Shut-Down (1995) Limited, Hertz Canada Equipment Rental Partnership, 3222434 Nova Scotia Company and between The Hertz Corporation,certain of their subsidiaries and Deutsche Bank AG Canada Branch, as issuer,Canadian Agent and the Subsidiary Guarantors from time to time as parties thereto and Wells Fargo Bank, National Association, as Trustee,Canadian Collateral Agent, relating to the 7.50% Senior Notes Due 2018ABL Facility (Incorporated by reference to Exhibit 99.5 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. as filed on March 17, 2011).

10.110.28

 

Separation Agreement and General Release, dated as of February 28, 2011, between Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan, as amended and restatedThe Hertz Corporation and Gerald Plescia (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.2


Form of Performance Stock Unit Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.2 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.3


Form of Restricted Stock Unit Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.3 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.4


Form of Employee Stock Option Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.4 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.5


Form of Director Stock Option Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.5 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)March 4, 2011).

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Exhibit
Number
 Description
10.615 Hertz Global Holdings, Inc. Senior Executive Bonus Plan (Incorporated by reference to 10.6 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.7


Form of Change in Control Severance Agreement between Hertz Global Holdings, Inc. and executive officers (form used for agreements entered into after March 3, 2010) (Incorporated by reference to 10.7 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.8


Agreement and Plan of Merger, dated as of April 25, 2010, by and among Hertz Global Holdings, Inc., HDTMS, Inc. and Dollar Thrifty Automotive Group, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on April 29, 2010.)

10.8.1


Amendment No. 1, dated September 10, 2010, to the Agreement and Plan of Merger, dated as of April 25, 2010, by and among Hertz Global Holdings, Inc., HDTMS, Inc. and Dollar Thrifty Automotive Group, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on September 13, 2010.)

15


Letter from PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, dated November 9, 2010,May 6, 2011, relating to Financial Information

31.1–31.2


Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer

32.1–32.2


18 U.S.C. Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

101.INS


XBRL Instance Document*

101.SCH


XBRL Taxonomy Extension Schema Document*

101.CAL


XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF


XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB


XBRL Taxonomy Extension Label Linkbase Document*

101.PRE


XBRL Taxonomy Extension Presentation Linkbase Document*

Note:
Certain instruments with respect to various additional obligations, which could be considered as long-term debt, have not been filed as exhibits to this Report because the total amount of securities authorized under any such instrument does not exceed 10% of our total assets on a consolidated basis. We agree to furnish to the SEC upon request a copy of any such instrument defining the rights of the holders of such long-term debt.

*
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 9, 2010HERTZ GLOBAL HOLDINGS, INC.
(Registrant)



By:


/s/ ELYSE DOUGLAS

Elyse Douglas
Executive Vice President and Chief Financial Officer
(principal financial officer and duly authorized officer)

Table of Contents

EXHIBIT INDEX

Exhibit
Number
Description
4.6.11Fifth Amendment, dated as of September 17, 2010, among The Hertz Corporation, Deutsche Bank AG, New York Branch, and the other parties signatory thereto, to the Credit Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, the several lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent, Lehman Commercial Paper Inc., as Syndication Agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Documentation Agent, Deutsche Bank Securities Inc., Lehman Brothers Inc., and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Joint Lead Arrangers, and BNP Paribas, The Royal Bank of Scotland plc, and Calyon New York Branch, as Co-Arrangers, and Deutsche Bank Securities Inc., Lehman Brothers, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Goldman Sachs Credit Partners L.P., and JPMorgan Chase Bank, N.A., as Joint Bookrunning Managers

4.7.13


Fifth Amendment, dated as of September 17, 2010, among Hertz Equipment Rental Corporation, The Hertz Corporation, Matthews Equipment Limited, Western Shut-Down (1995) Limited, Hertz Canada Equipment Rental Partnership, Deutsche Bank AG, New York Branch, Deutsche Bank AG, Canada Branch, and the other parties signatory thereto, to the Credit Agreement, dated as of December 21, 2005, by and between Hertz Equipment Rental Corporation, The Hertz Corporation, the Canadian Borrowers parties thereto, the several lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent, Deutsche Bank AG, Canada Branch, as Canadian Agent and Canadian Collateral Agent, Lehman Commercial Paper Inc., as Syndication Agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Documentation Agent, Deutsche Bank Securities Inc., Lehman Brothers Inc., and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Joint Lead Arrangers, BNP Paribas, The Royal Bank of Scotland plc, and Calyon New York Branch, as Co-Arrangers, and Deutsche Bank Securities Inc., Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Goldman Sachs Credit Partners L.P., and JPMorgan Chase Bank, N.A., as Joint Bookrunning Managers

4.9.35


Series 2010-1 Supplement, dated as of July 22, 2010, between Hertz Vehicle Financing LLC, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities Intermediary, to the Third Amended and Restated Base Indenture, dated as of September 18, 2009, between Hertz Vehicle Financing LLC., as Issuer, and The Bank of New York Mellon Trust Company, N.A. as Trustee (Incorporated by reference to Exhibit 4.9.35 to the Quarterly Report on Form 10-Q of Hertz Global Holdings, Inc., as filed on August 6, 2010.)

4.20


Exchange and Registration Rights Agreement, dated as of September 30, 2010, by and between The Hertz Corporation, Barclays Capital Inc. and the other financial institutions named therein, relating to the 7.50% Senior Notes Due 2018

4.21


Indenture, dated as of September 30, 2010, by and between The Hertz Corporation, as issuer, and the Subsidiary Guarantors from time to time as parties thereto and Wells Fargo Bank, National Association, as Trustee, relating to the 7.50% Senior Notes Due 2018

10.1


Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan, as amended and restated (Incorporated by reference to 10.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.2


Form of Performance Stock Unit Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.2 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

Table of Contents

Exhibit
Number
Description
10.3Form of Restricted Stock Unit Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.3 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.4


Form of Employee Stock Option Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.4 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.5


Form of Director Stock Option Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (Incorporated by reference to 10.5 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.6


Hertz Global Holdings, Inc. Senior Executive Bonus Plan (Incorporated by reference to 10.6 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.7


Form of Change in Control Severance Agreement between Hertz Global Holdings, Inc. and executive officers (form used for agreements entered into after March 3, 2010) (Incorporated by reference to 10.7 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on June 1, 2010.)

10.8


Agreement and Plan of Merger, dated as of April 25, 2010, by and among Hertz Global Holdings, Inc., HDTMS, Inc. and Dollar Thrifty Automotive Group, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on April 29, 2010.)

10.8.1


Amendment No. 1, dated September 10, 2010, to the Agreement and Plan of Merger, dated as of April 25, 2010, by and among Hertz Global Holdings, Inc., HDTMS, Inc. and Dollar Thrifty Automotive Group, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on September 13, 2010.)

15


Letter from PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, dated November 9, 2010, relating to Financial Information

31.1–31.2

 

Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer

32.1–32.2

 

18 U.S.C. Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

101.INS

 

XBRL Instance Document*

101.SCH

 

XBRL Taxonomy Extension Schema Document*

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document*

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document*

Note:
Certain instruments with respect to various additional obligations, which could be considered as long-term debt, have not been filed as exhibits to this Report because the total amount of securities authorized under any such instrument does not exceed 10% of our total assets on a consolidated basis. We agree to furnish to the SEC upon request a copy of any such instrument defining the rights of the holders of such long-term debt.

*
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.