2012 ASSETS Cash and cash equivalents Restricted cash and cash equivalents Receivables, less allowance for doubtful accounts of $23,050 and $20,282 Inventories, at lower of cost or market Prepaid expenses and other assets Revenue earning equipment, at cost: Cars Less accumulated depreciation Other equipment Less accumulated depreciation Total revenue earning equipment Property and equipment, at cost: Land, buildings and leasehold improvements Service equipment and other Less accumulated depreciation Total property and equipment Other intangible assets, net Goodwill Total assets LIABILITIES AND EQUITY Accounts payable Accrued liabilities Accrued taxes Debt Public liability and property damage Deferred taxes on income Total liabilities Commitments and contingencies Equity: Hertz Global Holdings, Inc. and Subsidiaries stockholders' equity 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, 419,734,253 and 417,022,853 shares issued and outstanding Additional paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Total Hertz Global Holdings, Inc. and Subsidiaries stockholders' equity Noncontrolling interest Total equity Total liabilities and equitySECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-QýxQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,September 30, 2012
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934ýx No oýx No oLarge accelerated filer ýx Accelerated filer o Non-accelerated filer o Smaller reporting company o Accelerated filer o Non-accelerated filer o
(Do not check if a smaller
reporting company) Smaller reporting company oýx419,741,032420,957,683 shares of the registrant's common stock, par value $0.01 per share, issued and outstanding as of MayNovember 1, 2012.PagePART I. FINANCIAL INFORMATION Page 112345-67-2829-535354
5555Exhibits55SIGNATURE5657March 31,September 30, 2012, and the related consolidated statements of operations and comprehensive income (loss) for the three-month and nine-month periods ended March 31,September 30, 2012 and March 31,September 30, 2011 and the consolidated statements of cash flows for the three-monthnine-month periods ended March 31,September 30, 2012 and March 31,September 30, 2011. These interim financial statements are the responsibility of the Company's management.May 4, 2012 March 31,
2012 December 31,
2011 September 30,
2012 December 31,
2011 $ 594,701 $ 931,779 $ 453,361 $ 931,779 211,872 308,039 376,773 308,039 1,398,702 1,616,382 Receivables, less allowance for doubtful accounts of $23,681 and $20,282 1,731,795 1,616,382 99,527 83,978 105,982 83,978 408,560 421,758 384,079 421,758 10,833,316 9,678,765 11,850,783 9,678,765 (1,479,223 ) (1,360,012 ) (1,814,403 ) (1,360,012 ) 2,960,938 2,830,176 3,226,306 2,830,176 (1,049,860 ) (1,043,520 ) (1,041,477 ) (1,043,520 ) 11,265,171 10,105,409 12,221,209 10,105,409 1,162,646 1,146,112 1,191,140 1,146,112 1,098,397 1,050,915 1,138,356 1,050,915 2,329,496 2,197,027 2,261,043 2,197,027 (995,119 ) (945,173 ) (1,049,775 ) (945,173 ) 1,265,924 1,251,854 1,279,721 1,251,854 2,564,222 2,562,234 2,531,522 2,562,234 471,430 392,094 454,663 392,094 $ 18,280,109 $ 17,673,527 $ 19,539,105 $ 17,673,527 $ 1,320,805 $ 897,489 $ 975,098 $ 897,489 1,211,443 1,128,458 1,020,483 1,128,458 131,631 125,803 205,037 125,803 11,425,702 11,317,090 12,720,908 11,317,090 281,047 281,534 279,755 281,534 1,703,987 1,688,478 1,795,513 1,688,478 16,074,615 15,438,852 16,996,794 15,438,852 — — 4,197 4,170 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, 420,859,594 and 417,022,853 shares issued and outstanding 4,209 4,170 3,200,750 3,205,964 3,220,500 3,205,964 (1,003,395 ) (947,064 ) (667,588 ) (947,064 ) 3,922 (28,414 ) Accumulated other comprehensive loss (14,829 ) (28,414 ) 2,205,474 2,234,656 2,542,292 2,234,656 20 19 19 19 2,205,494 2,234,675 2,542,311 2,234,675 $ 18,280,109 $ 17,673,527 $ 19,539,105 $ 17,673,527
Revenues: Car rental Equipment rental Other Total revenues Expenses: Direct operating Depreciation of revenue earning equipment and lease charges Selling, general and administrative Interest expense Interest income Other (income) expense, net Total expenses Loss before income taxes (Provision) benefit for taxes on income Net loss Less: Net income attributable to noncontrolling interest Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Weighted average shares outstanding (in thousands): Basic Diluted Loss per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders: Basic Diluted Three Months Ended
March 31, Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 2012 2011 $ 1,623,231 $ 1,478,938 $ 2,105,987 $ 2,062,457 $ 5,578,544 $ 5,272,595 301,326 268,086 362,933 321,555 998,458 891,282 36,368 32,979 47,302 48,254 125,292 120,685 1,960,925 1,780,003 2,516,222 2,432,266 6,702,294 6,284,562 1,115,147 1,073,665 1,241,082 1,247,617 3,545,162 3,508,588 514,117 436,089 Depreciation of revenue earning equipment and lease charges 560,529 523,283 1,594,396 1,379,041 207,752 182,221 201,022 197,557 615,343 575,369 162,267 196,889 154,925 169,339 469,375 532,054 (1,092 ) (1,855 ) (716 ) (1,248 ) (2,276 ) (4,650 ) (457 ) 51,876 (9,513 ) 29 (10,524 ) 62,706 1,997,734 1,938,885 2,147,329 2,136,577 6,211,476 6,053,108 (36,809 ) (158,882 ) (19,524 ) 29,940 (56,333 ) (128,942 ) — (3,673 ) $ (56,333 ) $ (132,615 ) Income before income taxes 368,893 295,689 490,818 231,454 Provision for taxes on income (125,973 ) (83,180 ) (211,343 ) (87,802 ) Net income 242,920 212,509 279,475 143,652 Less: Net income attributable to noncontrolling interest — (5,771 ) — (14,531 ) Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 242,920 $ 206,738 $ 279,475 $ 129,121 Weighted average shares outstanding (in thousands): 418,076 414,065 420,562 416,611 419,562 415,551 418,076 414,065 445,490 440,908 447,088 447,304 Earnings per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders: $ (0.13 ) $ (0.32 ) $ 0.58 $ 0.50 $ 0.67 $ 0.31 $ (0.13 ) $ (0.32 ) $ 0.55 $ 0.47 $ 0.63 $ 0.29
Net loss Other comprehensive income (loss), net of tax: Translation adjustment changes, (net of tax of 2012: ($1,374) and 2011: ($1,975)) Unrealized holding gains on securities, (net of tax of 2012: $1,958 and 2011: $0) Other, (net of tax of 2012: $0 and 2011: $0) Unrealized loss on Euro-denominated debt, (net of tax of 2012: $0 and 2011: $7,399) Defined benefit pension plans Net gains (losses) arising during the period Defined benefit pension plans Other comprehensive income Comprehensive loss Less: Comprehensive income attributable to noncontrolling interest Comprehensive loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Three Months Ended March 31, 2012 Three Months Ended March 31, 2011 $ (56,333 ) $ (128,942 ) $ 29,570 $ 42,471 3,086 33 (87 ) (44 ) — (11,558 ) (231 ) 148 (231 ) 148 32,338 31,050 (23,995 ) (97,892 ) — (3,673 ) $ (23,995 ) $ (101,565 ) Three Months Ended
September 30, 2012 Three Months Ended
September 30, 2011Net income $ 242,920 $ 212,509 Other comprehensive income (loss), net of tax: Translation adjustment changes, (net of tax of 2012: $(2,936) and 2011: $3,363) $ 20,175 $ (66,580 ) Unrealized holding gains (losses) on securities, (net of tax of 2012: $1,095 and 2011: $(3,215)) 1,720 (5,026 ) Other, (net of tax of 2012: $0 and 2011: $0) (103 ) 92 Unrealized gain on Euro-denominated debt, (net of tax of 2012: $0 and 2011: $6,898) — 10,777 Defined benefit pension plans Net gains (losses) arising during the period, (net of tax of 2012: $1,064 and 2011: $(4,834) 1,437 (14,007 ) Defined benefit pension plans 1,437 (14,007 ) Other comprehensive income (loss) 23,229 (74,744 ) Comprehensive income 266,149 137,765 Less: Comprehensive income attributable to noncontrolling interest — (5,771 ) Comprehensive income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 266,149 $ 131,994 Nine Months Ended
September 30, 2012 Nine Months Ended
September 30, 2011Net income $ 279,475 $ 143,652 Other comprehensive income (loss), net of tax: Translation adjustment changes, (net of tax of 2012: $(2,729) and 2011: $1,713) $ 3,655 $ (7,850 ) Unrealized holding gains (losses) on securities, (net of tax of 2012: $3,063 and 2011: $(2,450)) 4,817 (3,791 ) Other, (net of tax of 2012: $0 and 2011: $0) 5 32 Unrealized loss on Euro-denominated debt, (net of tax of 2012: $0 and 2011: $(2,650)) — (4,139 ) Defined benefit pension plans Net gains arising during the period, (net of tax of 2012: $3,333 and 2011: $2,037) 5,109 3,074 Defined benefit pension plans 5,109 3,074 Other comprehensive income (loss) 13,586 (12,674 ) Comprehensive income 293,061 130,978 Less: Comprehensive income attributable to noncontrolling interest — (14,531 ) Comprehensive income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 293,061 $ 116,447
Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of revenue earning equipment Depreciation of property and equipment Amortization of other intangible assets Amortization and write-off of deferred financing costs Amortization and write-off of debt discount Stock-based compensation charges Gain on derivatives Loss on revaluation of foreign denominated debt Provision for losses on doubtful accounts Asset writedowns Deferred taxes on income Gain on sale of property and equipment Changes in assets and liabilities, net of effects of acquisition: Receivables Inventories, prepaid expenses and other assets Accounts payable Accrued liabilities Accrued taxes Public liability and property damage Net cash provided by operating activities Cash flows from investing activities: Net change in restricted cash and cash equivalents Revenue earning equipment expenditures Proceeds from disposal of revenue earning equipment Property and equipment expenditures Proceeds from disposal of property and equipment Acquisitions, net of cash acquired Other investing activities Net cash used in investing activities Cash flows from financing activities: Proceeds from issuance of long-term debt Payment of long-term debt Short-term borrowings: Proceeds Payments Proceeds under the revolving lines of credit, net Purchase of noncontrolling interest Proceeds from employee stock purchase plan Proceeds from exercise of stock options Proceeds from disgorgement of stockholder short-swing profits Net settlement on vesting of restricted stock Payment of financing costs Net cash used in financing activities Effect of foreign exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents during the period Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amounts capitalized) Income taxes Supplemental disclosures of non-cash flow information: Purchases of revenue earning equipment included in accounts payable and accrued liabilities Sales of revenue earning equipment included in receivables Purchases of property and equipment included in accounts payable Sales of property and equipment included in receivables or In January 2009, Bank of America Corporation, or "Bank of America," acquired Merrill Lynch & Co., Inc., the former parent company of stock of Hertz Holdings as of September 30, 2012. our brands and services. Generally franchise fees from franchised locations are based on a percentage of net sales of the franchised business and are recognized as earned and when collectability is reasonably assured. Balance as of January 1, 2012 Goodwill Accumulated impairment losses Goodwill acquired during the period Adjustments to previously recorded purchase price allocation Other changes during the period(1) Balance as of March 31, 2012 Goodwill Accumulated impairment losses Balance as of January 1, 2011 Goodwill Accumulated impairment losses Goodwill acquired during the year Adjustments to previously recorded purchase price allocation Other changes during the year(1) Balance as of December 31, 2011 Goodwill Accumulated impairment losses Amortizable intangible assets: Customer-related Other(1) Total Indefinite-lived intangible assets: Trade name Other(2) Total Total other intangible assets, net Amortizable intangible assets: Customer-related Other(1) Total Indefinite-lived intangible assets: Trade name Other(2) Total Total other intangible assets, net Amortization of other intangible assets for the three months ended On September 1, 2011, Hertz acquired Three Months Ended
March 31, Nine Months Ended
September 30, 2012 2011 2012 2011 $ (56,333 ) $ (128,942 ) Net income $ 279,475 $ 143,652 Adjustments to reconcile net income to net cash provided by operating activities: 491,064 412,508 1,530,775 1,306,661 42,304 37,695 125,132 117,837 19,166 16,784 58,899 51,175 17,135 44,598 43,443 77,614 7,742 15,297 22,562 30,324 7,515 9,078 22,260 24,438 (2,956 ) (6,917 ) (Gain) loss on derivatives 731 (14,330 ) Gain on disposal of business (9,116 ) — 2,498 — 2,498 — 6,917 6,362 23,472 21,211 2,734 742 3,181 22,782 2,370 (26,465 ) 104,392 27,791 (197 ) (2,317 ) (1,935 ) (5,199 ) (57,554 ) (26,035 ) (232,336 ) (150,212 ) (5,471 ) (48,280 ) (6,098 ) (12,616 ) 53,589 28,813 83,112 66,808 (38,712 ) (165,747 ) 16,586 (124,288 ) 5,334 3,934 66,104 56,268 (5,144 ) (5,468 ) (3,189 ) 8,628 492,001 165,640 2,129,948 1,648,544 97,639 20,611 (69,301 ) (123,511 ) (2,648,695 ) (1,963,814 ) (7,681,018 ) (7,864,609 ) 2,009,336 1,690,159 4,815,374 4,932,410 (74,222 ) (56,770 ) (229,440 ) (202,276 ) 47,631 14,451 94,644 48,133 (147,314 ) (9,774 ) (196,220 ) (222,988 ) Purchase of short-term investments, net — (32,891 ) Proceeds from disposal of business 11,691 — (140 ) 1,192 (1,400 ) 760 $ (715,765 ) $ (303,945 ) $ (3,255,670 ) $ (3,464,972 ) Three Months Ended
March 31, Nine Months Ended
September 30, 2012 2011 2012 2011 $ 264,599 $ 2,429,456 $ 282,382 $ 3,058,395 (453,279 ) (3,138,875 ) (656,114 ) (3,641,290 ) 40,650 67,155 367,988 371,994 (243,276 ) (225,302 ) (962,690 ) (814,894 ) 325,247 47,928 Proceeds (payments) under the revolving lines of credit, net 1,675,987 934,364 Distributions to noncontrolling interest — (10,500 ) (38,000 ) — (38,000 ) — 985 871 3,186 2,690 4,514 1,728 7,233 12,292 4 40 17 73 (18,494 ) (10,703 ) (20,050 ) (11,425 ) (4,217 ) (64,091 ) (13,679 ) (87,640 ) (121,267 ) (891,793 ) Net cash provided by (used in) financing activities 646,260 (185,941 ) 7,953 21,687 1,044 13,987 (337,078 ) (1,008,411 ) Net decrease in cash and cash equivalents during the period (478,418 ) (1,988,382 ) 931,779 2,374,170 931,779 2,374,170 $ 594,701 $ 1,365,759 $ 453,361 $ 385,788 $ 126,945 $ 205,812 $ 395,601 $ 487,911 22,433 11,555 43,024 32,544 $ 518,231 $ 487,921 Purchases of revenue earning equipment included in accounts payable and accrued liabilities $ 289,798 $ 217,675 299,577 387,620 504,930 949,824 41,917 38,782 53,708 52,787 9,299 6,760 38,052 10,777 or "Ford," acquired an ownership interest in Hertz in 1987. Prior to this, Hertz was a subsidiary of United 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).•••BAML Capital Partners, or "BAMLCP" (formerly known as Equity)Equity, Inc.,collectively the "Sponsors,"MLGPE,"We refer to the acquisition of all of Hertz's common stock by the Sponsors as the "Acquisition."BAMLCP.MLGPE. Accordingly, Bank of America is now an indirect beneficial owner of our common stock held by BAMLCPthe investment funds associated with MLGPE. We refer to CD&R, Carlyle and certainMLGPE collectively as the "Sponsors." We refer to the acquisition of its affiliates.In March 2011,all of Hertz's common stock by 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"Acquisition."in June 2007, May 2009, June 2009 and March 2011, the Sponsors reduced theirSponsors' holdings torepresent approximately 38% of ourthe outstanding shares of common stock.
Franchise revenues and transactionsTableContentsHERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unauditedarebecame effective for us beginning with thisthe quarterly report for the period ended March 31, 2012. In December 2011, the FASB issued Accounting Standards Update No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05," which defers the timing of implementing only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments. The contractual maturities of such borrowings may exceed 90 days in certain cases.March 31,September 30, 2012 and December 31, 2011, the portion of total restricted cash and cash equivalents that was associated with our Fleet Debt facilities was $126.5$302.2 million and $213.6$213.6 million, respectively. The decreaseincrease in restricted cash and cash equivalents associated with our fleet debt of $87.1$88.6 million from December 31, 2011 to March 31,September 30, 2012 was primarily related to the timing of purchases and sales of revenue earning vehicles.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unaudited Car Rental Equipment
Rental Total $ 419.3 $ 693.8 $ 1,113.1 (46.1 ) (674.9 ) (721.0 ) 373.2 18.9 392.1
—
76.8
76.8 0.2 — 0.2 2.2 0.1 2.3 2.4 76.9 79.3 421.7 770.7 1,192.4 (46.1 ) (674.9 ) (721.0 ) $ 375.6 $ 95.8 $ 471.4 Car Rental Equipment
Rental Total $ 367.9 $ 681.7 $ 1,049.6 (46.1 ) (674.9 ) (721.0 ) 321.8 6.8 328.6
53.1
12.3
65.4 (0.9 ) (0.1 ) (1.0 ) (0.8 ) (0.1 ) (0.9 ) 51.4 12.1 63.5 419.3 693.8 1,113.1 (46.1 ) (674.9 ) (721.0 ) $ 373.2 $ 18.9 $ 392.1 (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. Car Rental Total Balance as of January 1, 2012 Goodwill $ 419.3 $ 693.8 $ 1,113.1 Accumulated impairment losses (46.1 ) (674.9 ) (721.0 ) 373.2 18.9 392.1 Goodwill acquired during the period — 79.4 79.4 Adjustments to previously recorded purchase price allocation (15.3 ) — (15.3 ) (1.0 ) (0.5 ) (1.5 ) (16.3 ) 78.9 62.6 Balance as of September 30, 2012 Goodwill 403.0 772.7 1,175.7 Accumulated impairment losses (46.1 ) (674.9 ) (721.0 ) $ 356.9 $ 97.8 $ 454.7 Car Rental Total Balance as of January 1, 2011 Goodwill $ 367.9 $ 681.7 $ 1,049.6 Accumulated impairment losses (46.1 ) (674.9 ) (721.0 ) 321.8 6.8 328.6 Goodwill acquired during the year 53.1 12.3 65.4 Adjustments to previously recorded purchase price allocation (0.9 ) (0.1 ) (1.0 ) (0.8 ) (0.1 ) (0.9 ) 51.4 12.1 63.5 Balance as of December 31, 2011 Goodwill 419.3 693.8 1,113.1 Accumulated impairment losses (46.1 ) (674.9 ) (721.0 ) $ 373.2 $ 18.9 $ 392.1 Unaudited(1) Primarily consists of changes resulting from disposals and the translation of foreign currencies at different exchange rates from the beginning of the period to the end of the period. March 31, 2012 September 30, 2012 Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Value $ 689.7 $ (382.2 ) $ 307.5 $ 694.6 $ (416.5 ) $ 278.1 78.8 (30.3 ) 48.5 81.0 (35.8 ) 45.2 768.5 (412.5 ) 356.0 775.6 (452.3 ) 323.3 2,190.0 — 2,190.0 2,190.0 — 2,190.0 18.2 — 18.2 18.2 — 18.2 2,208.2 — 2,208.2 2,208.2 — 2,208.2 $ 2,976.7 $ (412.5 ) $ 2,564.2 $ 2,983.8 $ (452.3 ) $ 2,531.5 December 31, 2011 Amortizable intangible assets: Customer-related $ 672.6 $ (365.5 ) $ 307.1 74.7 (27.8 ) 46.9 Total 747.3 (393.3 ) 354.0 Indefinite-lived intangible assets: Trade name 2,190.0 — 2,190.0 18.2 — 18.2 Total 2,208.2 — 2,208.2 Total other intangible assets, net $ 2,955.5 $ (393.3 ) $ 2,562.2 (1) Other amortizable intangible assets primarily consist of our Advantage trade name and concession rights, Donlen trade name, reacquired franchise rights, non-compete agreements and technology-related intangibles. (2) Other indefinite-lived intangible assets primarily consist of reacquired franchise rights. December 31, 2011 Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Value $ 672.6 $ (365.5 ) $ 307.1 74.7 (27.8 ) 46.9 747.3 (393.3 ) 354.0 2,190.0 — 2,190.0 18.2 — 18.2 2,208.2 — 2,208.2 $ 2,955.5 $ (393.3 ) $ 2,562.2 (1)Other amortizable intangible assets primarily consist of our Advantage trade name and concession rights, Donlen trade name, reacquired franchise rights, non-compete agreements and technology-related intangibles.(2)Other indefinite-lived intangible assets primarily consist of reacquired franchise rights.March 31,September 30, 2012 and 2011 was approximately $19.2$19.9 million and $16.8$17.5 million, respectively, and for the nine months ended September 30, 2012 and 2011 was approximately $58.9 million and $51.2 million, respectively. Based on our amortizable intangible assets as of March 31,September 30, 2012, we expect amortization expense to be approximately $57.7$18.5 million for the remainder of 2012, $75.3$77.2 million in 2013, $71.4$72.8 million in 2014, $69.1$70.5 million in 2015, $20.6$21.7 million in 2016 and $8.6$8.7 million in 2017.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unaudited
| | Revenue | Earnings (Loss) | |||||
|---|---|---|---|---|---|---|---|
2011 supplemental pro forma for the first quarter of 2011 (combined entity) | $ | 1,874.1 | $ | (130.3 | ) | ||
| Revenue | Earnings | ||||||
| 2011 supplemental pro forma for the third quarter of 2011 (combined entity) | $ | 2,500.8 | $ | 209.3 | |||
| 2011 supplemental pro forma for the first nine months of 2011 (combined entity) | 6,545.8 | 137.2 | |||||
2011 supplemental pro forma revenue for the nine months ended September 30, 2011 excludes
$3.2 million related to deferred revenue which was eliminated as part of acquisition accounting. 2011 supplemental pro forma earnings for the nine months ended September 30, 2011 excludes $2.0 million related to deferred income which was eliminated as part of acquisition accounting.the Merger. To that end,
Additionally, during
The provision for taxes on income of
$211.3 million in the nine months ended September 30, 2012 increased from $87.9 million in the nine months ended September 30, 2011, primarily due to higher income before income taxes, changes in geographic earnings mix and changes in losses in certain non-U.S. jurisdictions for which tax benefits are not realized.| | Three Months Ended March 31, | Three Months Ended September 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2012 | 2011 | 2012 | 2011 | ||||||||||
Depreciation of revenue earning equipment | $ | 530.4 | $ | 418.7 | $ | 554.1 | $ | 528.1 | ||||||
Adjustment of depreciation upon disposal of revenue earning equipment | (39.4 | ) | (6.2 | ) | (12.7 | ) | (30.9 | ) | ||||||
Rents paid for vehicles leased | 23.1 | 23.6 | 19.1 | 26.1 | ||||||||||
Total | $ | 514.1 | $ | 436.1 | $ | 560.5 | $ | 523.3 | ||||||
| Nine Months Ended September 30, | |||||||
| 2012 | 2011 | ||||||
| Depreciation of revenue earning equipment | $ | 1,624.1 | $ | 1,399.9 | |||
| Adjustment of depreciation upon disposal of revenue earning equipment | (93.3 | ) | (93.3 | ) | |||
| Rents paid for vehicles leased | 63.6 | 72.4 | |||||
| Total | $ | 1,594.4 | $ | 1,379.0 | |||
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unaudited
$0.1 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, 2012 and 2011, included net gains of $82.9 million and $86.0 million, respectively, on the disposal of vehicles used in our car rental operations and net gains of $10.4 million and $7.3 million, respectively, on the disposal of industrial and construction equipment used in our equipment rental operations.
ForSeptember 30, 2012, respectively. During the three monthsthree-month and nine-month periods ended March 31,September 30, 2012, and 2011,the depreciation rate changes in certain of our worldwide carequipment rental operations sold approximately 40,000 and 30,600 non-program cars, respectively, a 30.6% year over year increase primarily due to an overall increaseresulted in the number of cars in the fleet, an increase of
Corporate Debt Senior Term Facility Senior ABL Facility Senior Notes(2) Promissory Notes Convertible Senior Notes Other Corporate Debt Unamortized Net Discount (Corporate)(3) Total Corporate Debt Fleet Debt U.S. ABS Program U.S. Fleet Variable Funding Notes: Series 2009-1(4) Series 2010-2(4) Series 2011-2(4) U.S. Fleet Medium Term Notes Series 2009-2(4) Series 2010-1(4) Series 2011-1(4) Donlen ABS Program Donlen GN II Variable Funding Notes Other Fleet Debt U.S. Fleet Financing Facility European Revolving Credit Facility European Fleet Notes European Securitization(4) Canadian Securitization(4) Australian Securitization(4) Brazilian Fleet Financing Facility Capitalized Leases Unamortized Discount (Fleet) Total Fleet Debt Total Debt as well as airport concession obligations in the United States, Canada and Borrowing Capacity and Availability Corporate Debt Senior ABL Facility Total Corporate Debt Fleet Debt U.S. Fleet Variable Funding Notes Donlen GN II Variable Funding Notes U.S. Fleet Financing Facility European Revolving Credit Facility European Securitization Canadian Securitization Australian Securitization Capitalized Leases Total Fleet Debt Total International, Ltd.'s subsidiaries. As of Components of Net Periodic Benefit Cost: Service cost Interest cost Expected return on plan assets Net amortizations Settlement loss Net pension/postretirement expense The assigned car benefit is available for We participate in various "multiemployer" pension 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. At least one multiemployer plan in which we participate is reported to have, and other of our multiemployer plans could have, significant underfunded liabilities. Such underfunding may increase in the event other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of withdrawing 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. The occurrence of any of these events could have a material adverse effect on our consolidated financial position, results of operations or cash flows. In May 2012, we granted Compensation expense Income tax benefit Total As of Car rental Equipment rental Total reportable segments Other Total Adjustments: Other reconciling items(1) Purchase accounting(2) Non-cash debt charges(3) Restructuring charges Restructuring related charges(4) Acquisition related costs Management transition costs Premiums paid on debt(5) Loss before income taxes Notes. December 31, 2011 Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Other comprehensive income Employee stock purchase plan Net settlement on vesting of restricted stock Stock-based employee compensation charges, net of tax Exercise of stock options, net of tax Common shares issued to Directors March 31, 2012 December 31, 2010 Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Other comprehensive income Net income relating to noncontrolling interest Employee stock purchase plan Net settlement on vesting of restricted stock Stock-based employee compensation charges, net of tax Exercise of stock options, net of tax Common shares issued to Directors March 31, 2011 Accumulated other comprehensive By Type: Involuntary termination benefits Consultant costs Asset writedowns Facility closure and lease obligation costs Total By Caption: Direct operating Selling, general and administrative Total By Segment: Car rental Equipment rental Other reconciling items Total Balance as of January 1, 2012 Charges incurred Cash payments Other(1) Balance as of March 31, 2012 Note 13—Financial Instruments Marketable Securities 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 $11,400.3 million. Derivatives not designated as hedging instruments under ASC 815: Gasoline swaps Interest rate caps Foreign exchange forward contracts Interest rate swaps Foreign exchange options Total derivatives not designated as hedging instruments under ASC 815 Derivatives Not Designated as Hedging Instruments under ASC 815: Gasoline swaps Foreign exchange forward contracts Total 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. Premiums paid for options outstanding as of Indemnification Obligations 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 Legal Proceedings 10-Q. We have established reserves for matters where we believe that the losses are probable and reasonably estimated. Other than with respect to the aggregate 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, 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 in our Form 10-K or in our other filings with Securities and Exchange Commission, could be decided unfavorably to us or any of our subsidiaries involved. Accordingly, it is possible that an adverse outcome 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. Basic and diluted loss per share: Numerator: Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Denominator: Weighted average shares used in basic and diluted computation 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, diluted or In January 2009, Bank of America Corporation, or "Bank of America," acquired Merrill Lynch & Co., Inc., the former parent company of Holdings as of September 30, 2012. loss damage waivers, as well as revenues from the sale of new equipment and consumables); and sales. as of such date. Hertz's agreement to divest its Advantage business, which if consummated would result in a loss, triggered an interim impairment analysis. The assets were evaluated for impairment under a probability-weighted approach for developing estimates of future cash flows used to test a long-lived asset for recoverability. The sum of future undiscounted cash flows of the Advantage business exceeds the carrying value as of September 30, 2012. Accordingly, no impairment has been recognized at September 30, 2012. the television industry. Revenues: Car rental Equipment rental Other Total revenues Expenses: Direct operating Depreciation of revenue earning equipment and lease charges Selling, general and administrative Interest expense Interest income Other (income) expense, net Total expenses Loss before income taxes (Provision) benefit for taxes on income Net loss Less: Net income attributable to noncontrolling interest Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Selected Car Rental Operating Data: Worldwide number of transactions (in thousands) Domestic (Hertz) International (Hertz) Worldwide transaction days (in thousands)(a) Domestic (Hertz) International (Hertz) Worldwide rental rate revenue per transaction day(b) Domestic (Hertz) International (Hertz) Worldwide average number of cars during the period Domestic (Hertz company-operated) International (Hertz company-operated) Donlen (under lease and maintenance) Adjusted pre-tax income (in millions of dollars)(c) Worldwide revenue earning equipment, net (in millions of dollars) Selected Worldwide Equipment Rental Operating Data: Rental and rental related revenue (in millions of dollars)(d) Same store revenue growth, including growth initiatives(e) Average acquisition cost of rental equipment operated during the period (in millions of dollars) Adjusted pre-tax income (in millions of dollars)(c) Revenue earning equipment, net (in millions of dollars) Car rental segment revenues Non-rental rate revenue Foreign currency adjustment Rental rate revenue Transaction days (in thousands) Rental rate revenue per transaction day (in whole dollars) Adjusted pre-tax income: Car rental Equipment rental Total reportable segments Adjustments: Other reconciling items(1) Purchase accounting(2) Non-cash debt charges(3) Restructuring charges Restructuring related charges(4) Acquisition related costs Management transition costs Premiums paid on debt(5) Loss before income taxes Equipment rental segment revenues Equipment sales and other revenue Foreign currency adjustment Rental and rental related revenue Revenues by Segment Car rental Equipment rental Other reconciling items Total revenues $65.6 million and a decrease in worldwide RPD. shift to longer life, lower RPD rentals (including mix shift towards off-airport and the Advantage brand). International RPD decreased primarily due to a decrease in Europe's airport RPD which was due to the competitive pricing environment and uncertain economic conditions. Revenues from all other sources decreased Expenses: Fleet related expenses Personnel related expenses Other direct operating expenses Direct operating Depreciation of revenue earning equipment and lease charges Selling, general and administrative Interest expense Interest income Other (income) expense, net Total expenses 0.5%, but total expenses as a percentage of revenues decreased from 87.8% for the three months ended September 30, 2011 to 85.3% for the three months ended September 30, 2012. expansion. translation of approximately $8.2 million. cars. equipment and the effects of foreign currency translation of approximately $1.0 million. translation of approximately $2.0 million. expense. primarily due to rates in 2012, mainly due to the redemption of the remainder of our 8.875% Senior Notes and 7.875% Senior Notes in the first quarter of 2012. third quarter. (LOSS) Loss before income taxes (Provision) benefit for taxes on income Net loss Less: Net income attributable to noncontrolling interest Net loss attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders Cash Flows Cash provided by (used in): Operating activities Investing activities Financing activities Effect of exchange rate changes Net change in cash and cash equivalents payments. Capital Expenditures 2012 First Quarter 2011 First Quarter Revenue earning equipment expenditures Car rental Equipment rental Total Property and equipment expenditures Car rental Equipment rental Other Total nine months ended September 30, 2012. equipment, borrowings under our asset-backed securitizations and our asset-based revolving credit facilities and access to the credit markets generally. acquisitions. certain indebtedness, make certain restricted payments (including paying dividends, redeeming stock or making other distributions to parent entities of Hertz and other persons outside of the Hertz credit group), make investments, create liens, transfer or sell assets, merge or consolidate, and enter into certain transactions with Hertz's affiliates that are not members of the Hertz credit group. Under the terms of our Senior Term Facility and Senior ABL Facility, we are not subject to ongoing financial maintenance covenants; however, under the Senior ABL Facility, failure to maintain certain levels of liquidity will subject the Hertz Corporate Debt Senior ABL Facility Total Corporate Debt Fleet Debt U.S. Fleet Variable Funding Notes Donlen GN II Variable Funding Notes U.S. Fleet Financing Facility European Revolving Credit Facility European Securitization Canadian Securitization Australian Securitization Capitalized Leases Total Fleet Debt Total 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. 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. 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 We have a significant amount of debt 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. $3.2 million and $8.6 million, respectively. For the three and nine months ended September 30, 2011, our consolidated statement of operations contained realized and unrealized losses relating to the effects of foreign currency of $9.2 million and $16.9 million, respectively. Income Taxes was reinstated on October 15, 2012. We participate in various "multiemployer" pension 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. At least one multiemployer plan in which we participate is reported to have, and other of our multiemployer plans could have, significant underfunded liabilities. Such underfunding may increase in the event other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of withdrawing 10-Q. 1A of our Annual Report on Form 10-K for the year ended December 31, 2011, we may be subject to the risks and uncertainties associated with Dollar Thrifty's business. See "Item 1A-Risk Factors" in the Dollar Thrifty Form 10-K for the fiscal year ended December 31, 2011 for a discussion of these risks. This item is not incorporated by reference into this quarterly report on Form 10-Q and you should not consider the contents of this item to be a part of this quarterly report on Form 10-Q.Facility Maturity September 30,
2012 December 31,
2011Corporate Debt Senior Term Facility 3.75 % Floating 3/2018 $ 1,379.0 $ 1,389.5 Senior ABL Facility 2.47 % Floating 3/2016 410.0 — 7.09 % Fixed 10/2018–1/2021 2,450.0 2,638.6 Promissory Notes 6.96 % Fixed 6/2012–1/2028 48.7 224.7 Convertible Senior Notes 5.25 % Fixed 6/2014 474.7 474.7 Other Corporate Debt 5.05 % Floating Various 65.7 49.6 Unamortized Net Discount (43.7 ) (72.3 ) Total Corporate Debt 4,784.4 4,704.8 Fleet Debt U.S. ABS Program U.S. Fleet Variable Funding Notes: 1.25 % Floating 3/2013 1,900.0 1,000.0 1.36 % Floating 3/2013 200.0 170.0 N/A Floating 4/2012 — 175.0 2,100.0 1,345.0 U.S. Fleet Medium Term Notes 4.95 % Fixed 3/2013–3/2015 1,384.3 1,384.3 3.77 % Fixed 2/2014–2/2018 749.8 749.8 2.86 % Fixed 3/2015–3/2017 598.0 598.0 2,732.1 2,732.1 Donlen ABS Program Donlen GN II Variable 1.17 % Floating 12/2012 899.3 811.2 Other Fleet Debt U.S. Fleet Financing Facility 3.27 % Floating 9/2015 158.9 136.0 European Revolving Credit Facility 2.72 % Floating 6/2015 393.6 200.6 European Fleet Notes 8.50 % Fixed 7/2015 514.9 �� 517.7 2.51 % Floating 7/2014 413.6 256.2 Canadian Securitization 2.16 % Floating 6/2013 147.1 68.3 5.02 % Floating 12/2012 162.3 169.3 Brazilian Fleet Financing Facility 13.53 % Floating 2/2013 14.0 23.1 Capitalized Leases 4.40 % Floating Various 407.7 363.7 Unamortized Discount (Fleet) (7.0 ) (10.9 ) 2,205.1 1,724.0 Total Fleet Debt 7,936.5 6,612.3 Total Debt $ 12,720.9 $ 11,317.1 Average
Interest
Rate at
March 31,
2012(1) Fixed or
Floating
Interest
Rate Maturity March 31,
2012 December 31,
2011 3.75 % Floating 3/2018 $ 1,386.0 $ 1,389.5 2.50 % Floating 3/2016 120.0 — 7.09 % Fixed 10/2018–1/2021 2,450.0 2,638.6 7.48 % Fixed 6/2012–1/2028 224.7 224.7 5.25 % Fixed 6/2014 474.7 474.7 5.00 % Floating Various 45.9 49.6 (56.1 ) (72.3 ) 4,645.2 4,704.8 1.27 % Floating 3/2013 1,450.0 1,000.0 1.35 % Floating 3/2013 200.0 170.0 2.82 % Floating 4/2012 70.0 175.0 1,720.0 1,345.0 4.95 % Fixed 3/2013–3/2015 1,384.3 1,384.3 3.77 % Fixed 2/2014–2/2018 749.8 749.8 2.86 % Fixed 3/2015–3/2017 598.0 598.0 2,732.1 2,732.1 1.26 % Floating 8/2012 835.0 811.2 3.31 % Floating 9/2015 161.0 136.0 4.11 % Floating 6/2013 44.0 200.6 8.50 % Fixed 7/2015 532.7 517.7 2.82 % Floating 7/2013 229.3 256.2 2.10 % Floating 5/2012 60.1 68.3 6.00 % Floating 12/2012 165.2 169.3 17.35 % Floating 6/2012 16.8 23.1 4.60 % Floating Various 293.7 363.7 (9.4 ) (10.9 ) 1,493.4 1,724.0 6,780.5 6,612.3 $ 11,425.7 $ 11,317.1 Note:For further information on the definitions and terms of our debt, see Note 4 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."(1)As applicable, reference is to the March 31, 2012 weighted average interest rate (weighted by principal balance).Unaudited(2)References to our "Senior Notes" include the series of Hertz's unsecured senior notes set forth in the table below. As of March 31, 2012, the outstanding principal amount for each such series of the Senior Notes is also specified below. Outstanding Principal (in millions) March 31, 2012 December 31, 2011 8.875% Senior Notes due January 2014 $ — $ 162.3 7.875% Senior Notes due January 2014 — 276.3 (€213.5) 7.50% Senior Notes due October 2018 700.0 700.0 7.375% Senior Notes due January 2021 500.0 500.0 6.75% Senior Notes due April 2019 1,250.0 1,000.0 $ 2,450.0 $ 2,638.6 Note: For further information on the definitions and terms of our debt, see Note 4 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." (1) As applicable, reference is to the September 30, 2012 weighted average interest rate (weighted by principal balance). (2) References to our "Senior Notes" include the series of Hertz's unsecured senior notes set forth in the table below. As of September 30, 2012 and December 31, 2011, the outstanding principal amount for each such series of the Senior Notes is also specified below. (3)As of March 31, 2012 and December 31, 2011, $59.5 million and $65.5 million, respectively, of the unamortized corporate discount relates to the 5.25% Convertible Senior Notes.(4)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. Outstanding Principal (in millions) Senior Notes September 30, 2012 December 31, 2011 8.875% Senior Notes due January 2014 $ — $ 162.3 7.875% Senior Notes due January 2014 — 276.3 €(213.5) 7.50% Senior Notes due October 2018 700.0 700.0 7.375% Senior Notes due January 2021 500.0 500.0 6.75% Senior Notes due April 2019 1,250.0 1,000.0 $ 2,450.0 $ 2,638.6 (3) (4) 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. (5) (6) (7) March 31September 30 (in millions of dollars) are as follows:2013 $ 6,259.8 (including $5,610.9 of other short-term borrowings*) 2014 $ 254.0 2015 $ 1,769.6 2016 $ 329.2 2017 $ 266.0 After 2017 $ 3,893.0 2013 $ 4,920.2 (including $4,070.5 of other short-term borrowings*) 2014 $ 285.5 2015 $ 1,210.7 2016 $ 921.7 2017 $ 244.1 After 2017 $ 3,909.0 *Our short-term borrowings as of March 31, 2012 include, among other items, the amounts outstanding under the European Securitization, Australian Securitization, Senior ABL Facility, U.S. Fleet Financing Facility, U.S. Fleet Variable Funding Notes, Brazilian Fleet Financing Facility, Canadian Securitization, Capitalized Leases, European Revolving Credit Facility and the Donlen GN II Variable Funding Notes. 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, 2012 and remain as such through June 30, 2012. As of March 31, 2012, short-term borrowings had a weighted average interest rate of 2.5%.* Our short-term borrowings as of September 30, 2012 include, among other items, the amounts outstanding under the European Securitization, Australian Securitization, Senior ABL Facility, U.S. Fleet Financing Facility, U.S. Fleet Variable Funding Notes, Brazilian Fleet Financing Facility, Canadian Securitization, Capitalized Leases, European Revolving Credit Facility and the Donlen GN II Variable Funding Notes. 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, 2012 and remain as such through December 31, 2012. As of September 30, 2012, short-term borrowings had a weighted average interest rate of 2.3%. March 31,September 30, 2012, there were $607.0 million total outstanding standby letters of credit.credit totaling $601.1 million. Of this amount, $291.0$553.3 million was issued under the Senior Credit Facilities ($291.0 million of which was issued for the benefit of the U.S. ABS Program, and $57.8$65.7 million was related to other debt obligations. The remainder isobligations primarily to support self-insurance programs (including insurance policies with respect to which we have agreed to indemnify the policy issuers for any losses)HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedEurope.Europe). As of March 31,September 30, 2012, none of these letters of credit have been drawn upon.$10.77$10.77 for at least 20 trading days during the 30 consecutive trading day period ending on December 31, 2011. Since this same trigger was met in the firstthird quarter of 2012, the Convertible Senior Notes continue to be convertible through June 30,December 31, 2012, 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$1,000 in principal amount in cash and settling in shares the excess conversion, if any.$250$250 million in aggregate principal amount of the 6.75% Senior Notes due 2019. The proceeds of this March 2012 offering were used to redeem all of the outstanding 8.875% Senior Notes due 2014 and together with cash on hand, all of the outstanding 7.875% Senior Notes due 2014 which resulted in the write-off of unamortized debt costs of $3.2 million.$3.2 million.amendedcaused its wholly-owned subsidiary HC Limited Partnership to amend the Canadian Securitization to extend the maturity date from March 2012 to May 2012.See In the second quarter of 2012, the maturity date was extended to June 2013.March 31,September 30, 2012 has been issued from the terms disclosed in our Form 10-K.1:1:1 for the four quarters most recently ended. As of March 31,September 30, 2012, we were not subject to such contractually specified fixed charge coverage ratio.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedMarch 31,September 30, 2012, the following facilities were available for the use of Hertz and its subsidiaries (in millions of dollars): Remaining
Capacity Availability Under
Borrowing Base
Limitation $ 1,320.3 $ 953.6 $ 1,037.3 $ 1,016.5 1,320.3 953.6 1,037.3 1,016.5 618.1 159.7 288.1 — 20.1 20.1 105.8 — 29.0 29.0 31.1 — 249.0 91.0 — — 282.9 26.2 101.3 — 140.2 4.9 55.8 — 94.6 3.6 97.0 1.2 230.2 25.2 117.0 — 1,664.1 359.7 796.1 1.2 $ 2,984.4 $ 1,313.3 $ 1,833.4 $ 1,017.7 March 31,September 30, 2012, the Senior Term Facility had approximately $0.3$0.3 million available under the letter of credit facility and the Senior ABL Facility had $1,086.5$1,092.3 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedMarch 31,September 30, 2012 and December 31, 2011, 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 comprised of loans receivable and revenue earning equipment of $383.0$456.3$456.3 million, respectively, and total liabilities primarily comprised of debt of $382.5$658.0 million and $455.8$455.8 million, respectively. Pension Benefits Postretirement
Benefits (U.S.) Pension Benefits U.S. Non-U.S. U.S. Non-U.S. Three Months Ended March 31, Three Months Ended September 30, 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Components of Net Periodic Benefit Cost: $ 6.3 $ 6.2 $ 0.3 $ 1.7 $ 0.1 $ 0.1 $ 5.2 $ 6.6 $ 0.3 $ (0.5 ) $ — $ 0.1 6.5 6.5 2.3 2.8 0.2 0.2 7.3 6.6 2.2 2.9 0.2 0.2 (7.3 ) (7.1 ) (3.0 ) (3.1 ) — — (8.3 ) (7.7 ) (3.0 ) (3.5 ) — — 2.8 2.0 — (0.3 ) — — 2.9 1.1 — 0.1 — (0.1 ) — 0.3 — — — — — 1.5 — — — — $ 8.3 $ 7.9 $ (0.4 ) $ 1.1 $ 0.3 $ 0.3 Curtailment gain — — — — — — Net pension / postretirement expense $ 7.1 $ 8.1 $ (0.5 ) $ (1.0 ) $ 0.2 $ 0.2 Pension Benefits U.S. Non-U.S. Nine Months Ended September 30, 2012 2011 2012 2011 2012 2011 Components of Net Periodic Benefit Cost: Service cost $ 18.5 $ 19.7 $ 0.9 $ 3.0 $ 0.2 $ 0.2 Interest cost 21.2 20.6 6.8 8.5 0.6 0.7 Expected return on plan assets (23.6 ) (22.9 ) (9.0 ) (9.7 ) — — Net amortizations 8.9 5.4 (0.1 ) (0.5 ) — — Settlement loss — 2.2 — — — — Curtailment gain — — — (13.1 ) — — Net pension / postretirement expense $ 25.0 $ 25.0 $ (1.4 ) $ (11.8 ) $ 0.8 $ 0.9 March 31,September 30, 2012, and 2011, we contributed $20.3$14.5 million and $44.8$46.7 million, respectively, to our worldwide pension plans, including discretionary contributions of $3.2$0 and $3.2 million and $12.3 million,, respectively, to our 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, 2011, we contributed $16.6 million and $73.7 million, respectively, to our worldwide pension plans, including discretionary contributions of $0.5 million and $13.7 million, respectively, to our U.K. defined benefit pension plan and benefit payments made through unfunded plans. The level of 2012 and future contributions will vary, and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation.We have a defined benefit pension plan in the U.K. thatour U.K. defined benefit pension plan to cease all future benefit accruals to existing members and to close the plan to new members. Effective July 1, 2011, we introduced a defined contribution plan with company matching contributions to replace the U.K. defined benefit pension plan. The company matching contributions are generally 100% of the employee contributions, up to 8% of pay, except that former members of the defined benefit pension plan receive an enhanced match for five years. This will result in lower contributions this year into the defined benefit plan, which will be offset by matching contributions to the new defined contribution plan. In the year ended December 31, 2011, we recognized a gain of $13.1$13.1 million for the U.K. plan that represented unamortized prior service cost from a 2010 amendment that eliminated discretionary pension increases related to pre-1997 service primarily for inactive employees.Table15 years post-retirement or until the participant reaches the age of ContentsHERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES80NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued), whichever occurs last.Unaudited527,360543,880 Restricted Stock Units, or "RSUs," to certain executives and employees at fair values ranging from $13.65$13.65 to $14.47, $14.47, 747,423 Performance Stock Units, or "PSUs," at a fair value of $13.65,$13.65, and 1,083,9621,098,591 PSUs (referred to as Price Vesting Units, or "PVUs") at fair values ranging from $10.13$10.13 to $11.26$11.26 under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan, or the "Omnibus Plan." The PSUs 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 2012 and 2013 Corporate EBITDA results. "EBITDA" means consolidated net income before net interest expense, consolidated income taxes and consolidated depreciation (which includes revenue earning equipment lease charges) and amortization and "Corporate EBITDA," represents EBITDA as adjusted for car rental fleet interest, car rental fleet depreciation and certain other items, as described withinprovided in the provisions of the Plan.applicable award agreements. Of the PVUs granted, one half will fully vest after three years if the stock price appreciates 15%, over the grant date price, and one half will fully vest after four years if the stock price appreciates 25%. over the grant date price. Partial attainment of the stock appreciation targets will result in partial vesting. The achievement of the market condition for the PVUs is determined based on the average closing stock price for the 20 trading day period ending March 6, 2015 and 2016, respectively. Three Months Ended
March 31, Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 2012 2011 $ 7.5 $ 9.1 $ 7.3 $ 7.8 $ 22.3 $ 24.4 (2.9 ) (3.5 ) (2.8 ) (3.0 ) (8.6 ) (9.4 ) $ 4.6 $ 5.6 $ 4.5 $ 4.8 $ 13.7 $ 15.0 HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedMarch 31,September 30, 2012, there was approximately $55.51.51.4 years, on a weighted average basis, of the requisite service period that began on the grant dates.activities, such as our third party claim management services.activities. Donlen is included in the car rental reportable segment. (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 relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally. The contribution of our reportable segments to revenues and adjusted pre-tax income (loss) and the reconciliation to consolidated amounts are summarized below (in millions of dollars). Three Months Ended March 31, Revenues Adjusted Pre-Tax Income
(Loss) 2012 2011 2012 2011 $ 1,658.2 $ 1,510.3 $ 91.6 $ 61.3 302.1 268.2 25.9 10.2 1,960.3 1,778.5 117.5 71.5 0.6 1.5 $ 1,960.9 $ 1,780.0 (88.1 ) (87.5 ) (24.1 ) (20.6 ) (25.2 ) (59.9 ) (9.4 ) (4.9 ) (0.6 ) (0.5 ) (6.9 ) (2.8 ) — (2.5 ) — (51.7 ) $ (36.8 ) $ (158.9 ) (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 Three Months Ended September 30, Revenues Adjusted Pre-Tax Income (Loss) 2012 2011 2012 2011 Car rental $ 2,152.6 $ 2,109.1 $ 428.7 $ 375.3 Equipment rental 363.0 321.7 76.2 55.9 Total reportable segments 2,515.6 2,430.8 504.9 431.2 Other 0.6 1.5 Total $ 2,516.2 $ 2,432.3 Adjustments: (80.1 ) (84.3 ) (23.9 ) (19.1 ) (20.5 ) (21.0 ) Restructuring charges (1.5 ) (1.9 ) (2.0 ) (3.2 ) 0.1 0.1 Management transition costs — (1.5 ) Acquisition related costs (8.1 ) (4.6 ) Income before income taxes $ 368.9 $ 295.7 Nine Months Ended September 30, Revenues Adjusted Pre-Tax Income (Loss) 2012 2011 2012 2011 Car rental $ 5,700.4 $ 5,388.3 $ 797.8 $ 678.8 Equipment rental 1,000.1 891.6 144.6 99.5 Total reportable segments 6,700.5 6,279.9 942.4 778.3 Other 1.8 4.7 Total $ 6,702.3 $ 6,284.6 Adjustments: (254.3 ) (263.0 ) (76.9 ) (62.2 ) (66.3 ) (108.0 ) Restructuring charges (27.0 ) (40.4 ) (7.6 ) (6.4 ) 0.1 0.1 Acquisition related costs (19.6 ) (13.6 ) Management transition costs — (4.0 ) — 13.1 — (62.4 ) Income before income taxes $ 490.8 $ 231.5 Unaudited(1) Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as other business activities. (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 depreciation and amortization of tangible and intangible assets. (3) Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. (4)Represents incremental 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)Represents premiums paid to redeem our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes.(4) Represents incremental 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) Represents the mark-to-market adjustment on our interest rate cap. (6) Represents a gain for the U.K. pension plan relating to unamortized prior service cost from a 2010 amendment that eliminated discretionary pension increases related to pre-1997 service primarily pertaining to inactive employees. (7) $606.6$1,865.6 million from December 31, 2011 to March 31,September 30, 2012. The increase was primarily related to increases in our car rental and equipment rental segments' revenue earning equipment and receivables, driven by increased volumes, and an increase in restricted cash and cash equivalents related to the timing of purchases and sales of revenue earning vehicles, partly offset by a decreases in our cash and cash equivalents, primarily relating to the redemption of our 8.875% Senior Notes and our 7.875% Senior Notes, and fleet receivables, due to the timing of sales of revenue earning equipment. Common Stock Accumulated
Other
Comprehensive
Income (Loss) Preferred
Stock Additional
Paid-In
Capital Accumulated
Deficit Total
Equity Shares Amount $ — 417.0 $ 4.2 $ 3,206.0 $ (947.1 ) $ (28.4 ) $ 2,234.7 (56.3 ) (56.3 ) 32.3 32.3 0.1 1.2 1.2 1.8 (18.5 ) (18.5 ) 7.5 7.5 0.8 4.5 4.5 0.1 0.1 $ — 419.7 $ 4.2 $ 3,200.8 $ (1,003.4 ) $ 3.9 $ 2,205.5 Preferred Stock Common Stock Non-
Controlling
Interest (In Millions) Shares Amount December 31, 2011 $ — 417.0 $ 4.2 $ 3,206.0 $ (947.1 ) $ (28.4 ) $ — $ 2,234.7 Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders 279.5 279.5 Other comprehensive income 13.6 13.6 Employee stock purchase plan 0.3 3.7 3.7 Net settlement on vesting of restricted stock 2.0 (20.0 ) (20.0 ) Stock-based employee compensation charges, net of tax 22.2 22.2 Exercise of stock options, net of tax 1.6 7.2 7.2 Common shares issued to Directors 1.4 1.4 September 30, 2012 $ — 420.9 $ 4.2 $ 3,220.5 $ (667.6 ) $ (14.8 ) $ — $ 2,542.3 Common Stock Accumulated
Other
Comprehensive
Income (Loss) Preferred
Stock Additional
Paid-In
Capital Accumulated
Deficit Non-
controlling
Interest Total
Equity Shares Amount $ — 413.5 $ 4.1 $ 3,183.2 $ (1,123.2 ) $ 37.8 $ 16.5 $ 2,118.4 (132.6 ) (132.6 ) 31.0 31.0 3.7 3.7 0.1 1.0 1.0 1.0 (10.7 ) (10.7 ) 9.1 9.1 0.3 1.8 1.8 0.1 0.1 $ — 414.9 $ 4.1 $ 3,184.5 $ (1,255.8 ) $ 68.8 $ 20.2 $ 2,021.8 Common Stock Non-
Controlling
Interest (In Millions) Shares Amount December 31, 2010 $ — 413.5 $ 4.1 $ 3,183.2 $ (1,123.2 ) $ 37.9 $ 16.5 $ 2,118.5 Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders 129.1 129.1 Other comprehensive loss (12.8 ) (12.8 ) Net income relating to noncontrolling interest 14.5 14.5 Dividend payment to noncontrolling interest (10.5 ) (10.5 ) Employee stock purchase plan 0.2 3.2 3.2 Net settlement on vesting of restricted stock 1.2 (11.4 ) (11.4 ) Stock-based employee compensation charges, net of tax 24.4 24.4 Exercise of stock options, net of tax 1.6 0.1 12.3 12.4 Common shares issued to Directors 0.2 1.5 1.5 September 30, 2011 $ — 416.7 $ 4.2 $ 3,213.2 $ (994.1 ) $ 25.1 $ 20.5 $ 2,268.9 Unauditedincome (loss)loss as of March 31,September 30, 2012 and December 31, 2011 includes accumulated translation gains of $120.9$95.0 million and $91.3$91.3 million, respectively, pension benefits (expense) of $(99.8)$(94.5) million and $(99.6)$(99.6) million, respectively, unrealized losses on our Euro-denominated debt of $(19.4)$(19.4) million and $(19.4)$(19.4) million, respectively, unrealized holding gains of $3.4$5.1 million and $0.3$0.3 million, respectively, and other of $(1.2)$(1.0) million and $(1.0)$(1.0) million, respectively.quartersecond and third quarters of 2012, 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 employees. employees, 280 employees and 240 employees, respectively.March 31,September 30, 2012, we incurred $539.9$557.5 million ($261.5 ($273.5 million for our car rental segment, $225.7$229.5 million for our equipment rental segment and $52.7$54.5 million of other) of restructuring charges.developed,developed; however, we presently do not have firm plans or estimates of any related expenses.:. Three Months Ended
March 31, Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 2012 2011 $ 2.7 $ 1.0 Termination benefits $ 0.3 $ 2.4 $ 16.5 $ 6.8 Pension and post retirement expense — — — 0.3 0.2 0.1 0.1 0.3 0.7 0.6 2.7 0.7 — (0.5 ) 2.7 22.8 3.8 3.1 0.9 (0.4 ) 6.6 9.6 Relocation costs and temporary labor costs 0.1 0.1 0.1 0.1 Other 0.1 — 0.4 0.2 $ 9.4 $ 4.9 $ 1.5 $ 1.9 $ 27.0 $ 40.4 HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unaudited Three Months Ended
March 31, Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 2012 2011 $ 7.6 $ 4.3 $ 3.7 $ 0.7 $ 18.3 $ 35.3 1.8 0.6 (2.2 ) 1.2 8.7 5.1 $ 9.4 $ 4.9 $ 1.5 $ 1.9 $ 27.0 $ 40.4 Three Months Ended
March 31, Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 2012 2011 $ 5.2 $ 1.0 $ 0.2 $ 2.8 $ 17.2 $ 7.3 4.2 3.9 1.3 (0.9 ) 8.1 32.7 — — — — 1.7 0.4 $ 9.4 $ 4.9 $ 1.5 $ 1.9 $ 27.0 $ 40.4 March 31,September 30, 2012, the after-tax effect of the restructuring charges decreased diluted earnings per share by $0.01and$0.05, respectively. During the three and nine months ended September 30, 2011, the after-tax effect of the restructuring charges increased the lossdecreased diluted earnings per share by $0.02$0.00 and $0.01,$0.06, respectively.threenine months ended March 31,September 30, 2012 (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. Other Total Balance as of January 1, 2012 $ 9.1 $ 0.2 $ 0.6 $ 11.7 $ 21.6 Charges incurred 16.5 — 0.7 9.8 27.0 Cash payments (14.0 ) — (0.5 ) (4.0 ) (18.5 ) (0.3 ) — (0.1 ) (8.9 ) (9.3 ) Balance as of September 30, 2012 $ 11.3 $ 0.2 $ 0.7 $ 8.6 $ 20.8 (1) Involuntary
Termination
Benefits Pension
and Post
Retirement
Expense Consultant
Costs Other Total $ 9.1 $ 0.2 $ 0.6 $ 11.7 $ 21.6 2.7 — 0.2 6.5 9.4 (2.1 ) — (0.1 ) (0.8 ) (3.0 ) 0.3 — (0.1 ) (6.0 ) (5.8 ) $ 10.0 $ 0.2 $ 0.6 $ 11.4 $ 22.2 (1)Consists of decreases of $3.4 million for facility closures and $2.7 million for asset writedowns, partly offset by an increase of $0.3 million due to foreign currency translation.March 31,September 30, 2012 and December 31, 2011 because of the short-term maturity of these instruments. Money market accounts, whose fair value at March 31,September 30, 2012, is measured using Level 1 inputs, totaling $146.3$65.4 million and $194.9$300.4 million are included in "Cash and cash equivalents" and "Restricted cash and cash equivalents," respectively. Money market accounts, whose fair value at December 31, 2011, is measured using Level 1 inputs, totaling $566.0$566.0 million and $142.9$142.9 million are included in "Cash and cash equivalents" and "Restricted cash and cash equivalents," respectively.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unauditedincome (loss).loss." As of March 31,September 30, 2012 and December 31, 2011, the fair value of marketable securities was $38.2$41.1 million and $33.2$33.2 million, respectively. For the three and nine months ended March 31,September 30, 2012, unrealized gains of $5.0$2.8 million and $7.9 million, respectively, were recorded in "Accumulated other comprehensive income (loss).loss." For the three and nine months ended September 30, 2011, unrealized gains of $8.2 million and $6.3 million, respectively, were recorded in "Accumulated other comprehensive loss." Fair values for marketable securities are based on Level 1 inputs consisting of quoted market prices.DebtMarch 31,September 30, 2012 was $12,228.9$13,465.8 million, compared to its aggregate unpaid principal balance of $11,491.2 million.$12,771.6 million. The aggregate fair value of all debt at December 31, 2011 was $11,832.5$11,832.5 million, compared to its aggregate unpaid principal balance of $11,400.3 million. September 30,
2012 December 31,
2011 September 30,
2012 December 31,
2011Derivatives not designated as hedging instruments under ASC 815: Gasoline swaps $ 0.3 $ — $ — $ 0.4 Interest rate caps — 0.5 — 0.4 Foreign exchange forward contracts 4.2 4.4 3.3 1.9 Interest rate swaps — — — 0.2 Foreign exchange options 0.1 0.1 — — Total derivatives not designated as hedging instruments under ASC 815 $ 4.6 $ 5.0 $ 3.3 $ 2.9 (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. Fair Value of Derivative Instruments(1) Asset Derivatives(2) Liability Derivatives(2) March 31,
2012 December 31,
2011 March 31,
2012 December 31,
2011 $ 1.2 $ — $ — $ 0.4 0.1 0.5 0.1 0.4 6.5 4.4 2.8 1.9 — — 0.1 0.2 0.1 0.1 — — $ 7.9 $ 5.0 $ 3.0 $ 2.9 (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. Three Months Ended
September 30, 2012 2011 Derivatives not designated as hedging instruments under ASC 815: Gasoline swaps Direct operating $ 2.1 $ (1.9 ) Interest rate caps Selling, general and administrative — 0.1 Foreign exchange forward contracts Selling, general and administrative (6.2 ) 11.3 Foreign exchange options Selling, general and administrative — (0.1 ) Total $ (4.1 ) $ 9.4 HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unaudited Location of Gain or (Loss)
Recognized on Derivatives Amount of Gain or
(Loss) Recognized in
Income on Derivatives Three Months Ended
March 31, 2012 2011 Nine Months Ended
September 30, 2012 2011 Derivatives not designated as hedging instruments under ASC 815: Direct operating $ 1.8 $ 3.1 Direct operating $ 0.6 $ 1.0 Interest rate caps Selling, general and administrative (0.1 ) 0.1 Selling, general and administrative (5.4 ) (0.6 ) Selling, general and administrative (11.8 ) 3.4 Foreign exchange options Selling, general and administrative 0.1 (0.1 ) $ (3.6 ) $ 2.5 $ (11.2 ) $ 4.4 $6.7$6.7 million, with a maximum notional amount equal to the refinanced Series 2009-1 and the Series 2010-2 with a combined$2.1$2.1 billion, a strike rate of 5% and expected maturity date of March 25, 2013. Additionally, Hertz sold a 5% interest rate cap for $6.2$6.2 million, with a matching notional amount and term to the HVF interest rate cap. In March 2012, an additional $250 million of the Series 2009-1 notes was issued, for which HVF and Hertz amended their interest rate cap agreements to increase the maximum notional amounts by $250 million. Also, in December 2010, the Australian Securitization was completed and our Australian operating subsidiary purchased an interest rate cap for $0.5$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 December 2012. Additionally, Hertz sold a 7% interest rate cap for $0.4$0.4 million with a matching notional amount and term to the Australian operating subsidiary's interest rate cap. The fair values of all interest rate caps were 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.with a total notional amount of $25.6 million at March 31, 2012, associated with floating rate debt. As of September 30, 2012, these interest rate swaps have expired. These interest rate swaps are used to effectively convert an amount of floating rate debt into fixed rate debt. The fair values of these interest rate swaps were calculated using a discounted cash flow method and applying observable market data (i.e. the 1-month LIBOR yield curve). Gains and losses resulting from changes in the fair value of these interest rate swaps are included in our results of operations in the periods incurred (in Selling, general and administrative).MayNovember 2013. 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 March 31,September 30, 2012, our outstanding commodity instruments for unleaded gasoline and diesel fuel totaled approximately 8.27.8 million gallons and 0.61.5 million gallons, respectively. The fair value of these commodity instruments was calculated using a discounted cash flow method and applying observable market data (i.e.,(including NYMEX RBOB Gasoline and U.S. Department of Energy surveys, etc.)surveys). 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.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedMarch 31,September 30, 2012, were approximately $0.2 million.March 31,September 30, 2012 and December 31, 2011, the total notional amount of these foreign exchange options was $8.6$45.0 million and $9.1$9.1 million, respectively. As of March 31,September 30, 2012, these foreign exchange options mature through April 2013.January 2014. 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.March 31,September 30, 2012, the total notional amount of these forward contracts was $578.8$986.9 million, maturing within four months. The fair value of these foreign currency forward contracts was calculated based on foreign currency forward exchange rates.threenine months ended March 31,September 30, 2012, there were no material changes to our relationship with Hertz Investors, Inc. or the Sponsors.BAMLCPMLGPE (which is one of the Sponsors), including Merrill Lynch & Co., Inc., Bank of America N.A.,and certain of its affiliates, have provided various investment and 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 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 following capacities, or similar capacities, with respect to our financing arrangements: lenders and/or agents under the Senior 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 and certain of the U.S. Fleet Medium Term Notes; and structuring advisors and/or agents under the U.S. ABS Program.March 31,September 30, 2012 and December 31, 2011, approximately $187$185 million and $174$174 million, respectively, of our outstanding debt was with related parties.March 31,September 30, 2012 and December 31, 2011, the following guarantees (including indemnification commitments) were issued and outstanding.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedEnvironmentalMarch 31,September 30, 2012 and December 31, 2011, the aggregate amounts accrued for environmental liabilities including liability for environmental indemnities, reflected in our condensed consolidated balance sheets in "Accrued liabilities" were $1.5$1.5 million and $1.5$1.5 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 damagestherein,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).HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)UnauditedMarch 31,September 30, 2012 and December 31, 2011 our liability recorded for public liability and property damage matters was $281.0$279.8 million and $281.5$281.5 million, respectively. We believe that our analysis is 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.The following recent developments pertaining toare furnished on a supplemental basis:In February 2012, we filed separate motions for partial summary judgment on the Loss Damage Waiver and the Environmental Recovery Fee claims and we filed a motion to decertify the class inDavis Landscape, Ltd. et al. v. Hertz Equipment Rental Corporation.In March 2012, the federal magistrate entered an order inFun Services of Kansas City, Inc. v. Hertz Equipment Rental Corporation requiring the parties to engage in mediation and report back to her regarding their progress by June 6, 2012.Aside from the above mentioned, none of the other legal proceedings described in our subsequent quarterly reports on Form 10-K have experienced any material changes.HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)Unaudited(Loss) Per Share (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. Three Months Ended
March 31, 2012 2011 $ (56.3 ) $ (132.6 ) 418.1 414.1 $ (0.13 ) $ (0.32 ) $ (0.13 ) $ (0.32 ) Three Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 Basic and diluted earnings per share: Numerator: Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 242.9 $ 206.7 $ 279.5 $ 129.1 Denominator: Weighted average shares used in basic computation 420.6 416.6 419.6 415.6 Add: Stock options, RSUs and PSUs 4.0 6.4 5.0 8.0 Add: Potential issuance of common stock upon conversion of Convertible Senior Notes 20.9 17.9 22.5 23.7 Weighted average shares used in diluted computation 445.5 440.9 447.1 447.3 Earnings per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, basic $ 0.58 $ 0.50 $ 0.67 $ 0.31 Earnings per share attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders, diluted $ 0.55 $ 0.47 $ 0.63 $ 0.29 lossearnings per share computations for the three and nine months ended March 31,September 30, 2012 excluded the weighted-average impact of the assumed exercise of approximately 5.3 millionand5.1 million shares, respectively, of stock options, RSUs and PSUs, because such impact would be antidilutive. Diluted earnings per share computations for the three and nine months ended September 30, 2011 excluded the weighted-average impact of the assumed exercise of approximately 19.48.9 million and 21.65.1 million shares, respectively, of stock options, RSUs and PSUs, respectively, because such impact would be antidilutive. Additionally, for the three months ended March 31, 2012 and 2011, there was no impact to the diluted loss per share computations associated with the outstanding Convertible Senior Notes, because such impact would be anti-dilutiveAprilOctober 2012, Hertz paid off the remaining $70.0entered into an amendment to our Senior Term Facility providing for commitments for $750 million of debt outstandingloans under the U.S. ABS Program Series 2011-2 U.S. FleetSenior Term Facility. Hertz currently expects to incur incremental term loans, or the “Incremental Term Loans,” under such commitments in an aggregate principal amount of $750 million.and terminatedfrom December 2012 to December 2013.facility.Australian Securitization to extend the maturity from December 2012 to December 2014. Operationsmeanmeans 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.Holdings'Global Holding, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC, on February 27, 2012, or our "Form 10-K" and the following:•••ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)•••••••••••••••••••• the existing or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect our operations, the cost thereof or applicable tax rates;••ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)•••or "Ford," acquired an ownership interest in Hertz in 1987. Prior to this, Hertz was a subsidiary of United Continental Holdings, Inc. (formerly Allegis Corporation), which acquired Hertz's outstanding capital stock from RCA Corporation in 1985.•••BAML Capital Partners, or "BAMLCP" (formerly known as Equity)Equity, Inc.,collectively the "Sponsors,"MLGPE,"We refer to the acquisition of all of Hertz's common stock by the Sponsors as the "Acquisition."BAMLCP.MLGPE. Accordingly, Bank of America is now an indirect beneficial owner of our common stock held by BAMLCPthe investment funds associated with MLGPE. We refer to CD&R, Carlyle and certainMLGPE collectively as the "Sponsors." We refer to the acquisition of its affiliates.As a resultall of Hertz's commonin June 2007, May 2009, June 2009 and March 2011, the Sponsors reduced theirSponsors' holdings torepresent approximately 38% of the outstanding shares of common stock of Hertz Holdings.••ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)•relatesrelating to fees and certain cost reimbursements from our licensees and revenues from our third-party claim management services)licensees).••••March 31,September 30, 2012, the percentage of non-program cars was 84%86% as compared to 77%70% as of March 31,September 30, 2011. Internationally, as of March 31,September 30, 2012, the percentage of non-program cars was 75%65%, compared to 65%61% as of March 31,September 30, 2011. In the U.S., as of December 31, 2011, the percentage of non-program cars was 79% as compared to 72% as of December 31, 2010. Internationally, as of December 31, 2011, the percentage of non-program cars was 75%, compared to 70% as of December 31, 2010. 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. However, non-program cars allow us the opportunity for ancillary revenue, such as warranty and financing, during disposition. 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 beis reduced as the percentage of non-program cars 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.threenine months ended March 31,September 30, 2012, our monthly per vehicle depreciation costs decreased as compared to the prior year period due to improved residual values in the U.S., a continued move towards a greater proportion of non-program vehicles, mix optimization and improved procurement and remarketing efforts.positive trending of residual values ishave remained fairly strong primarily due to continued short supply of recent model year used vehicle inventoryvehicles and improving consumer confidence. This, along with an overallaided by strong car sales market (with fewer incentives on new vehicle sales), is expected to keep the demand for nearly new used vehicles on a positive trend for the near term.threenine months ended March 31,September 30, 2012, we experienced a 9.6%an 8.5% increase in transaction days versus the prior period in the United States while rental rate revenue per transaction day, or "RPD," declined by 4.4% compared to3.4%. During the threenine months ended March 31, 2011. During the three months ended March 31,September 30, 2012, in our European operations, we experienced a 3.2%2.8% decline in transaction days and a 2.8%2.7% decline in RPD when compared to the threenine months ended March 31,September 30, 2011.$283.8$981.3 million and $262.3$908.9 million of our total car rental revenues in the threenine months ended March 31,September 30, 2012 and 2011, respectively. As of March 31,September 30, 2012, we have approximately 2,2452,430 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, 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.fleets that, forfleets. For the three and nine months ended March 31,September 30, 2012, Donlen had an average of approximately 141,500153,200 and 146,900 vehicles, respectively, under lease and management. Donlen provides Hertz an immediate leadership position in long-term car, truck and equipment leasing and fleet management. Donlen's fleet management programs provide outsourced solutions to reduce fleet operating costs and improve driver productivity. These programs include administration of preventive maintenance, advisory services, and fuel and accident management along with other complementary services. This transaction is part of the overall growth strategy of Hertz to provide the most flexible transportation programs for corporate and general consumers. Additionally, Donlen brings to Hertz a specialized consulting and technology expertise that will enable us to model, measure and manage fleet performance more effectively and efficiently.March 31,September 30, 2012, our worldwide car rental operations had a total of approximately 8,6508,800 corporate and licensee locations in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand.Whilewithdrew its exchange offer for Dollar Thrifty's common stock in October 2011, we continue to believe thatHDTMS, Inc., a merger withwholly owned subsidiary of Hertz Holdings, and Dollar Thrifty is inAutomotive Group, Inc., a Delaware corporation, or "Dollar Thrifty," entered into an Agreement and Plan of Merger, or the best interests of both companies. We believe we have made substantial progress toward our goal"Merger Agreement," pursuant to obtaining antitrust clearance thatwhich Hertz Holdings would allow usacquire Dollar Thrifty for $87.50 per share, net to consider the terms on which we might move forward with that acquisition. We have agreed on the material terms of a divestiture of our Advantage business with a potential buyer, contingent on asuccessfulprovided those termsunanimously approved the transaction. The transaction has been structured as a two-step acquisition including a cash tender offer for all outstanding shares of Dollar Thrifty common stock followed by a cash merger in which Hertz Holdings would acquire any remaining outstanding shares of Dollar Thrifty common stock. The transaction is subject to the stafftender of at least a majority of the shares of Dollar Thrifty common stock, as well as other customary closing conditions. The successful completion of the transaction is also subject to regulatory clearance by the Federal Trade Commission, or "FTC." We are optimisticCommission. Hertz Holdings has also reached a definitive agreement with Adreca Holdings Corp., a subsidiary of Macquarie Capital which is expected to be operated by Franchise Services of North America Inc., to sell the Advantage Rent A Car business, selected Dollar Thrifty airport concessions and certain other assets. The closing of that divestiture is conditioned upon, among other things, Hertz Holdings completing an acquisition of Dollar Thrifty. Hertz Holdings estimates that it would realize a loss before income taxes of approximately $30 million to $35 million as a result of this divestiture will satisfy the FTC staff. In addition, Hertz has made significant progress in negotiating a draft consent order with the FTC staff. We are working with the FTC staff on the next steps toward obtaining a final consent order from the FTC.divestiture. We can offer no assurance that anythe Merger Agreement will be consummated.withwas not probable and was contingent upon acquisition of Dollar Thrifty will be consummated.threethe nine months ended March 31,September 30, 2012 compared to the prior year period as the industry continued its recovery in North America. We continued to see growth in our specialty services such as Pump & Power, Industrial Plant Services and Hertz Entertainment Services capitalizing on the opportunities in these strategic markets.Services. Additionally, there are increasedcontinues to be opportunities for the remainder of 2012 as the uncertain economic outlook makes rental solutions attractive to customers, enablingcustomers.other large rental companiesgrip rentals to gain market share.March 31,September 30, 2012, HERC had a total of approximately 325340 branches in the U.S., Canada, France, Spain, China and Saudi Arabia.quartersecond and third quarters of 2012, we continued to streamline operations and reduce costs with the employees. employees, 280 employees and 240 employees, respectively.March 31,September 30, 2012, our consolidated statement of operations includes restructuring charges of $1.5 million and $27.0 million, respectively. For the three and nine months ended September 30, 2011, our consolidated statement of operations includes restructuring charges of $9.4$1.9 million and $4.9$40.4 million, respectively.developed,developed; however, we presently do not have firm plans or estimates of any related expenses. See Note 12 to the Notes to our condensed consolidated financial statements included in this Report.ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)March 31,September 30, 2012 Compared with Three Months Ended March 31,September 30, 2011March 31,September 30, 2012 and 2011 (in millions of dollars): Percentage of Revenues Percentage of Revenues Three Months Ended
March 31, Three Months Ended
March 31, Three Months Ended
September 30, Three Months Ended
September 30, 2012 2011 2012 2011 2012 2011 2012 2011 $ 1,623.2 $ 1,478.9 82.8 % 83.1 % $ 2,106.0 $ 2,062.5 83.7 % 84.8 % 301.3 268.1 15.4 15.1 362.9 321.6 14.4 13.2 36.4 33.0 1.8 1.8 47.3 48.2 1.9 2.0 1,960.9 1,780.0 100.0 100.0 2,516.2 2,432.3 100.0 100.0 1,115.1 1,073.7 56.9 60.3 1,241.1 1,247.6 49.3 51.2 514.1 436.1 26.2 24.5 Depreciation of revenue earning equipment and lease charges 560.5 523.3 22.3 21.5 207.8 182.2 10.6 10.2 201.0 197.6 8.0 8.1 162.3 196.9 8.3 11.1 154.9 169.3 6.1 7.0 (1.1 ) (1.9 ) (0.1 ) (0.1 ) (0.7 ) (1.2 ) — — (0.5 ) 51.9 — 2.9 (9.5 ) — (0.4 ) — 1,997.7 1,938.9 101.9 108.9 2,147.3 2,136.6 85.3 87.8 (36.8 ) (158.9 ) (1.9 ) (8.9 ) (19.5 ) 30.0 (1.0 ) 1.7 (56.3 ) (128.9 ) (2.9 ) (7.2 ) Income before income taxes 368.9 295.7 14.7 12.2 Provision for taxes on income (126.0 ) (83.2 ) (5.0 ) (3.4 ) Net income 242.9 212.5 9.7 8.8 — (3.7 ) — (0.2 ) — (5.8 ) — (0.3 ) $ (56.3 ) $ (132.6 ) (2.9 )% (7.4 )% Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 242.9 $ 206.7 9.7 % 8.5 % March 31,September 30, 2012 and 2011: Three Months Ended
or as of September 30, 2012 2011 Selected Car Rental Operating Data: Worldwide number of transactions (in thousands) 7,704 7,409 Domestic (Hertz) 5,675 5,368 International (Hertz) 2,029 2,041 41,613 40,231 Domestic (Hertz) 28,077 26,452 International (Hertz) 13,536 13,779 $ 41.09 $ 42.20 Domestic (Hertz) $ 40.27 $ 41.44 International (Hertz) $ 42.79 $ 43.66 Worldwide average number of cars during the period 703,200 667,500 Domestic (Hertz company-operated) 368,400 352,700 International (Hertz company-operated) 181,600 185,700 Donlen (under lease and maintenance) 153,200 129,100 $ 428.7 $ 375.3 Worldwide revenue earning equipment, net (in millions of dollars) $ 10,036.4 $ 9,859.4 Selected Worldwide Equipment Rental Operating Data: $ 331.2 $ 290.5 8.1 % 11.3 % Average acquisition cost of rental equipment operated during the period (in millions of dollars) $ 3,141.0 $ 2,830.3 $ 76.2 $ 55.9 Revenue earning equipment, net (in millions of dollars) $ 2,184.8 $ 1,779.1 Three Months Ended
or as of March 31, 2012 2011 6,388 6,028 4,837 4,479 1,551 1,549 31,669 29,650 22,825 20,821 8,844 8,829 $ 40.36 $ 41.99 $ 39.54 $ 41.34 $ 42.48 $ 43.51 595,300 427,300 320,500 295,600 133,300 131,700 141,500 N/A $ 91.6 $ 61.3 $ 9,354.1 $ 7,714.2 $ 274.3 $ 241.5 8.9 % 10.6 % $ 2,902.0 $ 2,756.8 $ 25.9 $ 10.2 $ 1,911.1 $ 1,687.1 (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 and investors 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(a) Transaction days represent 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 and investors 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 segment revenues to our rental rate revenue and rental rate revenue per transaction day (based on December 31, 2011 foreign exchange rates) for the three months ended September 30, 2012 and 2011 (in millions of dollars, except as noted): car rental revenue to our rental rate revenue and rental rate revenue per transaction day (based on December 31, 2011 foreign exchange rates) for the three months ended March 31, 2012 and 2011 (in millions of dollars, except as noted): Three Months Ended
March 31, Three Months Ended
September 30, 2012 2011 2012 2011 $ 1,658.2 $ 1,510.3 $ 2,152.6 $ 2,109.1 (369.3 ) (245.6 ) (453.3 ) (351.8 ) (10.8 ) (19.8 ) 10.5 (59.4 ) $ 1,278.1 $ 1,244.9 $ 1,709.8 $ 1,697.9 31,669 29,650 41,613 40,231 $ 40.36 $ 41.99 $ 41.09 $ 42.20 (c) Adjusted pre-tax income is calculated as income (loss) before income taxes plus non-cash purchase accounting charges, non-cash debt charges relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally. The contribution of our reportable segments to adjusted pre-tax income and reconciliation to consolidated amounts are presented below (in millions of dollars): (c)Adjusted pre-tax income is calculated as income (loss) before income taxes plus non-cash purchase accounting charges, non-cash debt charges relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally. The contribution of our reportable segments to adjusted pre-tax income and reconciliation to consolidated amounts are presented below (in millions of dollars): Three Months Ended
September 30, 2012 2011 Adjusted pre-tax income: Car rental $ 428.7 $ 375.3 Equipment rental 76.2 55.9 Total reportable segments 504.9 431.2 Adjustments: (80.1 ) (84.3 ) (23.9 ) (19.1 ) (20.5 ) (21.0 ) Restructuring charges (1.5 ) (1.9 ) (2.0 ) (3.2 ) 0.1 0.1 Management transition costs — (1.5 ) Acquisition related costs (8.1 ) (4.6 ) Income before income taxes $ 368.9 $ 295.7 Three Months Ended
March 31, 2012 2011 $ 91.6 $ 61.3 25.9 10.2 117.5 71.5 (88.1 ) (87.5 ) (24.1 ) (20.6 ) (25.2 ) (59.9 ) (9.4 ) (4.9 ) (0.6 ) (0.5 ) (6.9 ) (2.8 ) — (2.5 ) — (51.7 ) $ (36.8 ) $ (158.9 ) (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 depreciation and amortization of tangible and intangible assets.(3)Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts.(1) Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as other business activities. (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 depreciation and amortization of tangible and intangible assets. (3) Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. (4) Represents incremental 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) Represents the mark-to-market adjustment on our interest rate cap. (d) (4)Represents incremental 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)Represents premiums paid to redeem our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes.(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 and investors 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 revenue to our equipment rental and rental related revenue (based on December 31, 2011 foreign exchange rates) for the three months ended March 31, 2012 and 2011 (in millions of dollars): Three Months Ended
March 31, Three Months Ended
September 30, 2012 2011 2012 2011 $ 302.1 $ 268.2 $ 363.0 $ 321.7 (26.3 ) (23.3 ) (30.7 ) (26.0 ) (1.5 ) (3.4 ) (1.1 ) (5.2 ) $ 274.3 $ 241.5 $ 331.2 $ 290.5 (e) Same store revenue growth is calculated as the year over year change in revenue for locations that are open at the end of the 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(e)Same store revenue growth is calculated as the year over year change in revenue for locations that are open at the end of the 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
March 31, Three Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change % Change 2012 2011 $ Change % Change $ 1,658.2 $ 1,510.3 $ 147.9 9.8 % $ 2,152.6 $ 2,109.1 $ 43.5 2.1 % 302.1 268.2 33.9 12.6 % 363.0 321.7 41.3 12.8 % 0.6 1.5 (0.9 ) (61.7 )% 0.6 1.5 (0.9 ) (56.7 )% $ 1,960.9 $ 1,780.0 $ 180.9 10.2 % $ 2,516.2 $ 2,432.3 $ 83.9 3.4 % 9.8%2.1%, primarily as a result of increases in car rental transaction days worldwide of 6.8%,3.4% and refueling fees of $8.3 million and airport concession recovery fees of $4.8$12.0 million. The three months ended March 31, 2012increase also includes $110.4$86.0 million of higher revenues related to Donlen, which was acquired on September 1, 2011. These increases were partly offset by a decrease in worldwide RPD and the effects of foreign currency translation of approximately $7.6 million.March 31,September 30, 2012 decreased 3.9%2.6% from 2011, due to decreases in U.S. and International RPD of 4.4%2.8% and 2.4%2.0%, respectively.respectively, and a mix shift to the U.S. off-airport RPD decreased by 3.3% anddue to uncertain economic conditions in Europe. U.S. airport RPD decreased 4.6%3.1% and U.S. off-airport RPD declined by 2.2%. U.S. airport RPD was negatively impacted by a mixITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)12.6%12.8%, primarily due to increases of 9.3%12.5% and 3.7%3.3% in equipment rental volumes and pricing, respectively, partiallypartly offset by the effects of foreign currency translation of approximately $2.0$4.5 million. The increase in volume was primarily due to strong industrial and improving construction performance. Our acquisition of Cinelease in January 2012 also contributed to the revenue increase. Our pricing metric now reflects our adoption of the American Rental Association methodology.Other$0.9$0.9 million, primarily due to a decrease in revenues from our third-party claim management services.EXPENSES Three Months Ended
March 31, (in millions of dollars) 2012 2011 $ Change % Change $ 251.1 $ 249.9 $ 1.2 0.5 % 381.4 366.0 15.4 4.2 % 482.6 457.8 24.8 5.4 % 1,115.1 1,073.7 41.4 3.9 % 514.1 436.1 78.0 17.9 % 207.8 182.2 25.6 14.0 % 162.3 196.9 (34.6 ) (17.6 )% (1.1 ) (1.9 ) 0.8 (41.1 )% (0.5 ) 51.9 (52.4 ) (100.9 )% $ 1,997.7 $ 1,938.9 $ 58.8 3.0 % Total expenses increased 3.0%, but total expenses as a percentage of revenues decreased from 108.9% for the three months ended March 31, 2011 to 101.9% for the three months ended March 31, 2012.Direct Operating ExpensesCar Rental SegmentDirect operating expenses for our car rental segment of $929.7 million for the three months ended March 31, 2012 increased 2.9% from $903.8 million for the three months ended March 31, 2011 as a result of increases in other direct operating expenses and personnel related expenses, partially offset by lower fleet related expenses. Three Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change % Change Expenses: Fleet related expenses $ 300.0 $ 318.5 $ (18.5 ) (5.8 )% Personnel related expenses 386.3 378.4 7.9 2.1 % Other direct operating expenses 554.8 550.7 4.1 0.7 % Direct operating 1,241.1 1,247.6 (6.5 ) (0.5 )% Depreciation of revenue earning equipment and lease charges 560.5 523.3 37.2 7.1 % Selling, general and administrative 201.0 197.6 3.4 1.8 % Interest expense 154.9 169.3 (14.4 ) (8.5 )% Interest income (0.7 ) (1.2 ) 0.5 (42.6 )% Other (income) expense, net (9.5 ) — (9.5 ) NM Total expenses $ 2,147.3 $ 2,136.6 $ 10.7 0.5 % $417.6$488.2 million for the three months ended March 31,September 30, 2012 increased $18.8 million, or 4.7%decreased 0.5% from the three months ended March 31,September 30, 2011. The increasedecrease was primarily related to increasesdecreases in field administrativeadministration expenses of $4.5$3.0 million, guaranteed charge card of $2.9 million and computers of $2.8 million as well as by the effects of foreign currency translation of approximately $16.6 million, partly offset by increases in facilities expense of $3.7 million, concession fees of $3.7$8.0 million, commissions of $3.0$6.5 million, concessions of $4.0 million and restructuring and restructuring related chargesfield systems expenses of $3.0$2.6 million. These increases were primarily a result of improved worldwide rental volume demand and additional locations associated with off-airport expansion and increased litigation expenses.$311.0$317.1 million for the three months ended March 31,September 30, 2012 increased $10.8 million, or 3.6%1.2% from the three months ended March 31,September 30, 2011. The increase was primarily related to increases in salaries and related expenses of $6.3 million and higher incentives of $5.1 million associated with improved volume and compensation for employees at additional U.S. off-airport locations in 2012.Fleet related expenses for our car rental segment2012 and due to an increase of $201.1$2.4 million for the three months ended March 31, 2012 decreased $3.8 million, or 1.8% from the three months ended March 31, 2011. The decrease was primarily related to lower vehicle damage costs due to higher collections from customersDonlen, which was acquired on damaged or wrecked vehicles. Fleet related expenses were also lower due to reduced fleet levelsSeptember 1, 2011, partly offset by a decrease in Europe associated with decreased volume, as well asoutside services of $1.7 million and by the effects of foreign currency translation. These decreases were partially offset by increases in gasoline costs.$187.4$187.7 million for the three months ended March 31,September 30, 2012 increased 9.7%7.0% from $170.8$175.4 million for the three months ended March 31,September 30, 2011 as a result of increases in other direct operating expenses, personnel related expenses and fleet related expenses.$76.3$75.8 million for the three months ended March 31,September 30, 2012 increased $6.5$7.1 million, or 9.3%10.3% from the three months ended March 31,September 30, 2011. The increase was primarily related to $3.1$4.0 million of other direct operating expenses associated with Cinelease, which was acquired in January 2012, as well as higher legal expenses of $1.3 million, cost of sales of $0.9 million, and restructuring and restructuring related charges of $0.7$2.1 million, increases of $1.8 million in cost of sales due to higher equipment sales and $1.4 million in re-rent expenses, partly offset by a decrease of $1.3 million in field administration costs primarily attributable to a legal settlement in the prior year in conjunction with a reduction in procurement costs resulting from bringing in certain outsourced services and by the effects of foreign currency translation of approximately $1.0 million.$61.2$60.2 million for the three months ended March 31,September 30, 2012 increased $5.2$4.2 million, or 9.2%7.4%, from the three months ended March 31,September 30, 2011. The increase was primarily related to incentives$1.8 million of $2.0personnel related mainly to improved results, andexpenses associated with Cinelease, which was acquired in January 2012, as well as increases in salaries and related expenses of $2.1$2.8 million and higher incentives of $0.6 million due to increased volumes and new branch openings, partly offset by the effects of foreign currency translation of approximately $1.0 million. Additionally, Cinelease added $1.5 million of personnel related expenses.$49.9$51.7 million for the three months ended March 31,September 30, 2012 increased $5.0$1.1 million, or 11.0%2.2% from the three months ended March 31,September 30, 2011. The increase was primarily related to increased rental volume resulting in higher maintenance costs of $1.5 million, increased freight and delivery costs of $1.1$1.7 million, increase of $1.0 million of fleet related expenses associated with Cinelease, which was acquired in January 2012 and increased insurance, license and tax expenses of $0.9$0.6 million, partly offset by a decrease in refueling costs of $2.2 million primarily driven by the increase in average fuel prices in conjunction with an increase in fleet from the prior year and by the effects of foreign currency translation of approximately $0.8 million. Additionally, Cinelease added $0.9 million of fleet related expenses.ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)$451.7$490.5 million for the three months ended March 31,September 30, 2012 increased 22.5%6.3% from $368.9$461.3 million for the three months ended March 31,September 30, 2011. The increase was primarily due to a higher depreciation expense of $69.0 million related to the acquisition of Donlen and its related depreciation expense of $90.0 million,in September 2011, as well as an increase in our average fleet size of 6.2%2.2% (exclusive of vehicles acquired through the Donlen acquisition). These increases were partially, partly offset by an improvement in certainlower net depreciation per vehicle residual values and a higher mix of non-program vehicles.$62.4$70.0 million for the three months ended March 31,September 30, 2012 decreased 7.2%increased 13.1% from $67.2$62.0 million for the three months ended March 31,September 30, 2011. The decreaseincrease was primarily due to an 11.0% increase in the average acquisition cost of rental equipment operated during the period, partly offset by higher residual values on the disposal of used equipment.$25.6$3.4 million or 14.0%1.8% from the prior year period, due to increases in administrative expenses advertising expenses and sales promotion expenses, partially offset by a decrease in advertising expenses.$17.6$3.1 million or 15.6%2.7%, primarily due to the acquisition of Donlen, which added $6.1$4.4 million in administrative expenses. Additionally, consultant fees increased $4.0expenses as well as increase in incentives of $1.9 million, outside services of $1.9 million, salaries and related expenses increased $3.5of $1.1 million, legal expense increased $2.7 million, incentives increased $1.6partially offset by decreases due to the effects of foreign currency translation of approximately $5.2 million and benefitsrestructuring and restructuring related charges of $2.2 million.$1.3 million. These$2.9 million or 8.1%, primarily related to increases were partiallyin sales salaries and$3.1$1.0 million.increased $8.2decreased $2.6 million or 24.6%5.6%, primarily due to increased mediaelevated on-line advertising higher airline miles expense associated with increased volume, and costs related to our new customer loyalty program.Sales promotion expenses decreased $0.2 million, or 0.4%, primarily related toin 2011 as well as the effects of foreign currency translation.$80.5$82.6 million for the three months ended March 31,September 30, 2012 increased 6.7%decreased 9.5% from $75.4$91.2 million for the three months ended March 31,September 30, 2011. The increasedecrease was primarily due to the Donlen acquisition,lower fleet levels and interest rates in Europe, partly offset by an increase in the weighted average debt outstanding as result of an increased fleet size and a slight increase in the weighted averageU.S., and by Donlen's additional interest rate.March 31,September 30, 2012 increased 15.9%19.6% from $11.1$10.7 million for the three months ended March 31,September 30, 2011. The increase wasITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) an increase in Senior Term Facility and Senior ABL Facility interest rates and an increase in weighted average debt outstanding as a result of an increase in averageincreased fleet size.$69.0$59.5 million for the three months ended March 31,September 30, 2012 decreased 37.5%11.7% from $110.4$67.4 million for the three months ended March 31,September 30, 2011. The decrease was primarily due to the prior year's write-off of unamortized debt costs in connection with the refinancing of our Senior Term Facility and Senior ABL Facility, and with the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes, partly offset by the write-off of unamortized debt costs of our remaining 8.875% Senior Notes and our 7.875% Senior Notes in 2012, and also due toas well as a decrease in the weighted average debt outstanding and interest rates.$0.8$0.5 million from the prior year period.(income) expense, net forincome increased $9.5 million from the three months ended March 31, 2012 and 2011, reflected income of $0.5 million and expense of $51.9 million, respectively.prior year period. The expense in 2011increase was primarilyprincipally due to $51.7a gain of $9.1 million from the sale of the business in premiums paid in connection withSwitzerland to a franchisee during the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes.$91.6$428.7 million increased 49.5%14.2% from $61.3$375.3 million for the three months ended March 31,September 30, 2011. The increase was primarily due to stronger volumes, improved residual valueslower net depreciation per vehicle and disciplined cost management, partly offset by decreased pricing. Adjustments to our car rental segment income before income taxes for the three months ended March 31,September 30, 2012 totaled $30.1$24.3 million (which consists of purchase accounting of $13.1$12.2 million, non-cash debt charges of $11.2$10.2 million and restructuring and restructuring related charges of $5.8$2.0 million, partly offset by a gain on derivatives of $0.1 million). Adjustments to our car rental segment income before income taxes for the three months ended March 31,September 30, 2011 totaled $20.3$23.3 million (which consists of non-cash debt charges of $10.2$11.1 million, purchase accounting of $8.1$8.0 million and restructuring and restructuring related charges of $1.5$4.3 million, and losspartly offset by a gain on derivatives of $0.5$0.1 million). See footnote (c) to the table under "Results of Operations" for a summary and description of these adjustments.$25.9$76.2 million increased 153.9%36.3% from $10.2$55.9 million for the three months ended March 31,September 30, 2011. The increase was primarily due to stronger volumes and pricing, strong cost management performance and higher residual values on the disposal of used equipment. Adjustments to our equipment rental segment income before income taxes for the three months ended March 31,September 30, 2012 totaled $15.7$13.2 million (which consists of purchase accounting of $10.0$10.6 million, restructuring and restructuring related charges of $4.2$1.5 million, and non-cash debt charges of $1.5$1.1 million). Adjustments to our equipment rental income before income taxes for the three months ended March 31,September 30, 2011 totaled $18.0$10.7 million (which consists of purchase accounting of $11.6 million,ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)restructuring charges of $3.9$10.2 million and non-cash debt charges of $2.5$0.6 million, partly offset by a reversal of restructuring and restructuring related charges of $0.1 million). See footnote (c) to the table under "Results of Operations" for a summary and description of these adjustments.(PROVISION) BENEFITLOSSINCOME ATTRIBUTABLE TO HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES' COMMON STOCKHOLDERS Three Months Ended
March 31, 2012 2011 $ Change % Change $ (36.8 ) $ (158.9 ) $ 122.1 (76.8 )% (19.5 ) 30.0 (49.5 ) N/M (56.3 ) (128.9 ) 72.6 (56.3 )% — (3.7 ) 3.7 (100.0 )% $ (56.3 ) $ (132.6 ) $ 76.3 (57.5 )% Three Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change % Change Income before income taxes $ 368.9 $ 295.7 $ 73.2 24.8 % Provision for taxes on income (126.0 ) (83.2 ) (42.8 ) 51.4 % Net income 242.9 212.5 30.4 14.3 % Less: Net income attributable to noncontrolling interest — (5.8 ) 5.8 (100.0 )% Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 242.9 $ 206.7 $ 36.2 17.5 % (Provision) BenefitMarch 31,September 30, 2012 was (53.0)%34.1% as compared to 18.8%28.1% in the three months ended March 31,September 30, 2011. The provision for taxes on income increased $49.5$42.8 million, primarily due to lower losshigher income before income taxes, changes in geographic earnings mix and changes in losses in certain non-U.S. jurisdictions for which tax benefits cannot beare not realized.$3.7$5.8 million due to Hertz's purchase of the noncontrolling interest of Navigation Solutions, L.L.C. on December 31, 2011, thereby increasing its ownership interest from 65% to 100%.LossIncome Attributable to Hertz Global Holdings, Inc. and Subsidiaries' Common Stockholderslossincome attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders increased 17.5% primarily due to higher rental volumes in our worldwide car and equipment rental operations, disciplined cost management, lower net depreciation per vehicle in our car rental operations, increased pricing in our equipment rental operations and improved residual values on the disposal of certain used equipment, partly offset by lower pricing in our worldwide car rental operations. The impact of changes in exchange rates on net income was mitigated by the fact that not only revenues but also most expenses outside of the United States were incurred in local currencies. Percentage of Revenues Nine Months Ended
September 30, Nine Months Ended
September 30, 2012 2011 2012 2011 Revenues: Car rental $ 5,578.5 $ 5,272.6 83.2 % 83.9 % Equipment rental 998.5 891.3 14.9 14.2 Other 125.3 120.7 1.9 1.9 Total revenues 6,702.3 6,284.6 100.0 100.0 Expenses: Direct operating 3,545.2 3,508.6 52.9 55.8 Depreciation of revenue earning equipment and lease charges 1,594.4 1,379.0 23.8 21.9 Selling, general and administrative 615.3 575.4 9.2 9.2 Interest expense 469.4 532.1 7.0 8.5 Interest income (2.3 ) (4.7 ) — (0.1 ) Other (income) expense, net (10.5 ) 62.7 (0.2 ) 1.0 Total expenses 6,211.5 6,053.1 92.7 96.3 Income before income taxes 490.8 231.5 7.3 3.7 Provision for taxes on income (211.3 ) (87.9 ) (3.1 ) (1.4 ) Net income 279.5 143.6 4.2 2.3 Less: Net income attributable to noncontrolling interest — (14.5 ) — (0.2 ) Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 279.5 $ 129.1 4.2 % 2.1 % Nine Months Ended
or as of September 30, 2012 2011 Selected Car Rental Operating Data: Worldwide number of transactions (in thousands) 21,608 20,583 Domestic (Hertz) 16,131 15,101 International (Hertz) 5,477 5,482 110,538 104,707 Domestic (Hertz) 77,214 71,162 International (Hertz) 33,324 33,545 $ 40.34 $ 41.70 Domestic (Hertz) $ 39.31 $ 40.70 International (Hertz) $ 42.73 $ 43.81 Worldwide average number of cars during the period 651,400 613,500 Domestic (Hertz company-operated) 347,300 325,500 International (Hertz company-operated) 157,200 158,900 Donlen (under lease and maintenance) 146,900 129,100 $ 797.8 $ 678.8 Worldwide revenue earning equipment, net (in millions of dollars) $ 10,036.4 $ 9,859.4 Selected Worldwide Equipment Rental Operating Data: $ 908.5 $ 798.0 8.1 % 10.1 % Average acquisition cost of rental equipment operated during the period (in millions of dollars) $ 3,017.9 $ 2,791.7 $ 144.6 $ 99.5 Revenue earning equipment, net (in millions of dollars) $ 2,184.8 $ 1,779.1 (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 growth including growth initiatives, see "Three Months Ended September 30, 2012 Compared with Three Months Ended September 30, 2011—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, 2011 foreign exchange rates) for the nine months ended September 30, 2012 and 2011 (in millions of dollars, except as noted): Nine Months Ended
September 30, 2012 2011 Car rental segment revenues $ 5,700.4 $ 5,388.3 Non-rental rate revenue (1,242.0 ) (887.8 ) Foreign currency adjustment 1.0 (134.5 ) Rental rate revenue $ 4,459.4 $ 4,366.0 Transaction days (in thousands) 110,538 104,707 Rental rate revenue per transaction day (in whole dollars) $ 40.34 $ 41.70 (c) The contribution of our reportable segments to adjusted pre-tax income and reconciliation to consolidated amounts are presented below (in millions of dollars): Nine Months Ended
September 30, 2012 2011 Adjusted pre-tax income: Car rental $ 797.8 $ 678.8 Equipment rental 144.6 99.5 Total reportable segments 942.4 778.3 Adjustments: (254.3 ) (263.0 ) (76.9 ) (62.2 ) (66.3 ) (108.0 ) Restructuring charges (27.0 ) (40.4 ) (7.6 ) (6.4 ) 0.1 0.1 Acquisition related costs (19.6 ) (13.6 ) Management transition costs — (4.0 ) — 13.1 — (62.4 ) Income before income taxes $ 490.8 $ 231.5 (1) Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as other business activities. (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 depreciation and amortization of tangible and intangible assets. (3) Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt discounts. (4) Represents incremental 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) Represents the mark-to-market adjustment on our interest rate cap. (6) Represents a gain for the U.K. pension plan relating to unamortized prior service cost from a 2010 amendment that eliminated discretionary pension increases related to pre-1997 service primarily pertaining to inactive employees. (7) Represents premiums paid to redeem our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes. (d) The following table reconciles our equipment rental segment revenues to our equipment rental and rental related revenue (based on December 31, 2011 foreign exchange rates) for the nine months ended September 30, 2012 and 2011 (in millions of dollars): Nine Months Ended
September 30, 2012 2011 Equipment rental segment revenues $ 1,000.1 $ 891.6 Equipment sales and other revenue (88.3 ) (78.8 ) Foreign currency adjustment (3.3 ) (14.8 ) Rental and rental related revenue $ 908.5 $ 798.0 Nine Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change % Change Revenues by Segment Car rental $ 5,700.4 $ 5,388.3 $ 312.1 5.8 % Equipment rental 1,000.1 891.6 108.5 12.2 % Other reconciling items 1.8 4.7 (2.9 ) (62.5 )% Total revenues $ 6,702.3 $ 6,284.6 $ 417.7 6.6 % 57.5%3.2% from 2011, due to decreases in U.S. and International RPD of 3.4% and 2.5%, respectively, and a mix shift to the U.S. due to uncertain economic conditions in Europe. U.S. airport RPD decreased 3.3% and U.S. off-airport RPD declined by 3.2%. U.S. airport RPD was negatively impacted by a mix shift to longer life, lower RPD rentals (including mix shift towards off-airport and the Advantage brand). International RPD decreased primarily due to a decrease in Europe's airport RPD which was due to the competitive pricing environment and uncertain economic conditions. Nine Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change % Change Expenses: Fleet related expenses $ 838.3 $ 855.4 $ (17.1 ) (2.0 )% Personnel related expenses 1,151.8 1,117.9 33.9 3.0 % Other direct operating expenses 1,555.1 1,535.3 19.8 1.3 % Direct operating 3,545.2 3,508.6 36.6 1.0 % Depreciation of revenue earning equipment and lease charges 1,594.4 1,379.0 215.4 15.6 % Selling, general and administrative 615.3 575.4 39.9 6.9 % Interest expense 469.4 532.1 (62.7 ) (11.8 )% Interest income (2.3 ) (4.7 ) 2.4 (51.1 )% Other (income) expense, net (10.5 ) 62.7 (73.2 ) (116.8 )% Total expenses $ 6,211.5 $ 6,053.1 $ 158.4 2.6 % Nine Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change % Change Income before income taxes $ 490.8 $ 231.5 $ 259.3 112.1 % Provision for taxes on income (211.3 ) (87.9 ) (123.4 ) 140.7 % Net income 279.5 143.6 135.9 94.6 % Less: Net income attributable to noncontrolling interest — (14.5 ) 14.5 (100.0 )% Net income attributable to Hertz Global Holdings, Inc. and Subsidiaries' common stockholders $ 279.5 $ 129.1 $ 150.4 116.4 % ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)March 31,September 30, 2012, we had cash and cash equivalents of $594.7$453.4 million, a decrease of $337.1$478.4 million from $931.8$931.8 million as of December 31, 2011. The following table summarizes such decrease: Three Months Ended
March 31, Nine Months Ended
September 30, (in millions of dollars) 2012 2011 $ Change 2012 2011 $ Change $ 492.0 $ 165.6 $ 326.4 $ 2,129.9 $ 1,648.5 481.4 (715.8 ) (303.9 ) (411.9 ) (3,255.7 ) (3,465.0 ) 209.3 (121.3 ) (891.8 ) 770.5 646.3 (185.9 ) 832.2 8.0 21.7 (13.7 ) 1.1 14.0 (12.9 ) $ (337.1 ) $ (1,008.4 ) $ 671.3 $ (478.4 ) $ (1,988.4 ) $ 1,510.0 threenine months ended March 31,September 30, 2012, we generated $326.4$481.4 million more cash from operating activities compared with the same period in 2011. The increase was primarily a result of higher earnings before interest,vendor payments and a result of improvements in the operating performance of our business.threenine months ended March 31,September 30, 2012, we used $411.9$209.3 million more less cash for investing activities compared with the same period in 2011. The increasedecrease in the use of funds was primarily due to increasesdecreases in revenue earning equipment expenditures, a decrease in the year-over-year change in restricted cash and cash equivalents and acquisitions during the period, partly offset by increasesdecrease in the proceeds from the disposal of revenue earning equipment in our car rental operations and an increaseoperations. The decrease in the year-over-year change in restricted cash and cash equivalents. The increase in the proceeds from the disposal of revenue earning equipment expenditures in our car rental operations was primarily relateddue to improved residual values. Thethe shift from the purchase of program cars to more non-program cars which have longer holding periods as compared to program cars. This decrease was partly offset by an increase in revenue earning equipment expenditures was primarilyin our equipment rental operations due to higher carthe timing of purchases and equipment rental volumes.payments. As of March 31,September 30, 2012 and December 31, 2011, we had $211.9$376.8 million and $308.0$308.0 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 Like Kind Exchange Program, or "LKE Program," and to satisfy certain of our self-insurance regulatory reserve requirements. The decreaseincrease in restricted cash and cash equivalents of $96.1$68.7 million from December 31, 2011 to March 31,September 30, 2012, primarily related to the timing of purchases and sales of revenue earning vehicles.threenine months ended March 31,September 30, 2012, we used $770.5 million less cash forflows from financing activities increased by $832.2 million compared with the same period in 2011. The decreaseincrease was primarily due to payment of a greater amount of long-termpre-funded debt associated with our Senior Note redemptions in the prior year.ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Revenue Earning Equipment Property and Equipment Revenue Earning Equipment Property and Equipment Capital
Expenditures Disposal
Proceeds Net Capital
Expenditures Capital
Expenditures Disposal
Proceeds Net Capital
Expenditures $ 2,648.7 $ (2,009.3 ) $ 639.4 $ 74.2 $ (47.6 ) $ 26.6 $ 2,648.7 $ (2,009.3 ) $ 639.4 $ 74.2 $ (47.6 ) $ 26.6 Second Quarter 3,050.2 (1,599.0 ) 1,451.2 63.0 (8.8 ) 54.2 Third Quarter 1,982.1 (1,207.1 ) 775.0 92.2 (38.2 ) 54.0 $ 7,681.0 $ (4,815.4 ) $ 2,865.6 $ 229.4 $ (94.6 ) $ 134.8 $ 1,963.8 $ (1,690.2 ) $ 273.6 $ 56.8 $ (14.5 ) $ 42.3 $ 1,963.8 $ (1,690.2 ) $ 273.6 $ 56.8 $ (14.5 ) $ 42.3 Second Quarter 3,503.0 (1,798.7 ) 1,704.3 68.6 (13.9 ) 54.7 Third Quarter 2,397.8 (1,443.5 ) 954.3 76.9 (19.7 ) 57.2 $ 7,864.6 $ (4,932.4 ) $ 2,932.2 $ 202.3 $ (48.1 ) $ 154.2 Three Months Ended
March 31, Nine Months Ended
September 30, 2012 2011 $ Change % Change 2012 2011 $ Change % Change $ 2,524.7 $ 1,792.2 $ 732.5 40.9 % $ 7,074.5 $ 7,452.1 $ (377.6 ) (5.1 )% 124.0 171.6 (47.6 ) (27.7 )% 606.5 412.5 194.0 47.0 % $ 2,648.7 $ 1,963.8 $ 684.9 34.9 % $ 7,681.0 $ 7,864.6 $ (183.6 ) (2.3 )% increasedecrease in our car rental operations revenue earning equipment expenditures was primarily due to higher rental volumesthe shift from the purchase of program cars to more non-program cars which have longer holding periods as compared to program cars, resulting in a slower rotation of fleet during the threenine months ended March 31,September 30, 2012 as compared to the threenine months ended March 31, 2011 which required us toSeptember 30, 2011. The increase our fleet levels. The decrease in our equipment rental operations revenue earning equipmentas well as due to better utilization of our existing equipment during the threenine months ended March 31,September 30, 2012 as compared to the threenine months ended March 31,September 30, 2011. Three Months Ended
March 31, Nine Months Ended
September 30, 2012 2011 $ Change % Change 2012 2011 $ Change % Change $ 59.2 $ 47.7 $ 11.5 24.0 % $ 170.9 $ 169.2 $ 1.7 1.0 % 8.2 8.6 (0.4 ) (4.1 )% 29.8 19.7 10.1 51.1 % 6.8 0.5 6.3 N/M 28.7 13.4 15.3 114.5 % $ 74.2 $ 56.8 $ 17.4 30.7 % $ 229.4 $ 202.3 $ 27.1 13.4 % net increase in property and equipment expenditures werewas primarily due to increased locations in our car rental operations, continued improvement in economic conditions and business performance during the quarter.ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)March 31,September 30, 2012, we had $11,425.7$12,720.9 million of total indebtedness outstanding. Cash paid for interest during the threenine months ended March 31,September 30, 2012, was $126.9$395.6 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, capital expenditures and capital expenditures.March 31,September 30, 2012 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.March 31September 30 (in millions of dollars) are as follows:2013 $ 6,259.8 (including $5,610.9 of other short-term borrowings*) 2014 $ 254.0 2015 $ 1,769.6 2016 $ 329.2 2017 $ 266.0 After 2017 $ 3,893.0 2013 $ 4,920.2 (including $4,070.5 of other short-term borrowings*) 2014 $ 285.5 2015 $ 1,210.7 2016 $ 921.7 2017 $ 244.1 After 2017 $ 3,909.0 *Our short-term borrowings as of March 31, 2012 include, among other items, the amounts outstanding under the European Securitization, Australian Securitization, Senior ABL Facility, U.S. Fleet Financing Facility, U.S. Fleet Variable Funding Notes, Brazilian Fleet Financing Facility, Canadian Securitization, Capitalized Leases, European Revolving Credit Facility and the Donlen GN II Variable Funding Notes. 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, 2012 and remain as such through June 30, 2012.* Our short-term borrowings as of September 30, 2012 include, among other items, the amounts outstanding under the European Securitization, Australian Securitization, Senior ABL Facility, U.S. Fleet Financing Facility, U.S. Fleet Variable Funding Notes, Brazilian Fleet Financing Facility, Canadian Securitization, Capitalized Leases, European Revolving Credit Facility and the Donlen GN II Variable Funding Notes. 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, 2012 and remain as such through December 31, 2012. As of September 30, 2012, short-term borrowings had a weighted average interest rate of 2.3%. induring March 2012.$250$250 million in aggregate principal amount of the 6.75% Senior Notes due 2019. The proceeds of this March 2012 offering were used to redeem all of itthe outstanding 8.875% Senior Notes due 2014 and together with cash on hand, all of itsthe outstanding 7.875% Senior Notes due 2014 which resulted in the write-off of unamortized debt costs of $3.2 million.$3.2 million.ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)March 31,September 30, 2012, we were not subject to such contractually specified fixed charge coverage ratio.March 31,September 30, 2012, the following facilities were available for the use of Hertz and its subsidiaries (in millions of dollars): Remaining
Capacity Availability
Under
Borrowing
Base
Limitation $ 1,320.3 $ 953.6 1,320.3 953.6 618.1 159.7 20.1 20.1 29.0 29.0 249.0 91.0 282.9 26.2 140.2 4.9 94.6 3.6 230.2 25.2 1,664.1 359.7 $ 2,984.4 $ 1,313.3 Corporate Debt Senior ABL Facility $ 1,037.3 $ 1,016.5 Total Corporate Debt 1,037.3 1,016.5 Fleet Debt U.S. Fleet Variable Funding Notes 288.1 — Donlen GN II Variable Funding Notes 105.8 — U.S. Fleet Financing Facility 31.1 — European Revolving Credit Facility — — European Securitization 101.3 — Canadian Securitization 55.8 — Australian Securitization 97.0 1.2 Capitalized Leases 117.0 — Total Fleet Debt 796.1 1.2 Total $ 1,833.4 $ 1,017.7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)March 31,September 30, 2012, the Senior Term Facility had approximately $0.3$0.3 million available under the letter of credit facility and the Senior ABL Facility had $1,086.5$1,092.3 million available under the letter of credit facility sublimit, subject to borrowing base restrictions.March 31,September 30, 2012 and December 31, 2011, 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 comprised of loans receivable and revenue earning equipment of $383.0$658.5 million and $456.3$456.3 million, respectively, and total liabilities primarily comprised of debt of $382.5$658.0 million and $455.8$455.8 million, respectively.March 31,September 30, 2012 and December 31, 2011, the following guarantees (including indemnification commitments) were issued and outstanding:ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)EnvironmentalMarch 31,September 30, 2012 and December 31, 2011, the aggregate amounts accrued for environmental liabilities including liability for environmental indemnities, reflected in our condensed consolidated balance sheets in "Accrued liabilities" were $1.5$1.5 million and $1.5$1.5 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 therein,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).ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)March 31,September 30, 2012, our net lossincome would increasedecrease by an estimated $29.5$32.3 million over a twelve-month period.March 31,September 30, 2012, our consolidated statement of operations contained realized and unrealized losses relating to the effects of foreign currency of $4.4 million.three monthsthree-month and nine-month periods ended March 31,September 30, 2012, we recognized a gainlosses of $1.8$2.1 million and $0.6 million, respectively, in "Direct operating" on our consolidated statement of operations relating to our gasoline swaps. See Note 13 to theITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)2010.2010 and 2012. 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. Over the last few years, for strategic purposes, such as cash management and fleet reduction, we have recognized some taxable gains in the program. In 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. 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, including paying down existing debt obligations, future growth initiatives and for general operating purposes. From August 2010 through 2011, recognized tax gains on vehicle dispositions resulting from the LKE suspension were more than offset by 100% tax depreciation on newly acquired vehicles. During 2012 the allowable 50% bonus depreciation is allowed, which will continue to support suspensionhelped offset tax gains during the period of theLKE suspension. The U.S. car rental LKE Program through 2012 without adverse implications. Our federal net operating loss position for U.S. tax purposes will not be adversely effected when the LKE Program is re-instated. The timing of reinstating the LKE Program is under continued analysis.BAMLCP.MLGPE. Accordingly, Bank of America is now an indirect beneficial owner of ourHertz Holdings' common stock held by BAMLCPMLGPE 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.$34.5$31.4 million, which would represent an increase of $13.2$10.1 million from 2011. The anticipated increase in expense compared to 2011 is primarily due to lower expected rates of return in 2012, lower discount rates at the end of 2011 compared to 2010 and a curtailment gain in the U.K. recorded in 2011.ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)arebecame effective for us beginning with thisthe quarterly report for the period ended March 31, 2012. In December 2011, the FASB issued Accounting Standards Update No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05," which defers the timing of implementing only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments.March 31,September 30, 2012 and for the three-month and nine-month periods ended March 31,September 30, 2012 and 2011 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they applied limited procedures in accordance with professional standards for reviews of such unaudited interim financial information. However, their separate report dated May 4,November 2, 2012 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 report should be restricted 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 their report on such unaudited interim financial information because that report is not a "report" or "part" of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Securities Act of 1933.March 31,September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.The following recent developments pertaining toare furnished on a supplemental basis:In February 2012, we filed separate motions for partial summary judgment on the Loss Damage Waiver and the Environmental Recovery Fee claims and we filed a motion to decertify the class inDavis Landscape, Ltd. et al. v. Hertz Equipment Rental Corporation.In March 2012, the federal magistrate entered an order inFun Services of Kansas City, Inc. v. Hertz Equipment Rental Corporation requiring the parties to engage in mediation and report back to her regarding their progress by June 6, 2012.Aside from the above mentioned, none of the other legal proceedings described in our subsequent quarterly reports on Form 10-K have experienced any material changes."Part II,ability to compete in our industry.1A—Risk Factors."(a)Exhibits:(a) Exhibits: Date: May 4,November 2, 2012
By:
/s/ ELYSE DOUGLAS
Chief Financial Officer
authorized officer)NumberDescription 4.2.62.1.3 FourthAgreement and Plan of Merger, dated as of August 26, 2012, 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 August 27, 2012).4.6.1 Indenture, dated as of October 16, 2012, between HDTFS, Inc., as Issuer, and Wells Fargo Bank, National Association, as Trustee, providing for the issuance of notes in series. 4.6.2 First Supplemental Indenture, dated as of February 27,October 16, 2012, among The Hertz Corporation,between HDTFS, Inc., as Issuer, the Subsidiary Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 7.50%5.875% Senior Notes due 2018.2020.4.2.74.6.3
FifthSecond Supplemental Indenture, dated as of March 30,October 16, 2012, among Cinelease Holdings,between HDTFS, Inc., Cinelease, Inc., Cinelease, LLC, The Hertz Corporation, as Issuer, the Existing Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 7.50%6.250% Senior Notes due 2018.2022.4.3.610.1.3
Fourth Supplemental Indenture,Incremental Commitment Amendment, dated as of February 27,October 9, 2012, among The Hertz Corporation, as Issuer, the Subsidiary Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 7.375% Senior Notes due 2021.4.3.7Fifth Supplemental Indenture, dated as of March 30, 2012, among Cinelease Holdings, Inc., Cinelease, Inc., Cinelease, LLC, The Hertz Corporation, as Issuer, the Existing Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 7.375% Senior Notes due 2021.4.4.6Third Supplemental Indenture, dated as of February 27, 2012, among The Hertz Corporation, as Issuer, the Subsidiary Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 6.75% Senior Notes due 2019.4.4.7Exchange and Registration Rightsthat certain Credit Agreement, dated as of March 13, 2012,11, 2011, among The Hertz Corporation, the Guarantors named therein,several banks and Barclays Capital Inc.,financial institutions parties thereto that constitute Tranche B-1 Term Lenders, and Deutsche Bank AG New York Branch, as the Initial Purchaser, relatingAdministrative Agent (Incorporated by reference to Exhibit 99.1 to the 6.75% Senior Notes due 2019.4.4.8Fourth Supplemental Indenture, dated asCurrent Report on Form 8-K of March 30, 2012, among Cinelease Holdings, Inc., Cinelease, Inc., Cinelease, LLC, The Hertz Corporation, as Issuer, the Existing Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 6.75% Senior Notes due 2019.10.7.8Form of Price Vested Stock Unit Agreement under the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan., as filed on October 10, 2012).
10.31Commitment Letter, dated as of August 26, 2012, by and among The Hertz Corporation, Barclays Bank PLC, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc., Bank of America, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc., as filed on August 27, 2012). 15
Letter from PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, dated May 4,November 2, 2012, 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: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.