UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended		~~September 30, 2020~~March 31, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

HERTZ GLOBAL HOLDINGS, INC.

THE HERTZ CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

001-37665

61-1770902

Delaware

001-07541

13-1938568

(State or other jurisdiction of
incorporation or organization)

(Commission File Number)

(I.R.S. Employer Identification No.)

8501 Williams Road

Estero,

Florida

33928

239

301-7000

(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)

Not Applicable

(Former name, former address and
former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which Registered

Hertz Global Holdings, Inc.

Common Stock

par value $0.01 per share

~~HTZ~~HTZGQ

~~New York Stock Exchange~~*

The Hertz Corporation

None

*On October 29, 2020, Hertz Global Holdings, Inc. ("Hertz Global") received notification from the New York Stock Exchange ("NYSE") that Hertz Global's common stock is no longer suitable for listing on the NYSE and that the NYSE suspended trading in Hertz Global's common stock after the market close on October 29, 2020. On October 30, 2020, the NYSE applied to the Securities and Exchange Commission pursuant to Form 25 to remove the common stock of Hertz Global from listing and registration on the NYSE at the opening of business on November 10, 2020. Upon deregistration of Hertz Global's common stock under Section 12(b) of the Exchange Act, Hertz Global's common stock will remain registered under Section 12(g) of the Exchange Act. As a result of the suspension and expected delisting, Hertz Global's common stock began trading exclusively on the over-the-counter market on October 30, 2020 under the symbol HTZGQ.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Hertz Global Holdings, Inc. Yes ☒ No ☐

The Hertz Corporation Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Hertz Global Holdings, Inc. Yes ☒ No ☐

The Hertz Corporation Yes ☒ No ☐

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

Hertz Global Holdings, Inc.

Large accelerated filer

☒☐

Accelerated filer

☐☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

The Hertz Corporation

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Hertz Global Holdings, Inc. Yes ☐ No ☒

The Hertz Corporation Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class

Shares Outstanding as of

~~November 2, 2020~~May 3, 2021

Hertz Global Holdings, Inc.

Common Stock,

par value $0.01 per share

156,206,478

The Hertz Corporation(1)

Common Stock,

par value $0.01 per share

100

(1)(100% owned by

Rental Car Intermediate Holdings, LLC)

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

TABLE OF CONTENTS

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Index


		Page
Hertz Global Holdings, Inc. and Subsidiaries (Debtor-in-Possession)
Condensed Consolidated Balance Sheets as of ~~September~~March 31 ~~30, 2020~~, 202 1 and December 31, ~~2019~~20 20		2
Condensed Consolidated Statements of Operations for the Three ~~and~~ ~~Nine~~ Months Ended S e ~~ptember~~March ~~30, 2020~~3 1 , 202 1 and ~~2019~~20 20		3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and~~ ~~Nine~~ Months Ended ~~September~~March ~~30, 2020~~3 1 , 202 1 and ~~2019~~20 20		4
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three ~~and~~ ~~Nine~~ Months Ended ~~September~~March ~~30, 2020~~3 1 , 202 1 and ~~2019~~20 20		5
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September~~March 31 , 202 1 ~~30, 2020~~ and ~~2019~~20 20		76
The Hertz Corporation and Subsidiaries (Debtor-in-Possession)
Condensed Consolidated Balance Sheets as of ~~September~~March ~~30, 2020~~3 1 , 202 1 and December 31, ~~2019~~20 20		98
Condensed Consolidated Statements of Operations for the Three ~~and~~ ~~Nine~~ Months Ended ~~September~~March ~~30, 2020~~3 1 , 202 1 and ~~2019~~20 20		109
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and~~ N ~~ine~~ Months Ended ~~September~~March ~~30,~~3 1 , 202 1 and 20 20		10
Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three Months Ended March 31, 2021 and 2020 ~~and 2019~~		11
Condensed Consolidated Statements of ~~Changes in Stockholder's Equity~~Cash Flows for the Three ~~and~~ N ~~ine~~Months Ended ~~September~~ ~~30,~~March 31, 2021 and 2020 ~~and 2019~~		12
~~Condensed Consolidated Statements of Cash Flows for the~~ ~~Nine~~ ~~Months Ended~~ ~~September~~ ~~30, 2020 and 2019~~		14
Notes to the Condensed Consolidated Financial Statements
Note 1	Background	1614
Note 2	Basis of Presentation and Recently Issued Accounting Pronouncements	2018
Note 3	Divestitures	2219
Note 4	Revenue Earning Vehicles	2320
Note 5	Goodwill and Intangible Assets, Net	2320
Note 6	Debt	2421
Note 7	Leases	3326
Note 8	Restructuring	3427
Note 9	Income Tax (Provision) Benefit	3528
Note 10	Earnings (Loss) Per Share -– Hertz Global	3628

Note 11	~~Employee Retirement Benefits~~	37
~~Note 12~~	Fair Value Measurements	3729
Note 1312	Contingencies and Off-Balance Sheet Commitments	3830
Note 13	Related Party Transactions	32
Note 14	~~Related Party Transactions~~Segment Information	4033
Note 15	~~Segment Information~~	42
~~Note 16~~	Liabilities Subject to Compromise	4637
Note 1716	Reorganization Items, Net	4637
Note 1817	Condensed Combined Debtor-in-Possession Financial Information	4637

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	1,137	$	865	Cash and cash equivalents	$	1,087	$	1,096
Restricted cash and cash equivalents:	Restricted cash and cash equivalents:					Restricted cash and cash equivalents:
Vehicle	Vehicle	382		466		Vehicle	119		50
Non-vehicle	Non-vehicle	363		29		Non-vehicle	1,234		361
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	745		495		Total restricted cash and cash equivalents	1,353		411
Total cash, cash equivalents, restricted cash and restricted cash equivalents	Total cash, cash equivalents, restricted cash and restricted cash equivalents	1,882		1,360		Total cash, cash equivalents, restricted cash and restricted cash equivalents	2,440		1,507
Receivables:	Receivables:					Receivables:
Vehicle	Vehicle	629		791		Vehicle	157		164
Non-vehicle, net of allowance of $63 and $35, respectively		787		1,049
Non-vehicle, net of allowance of $56 and $46, respectively						Non-vehicle, net of allowance of $56 and $46, respectively	636		613
Total receivables, net	Total receivables, net	1,416		1,840		Total receivables, net	793		777
Prepaid expenses and other assets	Prepaid expenses and other assets	429		689		Prepaid expenses and other assets	786		373
Revenue earning vehicles:	Revenue earning vehicles:					Revenue earning vehicles:
Vehicles	Vehicles	11,462		17,085		Vehicles	7,919		7,540
Less: accumulated depreciation	Less: accumulated depreciation	(3,011)		(3,296)		Less: accumulated depreciation	(1,559)		(1,478)
Total revenue earning vehicles, net	Total revenue earning vehicles, net	8,451		13,789		Total revenue earning vehicles, net	6,360		6,062
Property and equipment, net	Property and equipment, net	699		757		Property and equipment, net	637		666
Operating lease right-of-use assets	Operating lease right-of-use assets	1,737		1,871		Operating lease right-of-use assets	1,580		1,675
Intangible assets, net	Intangible assets, net	3,062		3,238		Intangible assets, net	2,969		2,992
Goodwill	Goodwill	1,081		1,083		Goodwill	1,045		1,045
Assets held for sale						Assets held for sale	0		1,811
Total assets(a)	Total assets(a)	$	18,757	$	24,627	Total assets(a)	$	16,610	$	16,908
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:	Accounts payable:					Accounts payable:
Vehicle	Vehicle	$	84	$	289	Vehicle	$	141	$	29
Non-vehicle	Non-vehicle	501		654		Non-vehicle	390		389
Total accounts payable	Total accounts payable	585		943		Total accounts payable	531		418
Accrued liabilities	Accrued liabilities	810		1,032		Accrued liabilities	824		759
Accrued taxes, net	Accrued taxes, net	119		150		Accrued taxes, net	161		121
Debt:	Debt:					Debt:
Vehicle	Vehicle	8,753		13,368		Vehicle	6,286		6,024
Non-vehicle	Non-vehicle	18		3,721		Non-vehicle	740		243
Total debt	Total debt	8,771		17,089		Total debt	7,026		6,267
Operating lease liabilities	Operating lease liabilities	1,703		1,848		Operating lease liabilities	1,541		1,636
Self-insured liabilities	Self-insured liabilities	481		553		Self-insured liabilities	470		488
Deferred income taxes, net	Deferred income taxes, net	887		1,124		Deferred income taxes, net	789		730
Total liabilities not subject to compromise	Total liabilities not subject to compromise	13,356		22,739		Total liabilities not subject to compromise	11,342		10,419
Liabilities subject to compromise	Liabilities subject to compromise	5,001		0		Liabilities subject to compromise	4,978		4,965
Liabilities held for sale						Liabilities held for sale	0		1,431
Total liabilities(a)	Total liabilities(a)	18,357		22,739		Total liabilities(a)	16,320		16,815
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Stockholders' equity:	Stockholders' equity:					Stockholders' equity:
Preferred stock, $0.01 par value, 0 shares issued and outstanding	Preferred stock, $0.01 par value, 0 shares issued and outstanding	0		0		Preferred stock, $0.01 par value, 0 shares issued and outstanding	0		0
Common stock, $0.01 par value, 158,235,410 and 144,153,444 shares issued, respectively and 156,206,478 and 142,124,512 shares outstanding, respectively		2		1
Common stock, $0.01 par value, 158,235,410 shares issued and 156,206,478 shares outstanding at March 31, 2021 and December 31, 2020						Common stock, $0.01 par value, 158,235,410 shares issued and 156,206,478 shares outstanding at March 31, 2021 and December 31, 2020	2		2
Additional paid-in capital	Additional paid-in capital	3,047		3,024		Additional paid-in capital	3,049		3,047
Accumulated deficit	Accumulated deficit	(2,392)		(967)		Accumulated deficit	(2,491)		(2,681)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(216)		(189)		Accumulated other comprehensive income (loss)	(195)		(212)
Treasury stock, at cost, 2,028,932 and 2,028,932 shares, respectively		(100)		(100)
Treasury stock, at cost, 2,028,932 shares at March 31, 2021 and December 31, 2020						Treasury stock, at cost, 2,028,932 shares at March 31, 2021 and December 31, 2020	(100)		(100)
Stockholders' equity attributable to Hertz Global	Stockholders' equity attributable to Hertz Global	341		1,769		Stockholders' equity attributable to Hertz Global	265		56
Noncontrolling interests	Noncontrolling interests	59		119		Noncontrolling interests	25		37
Total stockholders' equity	Total stockholders' equity	400		1,888		Total stockholders' equity	290		93
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	18,757	$	24,627	Total liabilities and stockholders' equity	$	16,610	$	16,908

(a)Hertz Global Holdings, Inc.'s consolidated total assets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include total assets of variable interest entities (“VIEs”) of ~~$705~~$513 million and ~~$1.3 billion,~~$511 million, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include total liabilities of VIEs of ~~$647~~$393 million and ~~$1.1 billion,~~$475 million, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Special Purpose Entities" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note ~~14,~~13, "Related Party Transactions," for further information.

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

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In millions, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Worldwide vehicle rental	Worldwide vehicle rental	$	1,119	$	2,664	$	3,535	$	6,961	Worldwide vehicle rental	$	1,153	$	1,749
All other operations	All other operations	149		172		488		493		All other operations	136		174
Total revenues	Total revenues	1,268		2,836		4,023		7,454		Total revenues	1,289		1,923
Expenses:	Expenses:									Expenses:
Direct vehicle and operating	Direct vehicle and operating	832		1,492		2,777		4,147		Direct vehicle and operating	827		1,241
Depreciation of revenue earning vehicles and lease charges	Depreciation of revenue earning vehicles and lease charges	347		667		1,634		1,892		Depreciation of revenue earning vehicles and lease charges	243		677
Selling, general and administrative	Selling, general and administrative	143		232		519		723		Selling, general and administrative	156		208
Interest expense, net:	Interest expense, net:									Interest expense, net:
Vehicle	Vehicle	110		134		360		372		Vehicle	104		118
Non-vehicle (excludes contractual interest of $53 million and $75 million for the three and nine months ended September 30, 2020, respectively)		17		70		118		214
Non-vehicle (excludes contractual interest of $53 million for the three months ended March 31, 2021)										Non-vehicle (excludes contractual interest of $53 million for the three months ended March 31, 2021)	44		57
Total interest expense, net	Total interest expense, net	127		204		478		586		Total interest expense, net	148		175
Technology-related intangible and other asset impairments		0		0		193		0

Other (income) expense, net	Other (income) expense, net	0		(6)		(15)		(37)		Other (income) expense, net	(3)		(17)
Reorganization items, net	Reorganization items, net	78		0		101		0		Reorganization items, net	42		0
(Gain) from the sale of a business										(Gain) from the sale of a business	(392)		0
Total expenses	Total expenses	1,527		2,589		5,687		7,311		Total expenses	1,021		2,284
Income (loss) before income taxes	Income (loss) before income taxes	(259)		247		(1,664)		143		Income (loss) before income taxes	268		(361)
Income tax (provision) benefit	Income tax (provision) benefit	36		(74)		232		(78)		Income tax (provision) benefit	(79)		4
Net income (loss)	Net income (loss)	(223)		173		(1,432)		65		Net income (loss)	189		(357)
Net (income) loss attributable to noncontrolling interests	Net (income) loss attributable to noncontrolling interests	1		(4)		7		(4)		Net (income) loss attributable to noncontrolling interests	1		1
Net income (loss) attributable to Hertz Global	Net income (loss) attributable to Hertz Global	$	(222)	$	169	$	(1,425)	$	61	Net income (loss) attributable to Hertz Global	$	190	$	(356)
Weighted-average shares outstanding:	Weighted-average shares outstanding:									Weighted-average shares outstanding:
Basic	Basic	156		133		148		109		Basic	156		142
Diluted	Diluted	156		134		148		109		Diluted	157		142
Earnings (loss) per share:	Earnings (loss) per share:									Earnings (loss) per share:
Basic earnings (loss) per share	Basic earnings (loss) per share	$	(1.42)	$	1.26	$	(9.65)	$	0.56	Basic earnings (loss) per share	$	1.22	$	(2.50)
Diluted earnings (loss) per share	Diluted earnings (loss) per share	$	(1.42)	$	1.26	$	(9.65)	$	0.56	Diluted earnings (loss) per share	$	1.21	$	(2.50)

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

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

(In millions)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Net income (loss)	Net income (loss)	$	(223)	$	173	$	(1,432)	$	65	Net income (loss)	$	189	$	(357)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	(6)		(13)		(32)		(11)		Foreign currency translation adjustments	17		(41)
Net gain (loss) on defined benefit pension plans		15		1		1		1
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans		1		2		6		5
Net gain (loss) on pension and postretirement benefit plans										Net gain (loss) on pension and postretirement benefit plans	0		1
Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses										Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses	0		1

Total other comprehensive income (loss) before income taxes	Total other comprehensive income (loss) before income taxes	10		(10)		(25)		(5)		Total other comprehensive income (loss) before income taxes	17		(39)
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans		(4)		0		0		0
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans		(1)		(1)		(2)		(1)

Total other comprehensive income (loss)	Total other comprehensive income (loss)	5		(11)		(27)		(6)		Total other comprehensive income (loss)	17		(39)
Total comprehensive income (loss)	Total comprehensive income (loss)	(218)		162		(1,459)		59		Total comprehensive income (loss)	206		(396)
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	1		(4)		7		(4)		Comprehensive (income) loss attributable to noncontrolling interests	1		1
Comprehensive income (loss) attributable to Hertz Global	Comprehensive income (loss) attributable to Hertz Global	$	(217)	$	158	$	(1,452)	$	55	Comprehensive income (loss) attributable to Hertz Global	$	207	$	(395)

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

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Unaudited

(In millions)

Preferred Stock
Shares Common Stock Shares Common Stock Amount Additional
Paid-In Capital
Accumulated
Deficit(1)
Accumulated
Other
Comprehensive
Income (Loss) Treasury Stock Shares Treasury Stock Amount Stockholders'
Equity
Attributable to
Hertz Global
Non-
controlling Interests(1)
Total Stockholders' Equity
Balance as of:
December 31, 2018 0 84 $ 1 $ 2,261 $ (909) $ (192) 2 $ (100) $ 1,061 $ 59 $ 1,120
Net income (loss) — — — — (147) — — — (147) (1) (148)
Other comprehensive income (loss) — — — — — 7 — — 7 — 7
Net settlement on vesting of restricted stock — — — (2) — — — — (2) — (2)
Stock-based compensation charges — — — 3 — — — — 3 — 3
Contributions from noncontrolling interests — — — — — — — — — 25 25
March 31, 2019 0 84 1 2,262 (1,056) (185) 2 (100) 922 83 1,005
Net income (loss) — — — — 39 — — — 39 2 41
Other comprehensive income (loss) — — — — — (2) — — (2) — (2)
Stock-based compensation charges — — — 5 — — — — 5 — 5
Contributions from noncontrolling interests — — — — — — — — — 21 21
June 30, 2019 0 84 1 2,267 (1,017) (187) 2 (100) 964 106 1,070
Net income (loss) — — — — 169 — — — 169 4 173
Other comprehensive income (loss) — — — — — (11) — — (11) — (11)
Net settlement on vesting of restricted stock — — — (2) — — — — (2) — (2)
Stock-based compensation charges — — — 6 — — — — 6 — 6
Contributions from noncontrolling interests — — — — — — — — — 5 5
Rights Offering, net — 58 — 748 — — — — 748 — 748
September 30, 2019 0 142 $ 1 $ 3,019 $ (848) $ (198) 2 $ (100) $ 1,874 $ 115 $ 1,989

(1) Net income (loss) and Net income (loss) attributable to noncontrolling interests are computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to amounts in the accompanying unaudited condensed consolidated balance sheet.


	Preferred Stock Shares	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Shares	Treasury Stock Amount		Stockholders' Equity Attributable to Hertz Global		Non- controlling Interests		Total Stockholders' Equity
Balance as of:
December 31, 2019	0	142	$	1	$	3,024	$	(967)	$	(189)	2	$	(100)	$	1,769	$	119	$	1,888
Net income (loss)	—	—	—		—		(356)		—		—	—		(356)		(1)		(357)
Other comprehensive income (loss)	—	—	—		—		—		(39)		—	—		(39)		—		(39)
Net settlement on vesting of restricted stock	—	—	—		(2)		—		—		—	—		(2)		—		(2)

Contributions from noncontrolling interests	—	—	—		—		—		—		—	—		—		1		1
March 31, 2020	0	142	$	1	$	3,022	$	(1,323)	$	(228)	2	$	(100)	$	1,372	$	119	$	1,491


	Preferred Stock Shares	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock Shares	Treasury Stock Amount		Stockholders' Equity Attributable to Hertz Global		Non- controlling Interests		Total Stockholders' Equity
Balance as of:
December 31, 2020	0	156	$	2	$	3,047	$	(2,681)	$	(212)	2	$	(100)	$	56	$	37	$	93
Net income (loss)	—	—	—		—		190		—		—	—		190		(1)		189
Other comprehensive income (loss)	—	—	—		—		—		17		—	—		17		—		17

Stock-based compensation charges	—	—	—		2		—		—		—	—		2		—		2
Distributions to noncontrolling interests	—	—	—		—		—		—		—	—		—		(11)		(11)
March 31, 2021	0	156	$	2	$	3,049	$	(2,491)	$	(195)	2	$	(100)	$	265	$	25	$	290

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY~~

~~Unaudited~~

~~(In millions)~~

Preferred Stock
Shares Common Stock Shares Common Stock Amount Additional
Paid-In Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Income (Loss) Treasury Stock Shares Treasury Stock Amount Stockholders'
Equity
Attributable to
Hertz Global Non-
controlling Interests Total Stockholders' Equity
Balance as of:
December 31, 2019 0 142 $ 1 $ 3,024 $ (967) $ (189) 2 $ (100) $ 1,769 $ 119 $ 1,888
Net income (loss) — — — — (356) — — — (356) (1) (357)
Other comprehensive income (loss) — — — — — (39) — — (39) — (39)
Net settlement on vesting of restricted stock — — — (2) — — — — (2) — (2)
Contributions from noncontrolling interests — — — — — — — — — 1 1
March 31, 2020 0 142 1 3,022 (1,323) (228) 2 (100) 1,372 119 1,491
Net income (loss) — — — — (847) — — — (847) (5) (852)
Other comprehensive income (loss) — — — — — 7 — — 7 — 7
Stock-based compensation charges — — — (2) — — — — (2) — (2)
Stock issuance, net — 14 1 28 — — — — 29 — 29
June 30, 2020 0 156 2 3,048 (2,170) (221) 2 (100) 559 114 673
Net income (loss) — — — — (222) — — — (222) (1) (223)
Other comprehensive income (loss) — — — — — 5 — — 5 — 5
Net settlement on vesting of restricted stock — — — (1) — — — — (1) — (1)
Distributions to noncontrolling interests — — — — — — — — — (54) (54)
September 30, 2020 0 156 $ 2 $ 3,047 $ (2,392) $ (216) 2 $ (100) $ 341 $ 59 $ 400

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

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	(1,432)	$	65	Net income (loss)	$	189	$	(357)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles	Depreciation and reserves for revenue earning vehicles	1,809		2,056		Depreciation and reserves for revenue earning vehicles	275		733
Depreciation and amortization, non-vehicle	Depreciation and amortization, non-vehicle	168		151		Depreciation and amortization, non-vehicle	54		53
Amortization of deferred financing costs and debt discount (premium)	Amortization of deferred financing costs and debt discount (premium)	37		40		Amortization of deferred financing costs and debt discount (premium)	34		12

Stock-based compensation charges		(2)		14

Provision for receivables allowance	Provision for receivables allowance	66		35		Provision for receivables allowance	29		15
Deferred income taxes, net	Deferred income taxes, net	(243)		58		Deferred income taxes, net	62		(13)
Technology-related intangible and other asset impairments		193		0
(Gain) loss on marketable securities		0		(26)

Non-cash reorganization items, net						Non-cash reorganization items, net	(15)		0
(Gain) loss from the sale of a business						(Gain) loss from the sale of a business	(392)		0
(Gain) loss on sale of non-vehicle capital assets	(Gain) loss on sale of non-vehicle capital assets	(24)		(15)		(Gain) loss on sale of non-vehicle capital assets	(1)		(21)
(Gain) loss on derivatives		(3)		(10)

Other	Other	7		6		Other	2		4
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Non-vehicle receivables	Non-vehicle receivables	231		(132)		Non-vehicle receivables	(73)		226
Prepaid expenses and other assets	Prepaid expenses and other assets	33		(44)		Prepaid expenses and other assets	(87)		(61)
Operating lease right-of-use assets	Operating lease right-of-use assets	277		305		Operating lease right-of-use assets	78		100
Non-vehicle accounts payable	Non-vehicle accounts payable	224		72		Non-vehicle accounts payable	40		(86)
Accrued liabilities	Accrued liabilities	(47)		(48)		Accrued liabilities	62		(59)
Accrued taxes, net	Accrued taxes, net	(4)		25		Accrued taxes, net	36		(14)
Operating lease liabilities	Operating lease liabilities	(287)		(323)		Operating lease liabilities	(78)		(66)
Self-insured liabilities	Self-insured liabilities	(75)		4		Self-insured liabilities	(15)		(17)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	928		2,233		Net cash provided by (used in) operating activities	200		449
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Revenue earning vehicles expenditures	Revenue earning vehicles expenditures	(5,188)		(11,536)		Revenue earning vehicles expenditures	(1,517)		(4,346)
Proceeds from disposal of revenue earning vehicles	Proceeds from disposal of revenue earning vehicles	8,770		6,193		Proceeds from disposal of revenue earning vehicles	686		2,212
Non-vehicle capital asset expenditures	Non-vehicle capital asset expenditures	(89)		(170)		Non-vehicle capital asset expenditures	(9)		(59)
Proceeds from non-vehicle capital assets disposed of or to be disposed of	Proceeds from non-vehicle capital assets disposed of or to be disposed of	56		21		Proceeds from non-vehicle capital assets disposed of or to be disposed of	4		23
Sales of marketable securities	Sales of marketable securities	74		0		Sales of marketable securities	0		74
Proceeds from the sale of a business, net of cash sold						Proceeds from the sale of a business, net of cash sold	818		0
Other	Other	(1)		0		Other	0		(1)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	3,622		(5,492)		Net cash provided by (used in) investing activities	(18)		(2,097)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuance of vehicle debt	Proceeds from issuance of vehicle debt	4,226		11,039		Proceeds from issuance of vehicle debt	1,096		3,661
Repayments of vehicle debt	Repayments of vehicle debt	(8,931)		(8,538)		Repayments of vehicle debt	(946)		(2,538)
Proceeds from issuance of non-vehicle debt	Proceeds from issuance of non-vehicle debt	1,553		1,726		Proceeds from issuance of non-vehicle debt	560		1,440
Repayments of non-vehicle debt	Repayments of non-vehicle debt	(854)		(2,437)		Repayments of non-vehicle debt	(1)		(851)
Payment of financing costs	Payment of financing costs	(11)		(33)		Payment of financing costs	(7)		(9)

Contributions from (distributions to) noncontrolling interests						Contributions from (distributions to) noncontrolling interests	(10)		0

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

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Proceeds from the issuance of stock, net		28		0
Contributions from (distributions to) noncontrolling interests		(55)		49
Proceeds from Rights Offering, net		0		748
Other	Other	(2)		(3)		Other	0		(2)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(4,046)		2,551		Net cash provided by (used in) financing activities	692		1,701
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	18		(7)		Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(12)		(4)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	522		(715)		Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	862		49
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period		1,360		1,410
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period(1)						Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period(1)	1,578		1,360
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	1,882	$	695	Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	2,440	$	1,409

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest, net of amounts capitalized:	Interest, net of amounts capitalized:					Interest, net of amounts capitalized:
Vehicle	Vehicle	$	275	$	331	Vehicle	$	69	$	103
Non-vehicle	Non-vehicle	78		182		Non-vehicle	30		26
Income taxes, net of refunds	Income taxes, net of refunds	(13)		12		Income taxes, net of refunds	(4)		5

Supplemental disclosures of non-cash information:	Supplemental disclosures of non-cash information:					Supplemental disclosures of non-cash information:
Purchases of revenue earning vehicles included in accounts payable, net of incentives	Purchases of revenue earning vehicles included in accounts payable, net of incentives	$	30	$	43	Purchases of revenue earning vehicles included in accounts payable, net of incentives	$	103	$	200
Sales of revenue earning vehicles included in vehicle receivables	Sales of revenue earning vehicles included in vehicle receivables	575		712		Sales of revenue earning vehicles included in vehicle receivables	119		1,043
Fleet payables included in liabilities subject to compromise		11		0

Purchases of non-vehicle capital assets included in accounts payable	Purchases of non-vehicle capital assets included in accounts payable	7		48		Purchases of non-vehicle capital assets included in accounts payable	6		32
Purchases of non-vehicle capital assets included in liabilities subject to compromise	Purchases of non-vehicle capital assets included in liabilities subject to compromise	20		0		Purchases of non-vehicle capital assets included in liabilities subject to compromise	16		0
Revenue earning vehicles and non-vehicle capital assets acquired through capital lease						Revenue earning vehicles and non-vehicle capital assets acquired through capital lease	21		4

(1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which are held for sale at December 31, 2020, as disclosed in Note 3, "Divestitures."

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

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In millions, except par value and share data)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	1,137	$	865	Cash and cash equivalents	$	1,087	$	1,096
Restricted cash and cash equivalents:	Restricted cash and cash equivalents:					Restricted cash and cash equivalents:
Vehicle	Vehicle	382		466		Vehicle	119		50
Non-vehicle	Non-vehicle	335		29		Non-vehicle	1,206		333
Total restricted cash and cash equivalents	Total restricted cash and cash equivalents	717		495		Total restricted cash and cash equivalents	1,325		383
Total cash, cash equivalents, restricted cash and restricted cash equivalents	Total cash, cash equivalents, restricted cash and restricted cash equivalents	1,854		1,360		Total cash, cash equivalents, restricted cash and restricted cash equivalents	2,412		1,479
Receivables:	Receivables:					Receivables:
Vehicle	Vehicle	629		791		Vehicle	157		164
Non-vehicle, net of allowance of $63 and $35, respectively		787		1,049
Non-vehicle, net of allowance of $56 and $46, respectively						Non-vehicle, net of allowance of $56 and $46, respectively	636		613
Total receivables, net	Total receivables, net	1,416		1,840		Total receivables, net	793		777
Due from Hertz Holdings	Due from Hertz Holdings	1		0		Due from Hertz Holdings	1		1
Prepaid expenses and other assets	Prepaid expenses and other assets	428		689		Prepaid expenses and other assets	785		372
Revenue earning vehicles:	Revenue earning vehicles:					Revenue earning vehicles:
Vehicles	Vehicles	11,462		17,085		Vehicles	7,919		7,540
Less: accumulated depreciation	Less: accumulated depreciation	(3,011)		(3,296)		Less: accumulated depreciation	(1,559)		(1,478)
Total revenue earning vehicles, net	Total revenue earning vehicles, net	8,451		13,789		Total revenue earning vehicles, net	6,360		6,062
Property and equipment, net	Property and equipment, net	699		757		Property and equipment, net	637		666
Operating lease right-of-use assets	Operating lease right-of-use assets	1,737		1,871		Operating lease right-of-use assets	1,580		1,675
Intangible assets, net	Intangible assets, net	3,062		3,238		Intangible assets, net	2,969		2,992
Goodwill	Goodwill	1,081		1,083		Goodwill	1,045		1,045
Assets held for sale						Assets held for sale	0		1,811
Total assets(a)	Total assets(a)	$	18,729	$	24,627	Total assets(a)	$	16,582	$	16,880
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)						LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Accounts payable:	Accounts payable:					Accounts payable:
Vehicle	Vehicle	$	84	$	289	Vehicle	$	141	$	29
Non-vehicle	Non-vehicle	501		654		Non-vehicle	390		389
Total accounts payable	Total accounts payable	585		943		Total accounts payable	531		418
Accrued liabilities	Accrued liabilities	812		1,032		Accrued liabilities	825		759
Accrued taxes, net	Accrued taxes, net	119		150		Accrued taxes, net	161		121
Debt:	Debt:					Debt:
Vehicle	Vehicle	8,753		13,368		Vehicle	6,286		6,024
Non-vehicle	Non-vehicle	18		3,721		Non-vehicle	740		243
Total debt	Total debt	8,771		17,089		Total debt	7,026		6,267
Operating lease liabilities	Operating lease liabilities	1,703		1,848		Operating lease liabilities	1,541		1,636
Self-insured liabilities	Self-insured liabilities	481		553		Self-insured liabilities	470		488
Deferred income taxes, net	Deferred income taxes, net	862		1,128		Deferred income taxes, net	793		735
Total liabilities not subject to compromise	Total liabilities not subject to compromise	13,333		22,743		Total liabilities not subject to compromise	11,347		10,424
Liabilities subject to compromise	Liabilities subject to compromise	5,066		0		Liabilities subject to compromise	5,043		5,030
Liabilities held for sale						Liabilities held for sale	0		1,431
Total liabilities(a)	Total liabilities(a)	18,399		22,743		Total liabilities(a)	16,390		16,885
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Stockholder's equity:
Stockholder's equity (deficit):						Stockholder's equity (deficit):
Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively	Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively	0		0		Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively	0		0
Additional paid-in capital	Additional paid-in capital	3,953		3,955		Additional paid-in capital	3,955		3,953
Due from affiliate		0		(64)

Accumulated deficit	Accumulated deficit	(3,466)		(1,937)		Accumulated deficit	(3,593)		(3,783)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(216)		(189)		Accumulated other comprehensive income (loss)	(195)		(212)
Stockholder's equity attributable to Hertz		271		1,765
Stockholder's equity (deficit) attributable to Hertz						Stockholder's equity (deficit) attributable to Hertz	167		(42)
Noncontrolling interests	Noncontrolling interests	59		119		Noncontrolling interests	25		37
Total stockholder's equity		330		1,884
Total liabilities and stockholder's equity		$	18,729	$	24,627
Total stockholder's equity (deficit)						Total stockholder's equity (deficit)	192		(5)
Total liabilities and stockholder's equity (deficit)						Total liabilities and stockholder's equity (deficit)	$	16,582	$	16,880

(a)The Hertz Corporation's consolidated total assets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include total assets of ~~variable interest entities (“VIEs”)~~VIEs of ~~$705~~$513 million and ~~$1.3 billion,~~$511 million, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include total liabilities of VIEs of ~~$647~~$393 million and ~~$1.1 billion,~~$475 million, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Special Purpose Entities" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note ~~14,~~13, "Related Party Transactions," for further information.

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

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In millions)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Worldwide vehicle rental	Worldwide vehicle rental	$	1,119	$	2,664	$	3,535	$	6,961	Worldwide vehicle rental	$	1,153	$	1,749
All other operations	All other operations	149		172		488		493		All other operations	136		174
Total revenues	Total revenues	1,268		2,836		4,023		7,454		Total revenues	1,289		1,923
Expenses:	Expenses:									Expenses:
Direct vehicle and operating	Direct vehicle and operating	832		1,492		2,777		4,147		Direct vehicle and operating	827		1,241
Depreciation of revenue earning vehicles and lease charges	Depreciation of revenue earning vehicles and lease charges	347		667		1,634		1,892		Depreciation of revenue earning vehicles and lease charges	243		677
Selling, general and administrative	Selling, general and administrative	143		232		519		723		Selling, general and administrative	156		208
Interest expense, net:	Interest expense, net:									Interest expense, net:
Vehicle	Vehicle	110		134		360		372		Vehicle	104		118
Non-vehicle (excludes contractual interest of $53 million and $75 million for the three and nine months ended September 30, 2020, respectively)		17		68		116		209
Non-vehicle (excludes contractual interest of $53 million for the three months ended March 31, 2021)										Non-vehicle (excludes contractual interest of $53 million for the three months ended March 31, 2021)	44		55
Total interest expense, net	Total interest expense, net	127		202		476		581		Total interest expense, net	148		173
Technology-related intangible and other asset impairments		0		0		193		0
Write-off of intercompany loan		0		0		133		0

Other (income) expense, net	Other (income) expense, net	0		(6)		(15)		(37)		Other (income) expense, net	(3)		(17)
Reorganization items, net	Reorganization items, net	78		0		101		0		Reorganization items, net	42		0
(Gain) from the sale of a business										(Gain) from the sale of a business	(392)		0
Total expenses	Total expenses	1,527		2,587		5,818		7,306		Total expenses	1,021		2,282
Income (loss) before income taxes	Income (loss) before income taxes	(259)		249		(1,795)		148		Income (loss) before income taxes	268		(359)
Income tax (provision) benefit	Income tax (provision) benefit	36		(75)		259		(79)		Income tax (provision) benefit	(79)		3
Net income (loss)	Net income (loss)	(223)		174		(1,536)		69		Net income (loss)	189		(356)
Net (income) loss attributable to noncontrolling interests	Net (income) loss attributable to noncontrolling interests	1		(4)		7		(4)		Net (income) loss attributable to noncontrolling interests	1		1
Net income (loss) attributable to Hertz	Net income (loss) attributable to Hertz	$	(222)	$	170	$	(1,529)	$	65	Net income (loss) attributable to Hertz	$	190	$	(355)

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

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

(In millions)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Net income (loss)	Net income (loss)	$	(223)	$	174	$	(1,536)	$	69	Net income (loss)	$	189	$	(356)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	(6)		(13)		(32)		(11)		Foreign currency translation adjustments	17		(41)
Net gain (loss) on defined benefit pension plans		15		1		1		1
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans		1		2		6		5
Net gain (loss) on pension and postretirement benefit plans										Net gain (loss) on pension and postretirement benefit plans	0		1
Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses										Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses	0		1

Total other comprehensive income (loss) before income taxes	Total other comprehensive income (loss) before income taxes	10		(10)		(25)		(5)		Total other comprehensive income (loss) before income taxes	17		(39)
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans		(4)		0		0		0
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans		(1)		(1)		(2)		(1)

Total other comprehensive income (loss)	Total other comprehensive income (loss)	5		(11)		(27)		(6)		Total other comprehensive income (loss)	17		(39)
Total comprehensive income (loss)	Total comprehensive income (loss)	(218)		163		(1,563)		63		Total comprehensive income (loss)	206		(395)
Comprehensive (income) loss attributable to noncontrolling interests	Comprehensive (income) loss attributable to noncontrolling interests	1		(4)		7		(4)		Comprehensive (income) loss attributable to noncontrolling interests	1		1
Comprehensive income (loss) attributable to Hertz		$	(217)	$	159	$	(1,556)	$	59
Comprehensive income (loss) attributable to Hertz Global										Comprehensive income (loss) attributable to Hertz Global	$	207	$	(394)

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

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)

Unaudited

(In millions, except share data)

Common Stock Shares Common Stock Amount Additional
Paid-In Capital Due From Affiliate
Accumulated
Deficit(1)
Accumulated
Other
Comprehensive
Income (Loss) Stockholder's Equity Attributable to Hertz
Noncontrolling Interests(1)
Total Stockholder's Equity
Balance as of:
December 31, 2018 100 $ 0 $ 3,187 $ (52) $ (1,884) $ (192) $ 1,059 $ 59 $ 1,118
Net income (loss) — — — — (145) — (145) (1) (146)
Due from Hertz Holdings — — — (4) — — (4) — (4)
Other comprehensive income (loss) — — — — — 7 7 — 7
Stock-based compensation charges — — 3 — — — 3 — 3
Contributions from noncontrolling interests — — — — — — — 25 25
March 31, 2019 100 0 3,190 (56) (2,029) (185) 920 83 1,003
Net income (loss) — — — — 39 — 39 2 41
Due from Hertz Holdings — — — (2) — — (2) — (2)
Other comprehensive income (loss) — — — — — (2) (2) — (2)
Stock-based compensation charges — — 5 — — — 5 — 5
Contributions from noncontrolling interests — — — — — — — 21 21
June 30, 2019 100 0 3,195 (58) (1,990) (187) 960 106 1,066
Net income (loss) — — — — 171 — 171 4 175
Due from Hertz Holdings — — — (4) — — (4) — (4)
Other comprehensive income (loss) — — — — — (11) (11) — (11)
Stock-based compensation charges — — 6 — — — 6 — 6
Contributions from noncontrolling interests — — — — — — — 5 5
Contributions from Hertz Holdings — — 750 — — — 750 — 750
September 30, 2019 100 $ 0 $ 3,951 $ (62) $ (1,819) $ (198) $ 1,872 $ 115 $ 1,987


	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Due From Affiliate		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholder's Equity Attributable to Hertz		Noncontrolling Interests		Total Stockholder's Equity
Balance as of:
December 31, 2019	100	$	0	$	3,955	$	(64)	$	(1,937)	$	(189)	$	1,765	$	119	$	1,884
Net income (loss)	—	—		—		—		(355)		—		(355)		(1)		(356)
Due from Hertz Holdings	—	—		—		(3)		—		—		(3)		—		(3)
Other comprehensive income (loss)	—	—		—		—		—		(39)		(39)		—		(39)

Contributions from noncontrolling interests	—	—		—		—		—		—		—		1		1
March 31, 2020	100	$	0	$	3,955	$	(67)	$	(2,292)	$	(228)	$	1,368	$	119	$	1,487


	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Stockholder's Equity Attributable to Hertz		Noncontrolling Interests		Total Stockholder's Equity (Deficit)
Balance as of:
December 31, 2020	100	$	0	$	3,953	$	(3,783)	$	(212)	$	(42)	$	37	$	(5)
Net income (loss)	—	—		—		190		—		190		(1)		189

Other comprehensive income (loss)	—	—		—		—		17		17		—		17
Stock-based compensation charges	—	—		2		—		—		2		—		2
Distributions to noncontrolling interests	—	—		—		—		—		—		(11)		(11)
March 31, 2021	100	$	0	$	3,955	$	(3,593)	$	(195)	$	167	$	25	$	192

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTOR-IN-POSSESSION)~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY~~

~~Unaudited~~

~~(In millions, except share data)~~

Common Stock Shares Common Stock Amount Additional
Paid-In Capital Due From Affiliate
Accumulated
Deficit(1)
Accumulated
Other
Comprehensive
Income (Loss) Stockholder's Equity Attributable to Hertz Noncontrolling Interests Total Stockholder's Equity
Balance as of:
December 31, 2019 100 $ 0 $ 3,955 $ (64) $ (1,937) $ (189) $ 1,765 $ 119 $ 1,884
Net income (loss) — — — — (355) — (355) (1) (356)
Due from Hertz Holdings — — — (3) — — (3) — (3)
Other comprehensive income (loss) — — — — — (39) (39) — (39)
Contributions from noncontrolling interests — — — — — — — 1 1
March 31, 2020 100 0 3,955 (67) (2,292) (228) 1,368 119 1,487
Net income (loss) — — — — (951) — (951) (5) (956)
Due from Hertz Holdings — — — (1) — — (1) — (1)
Liabilities subject to compromise(2)
— — — (65) — — (65) — (65)
Write-off of intercompany loan(3)
— — — 133 — — 133 — 133
Other comprehensive income (loss) — — — — — 7 7 — 7
Stock-based compensation charges — — (2) — — — (2) — (2)
June 30, 2020 100 0 3,953 0 (3,243) (221) 489 114 603
Net income (loss) — — — — (223) — (223) (1) (224)
Other comprehensive income (loss) — — — — — 5 5 — 5
Distributions to noncontrolling interests — — — — — — — (54) (54)
September 30, 2020 100 $ 0 $ 3,953 $ 0 $ (3,466) $ (216) $ 271 $ 59 $ 330

(1) Net income (loss) is computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet.

(2) As a result of filing the Chapter 11 Cases, a Pre-petition loan due to an affiliate was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020. See Note 16, "Liabilities Subject to Compromise."

~~(3) As a result of filing the Chapter 11 Cases, the full amount outstanding under a loan due from affiliate was deemed uncollectible and written off. See Note 14, "Related Party Transactions."~~

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

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	(1,536)	$	69	Net income (loss)	$	189	$	(356)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:					Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles	Depreciation and reserves for revenue earning vehicles	1,809		2,056		Depreciation and reserves for revenue earning vehicles	275		733
Depreciation and amortization, non-vehicle	Depreciation and amortization, non-vehicle	168		151		Depreciation and amortization, non-vehicle	54		53
Amortization of deferred financing costs and debt discount (premium)	Amortization of deferred financing costs and debt discount (premium)	37		40		Amortization of deferred financing costs and debt discount (premium)	34		12

Stock-based compensation charges		(2)		14

Provision for receivables allowance	Provision for receivables allowance	66		35		Provision for receivables allowance	29		15
Deferred income taxes, net	Deferred income taxes, net	(271)		59		Deferred income taxes, net	62		(12)
Technology-related intangible and other asset impairments		193		0
Write-off of intercompany loan		133		0
(Gain) loss on marketable securities		0		(26)
Non-cash reorganization items, net						Non-cash reorganization items, net	(15)		0

(Gain) loss from the sale of a business						(Gain) loss from the sale of a business	(392)		0
(Gain) loss on sale of non-vehicle capital assets	(Gain) loss on sale of non-vehicle capital assets	(24)		(15)		(Gain) loss on sale of non-vehicle capital assets	(1)		(21)
(Gain) loss on derivatives		(3)		(10)

Other	Other	9		6		Other	2		3
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Non-vehicle receivables	Non-vehicle receivables	231		(132)		Non-vehicle receivables	(73)		226
Prepaid expenses and other assets	Prepaid expenses and other assets	33		(44)		Prepaid expenses and other assets	(87)		(61)
Operating lease right-of-use assets	Operating lease right-of-use assets	277		305		Operating lease right-of-use assets	78		100
Non-vehicle accounts payable	Non-vehicle accounts payable	224		72		Non-vehicle accounts payable	40		(86)
Accrued liabilities	Accrued liabilities	(47)		(48)		Accrued liabilities	62		(59)
Accrued taxes, net	Accrued taxes, net	(4)		25		Accrued taxes, net	36		(14)
Operating lease liabilities	Operating lease liabilities	(287)		(323)		Operating lease liabilities	(78)		(66)
Self-insured liabilities	Self-insured liabilities	(75)		4		Self-insured liabilities	(15)		(17)
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	931		2,238		Net cash provided by (used in) operating activities	200		450
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Revenue earning vehicles expenditures	Revenue earning vehicles expenditures	(5,188)		(11,536)		Revenue earning vehicles expenditures	(1,517)		(4,346)
Proceeds from disposal of revenue earning vehicles	Proceeds from disposal of revenue earning vehicles	8,770		6,193		Proceeds from disposal of revenue earning vehicles	686		2,212
Non-vehicle capital asset expenditures	Non-vehicle capital asset expenditures	(89)		(170)		Non-vehicle capital asset expenditures	(9)		(59)
Proceeds from non-vehicle capital assets disposed of or to be disposed of	Proceeds from non-vehicle capital assets disposed of or to be disposed of	56		21		Proceeds from non-vehicle capital assets disposed of or to be disposed of	4		23
Sales of marketable securities	Sales of marketable securities	74		0		Sales of marketable securities	0		74
Proceeds from the sale of a business, net of cash sold						Proceeds from the sale of a business, net of cash sold	818		0
Other	Other	(1)		0		Other	0		(1)
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	3,622		(5,492)		Net cash provided by (used in) investing activities	(18)		(2,097)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuance of vehicle debt	Proceeds from issuance of vehicle debt	4,226		11,039		Proceeds from issuance of vehicle debt	1,096		3,661
Repayments of vehicle debt	Repayments of vehicle debt	(8,931)		(8,538)		Repayments of vehicle debt	(946)		(2,538)
Proceeds from issuance of non-vehicle debt	Proceeds from issuance of non-vehicle debt	1,553		1,726		Proceeds from issuance of non-vehicle debt	560		1,440
Repayments of non-vehicle debt	Repayments of non-vehicle debt	(854)		(2,437)		Repayments of non-vehicle debt	(1)		(851)
Payment of financing costs						Payment of financing costs	(7)		(9)
Advances to Hertz Holdings						Advances to Hertz Holdings	0		(3)

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

Table of Contents

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTOR-IN-POSSESSION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In millions)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Payment of financing costs		(11)		(33)
Advances to Hertz Holdings		(5)		(10)
Contributions from (distributions to) noncontrolling interests	Contributions from (distributions to) noncontrolling interests	(55)		49		Contributions from (distributions to) noncontrolling interests	(10)		0
Contributions from Hertz Holdings		0		750

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(4,077)		2,546		Net cash provided by (used in) financing activities	692		1,700
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	18		(7)		Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(12)		(4)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	494		(715)		Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	862		49
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period		1,360		1,410
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period(1)						Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period(1)	1,550		1,360
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	1,854	$	695	Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	2,412	$	1,409

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest, net of amounts capitalized:	Interest, net of amounts capitalized:					Interest, net of amounts capitalized:
Vehicle	Vehicle	$	275	$	331	Vehicle	$	69	$	103
Non-vehicle	Non-vehicle	78		182		Non-vehicle	30		26
Income taxes, net of refunds	Income taxes, net of refunds	(13)		12		Income taxes, net of refunds	(4)		5

Supplemental disclosures of non-cash information:	Supplemental disclosures of non-cash information:					Supplemental disclosures of non-cash information:
Purchases of revenue earning vehicles included in accounts payable, net of incentives	Purchases of revenue earning vehicles included in accounts payable, net of incentives	$	30	$	43	Purchases of revenue earning vehicles included in accounts payable, net of incentives	$	103	$	200
Sales of revenue earning vehicles included in vehicle receivables	Sales of revenue earning vehicles included in vehicle receivables	575		712		Sales of revenue earning vehicles included in vehicle receivables	119		1,043
Fleet payables included in liabilities subject to compromise		11		0

Purchases of non-vehicle capital assets included in accounts payable	Purchases of non-vehicle capital assets included in accounts payable	7		48		Purchases of non-vehicle capital assets included in accounts payable	6		32
Revenue earning vehicles and non-vehicle capital assets acquired through capital leases						Revenue earning vehicles and non-vehicle capital assets acquired through capital leases	21		4
Purchases of non-vehicle capital assets included in liabilities subject to compromise	Purchases of non-vehicle capital assets included in liabilities subject to compromise	20		0		Purchases of non-vehicle capital assets included in liabilities subject to compromise	16		0

(1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which are held for sale at December 31, 2020, as disclosed in Note 3, "Divestitures."

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

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1—Background

Hertz Global Holdings, Inc. ~~(Hertz Global~~("Hertz Global" when including its subsidiaries and VIEs and "Hertz Holdings" when excluding its subsidiaries and VIEs) was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns The Hertz Corporation ("Hertz" and interchangeably with Hertz Global, the "Company"), Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918. Hertz operates its vehicle rental business globally primarily through the Hertz, Dollar and Thrifty brands from company-owned, licensee and franchisee locations in the United States ("U.S."), Africa, Asia, Australia, Canada, the Caribbean, Europe, Latin America, the Middle East and New Zealand. ~~Through~~The Company also sells vehicles through Hertz Car Sales and operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets. As disclosed in Note 3, "Divestitures," on March 30, 2021 the Company completed the previously announced sale of substantially all of the assets and certain liabilities of its Donlen subsidiary ~~Hertz~~(the "Donlen Sale"), a business which provides vehicle leasing and fleet management services.

Voluntary Petitions for Bankruptcy

In March 2020, the World Health Organization declared COVID-19 a ~~pandemic resulting from the COVID-19 viral disease ("COVID-19").~~global pandemic. In response to COVID-19, local and national governments around the world instituted shelter-in-place and similar orders and travel restrictions, and airline and other travel decreased suddenly and dramatically. ~~Despite a strong start to the year, as~~As a result of the impact on travel demand, late in the first quarter of 2020, the Company ~~began experiencing~~experienced a high level of rental cancellations and a significant decline in forward bookings. In response, the Company began ~~adjusting its fleet levels to reflect the reduced level of demand by leveraging its multiple used-vehicle channels and negotiating with suppliers to reduce fleet commitments.~~

Additionally, the Company began aggressively managing costs, including implementing employee furlough programs affecting approximately 20,000 employees worldwide to align staffing levels with the slowdown in demand. The Company (i) initiated a restructuring program affecting approximately 11,000 employees in its U.S. RAC segment and U.S. corporate operations, the majority of which were previously furloughed; (ii) actively negotiated to abate or defer its airport rent and concession payments; (iii) substantially reduced capital expenditures; (iv) eliminated discretionary marketing spend; and (v) reduced commitments to purchase vehicles by approximately $4.0 billion from original commitments in its U.S. RAC segment, the majority of which were delivered during the second quarter of 2020. See Note 8, "Restructuring" for further information regarding the restructuring program disclosed above.

~~Although the Company had taken~~ aggressive ~~action~~actions to eliminate ~~costs,~~costs. However, it faced significant ongoing expenses, including monthly payments under its Amended and Restated Master Motor Vehicle Operating Lease and Servicing Agreement (Series 2013-G1) (the "Operating Lease") with Hertz Vehicle Financing LLC ("HVF"), pursuant to which Hertz leases from HVF vehicles used in the Company's U.S. rental car operations. Hertz Vehicle Financing II LP ("HVF II"), a special purpose financing subsidiary, issues asset-backed notes and lends the proceeds thereof to HVF to finance the acquisition of vehicles, which are then leased to Hertz pursuant to the Operating Lease. Monthly payments under the Operating Lease are variable and significant and are subject to volatility depending upon the changes in current market value estimates of the underlying leased vehicles. During April 2020, the Company engaged in discussions with various creditors to obtain relief from its obligations to make full rent payments under its Operating Lease. While such discussions were ongoing, to preserve liquidity, on April 27, 2020, Hertz did not make certain payments, including the full rent payments, in accordance with the Operating Lease.

On May 4, 2020, prior to the occurrence of the liquidation event with respect to the Series 2013-A Notes, Hertz, HVF, HVF II and DTG Operations, Inc. entered into a forbearance agreement (the “Forbearance Agreement”) with

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

holders (the “VFN Noteholders”) of the Series 2013-A Notes representing approximately 77% in aggregate principal amount of the Series 2013-A Notes. Pursuant to the Forbearance Agreement that became effective against all VFN Noteholders, the VFN Noteholders agreed to forbear from exercising their liquidation remedies. The Forbearance Agreement with the VFN Noteholders expired on May 22, 2020.

Concurrently with entering into the Forbearance Agreement, on May 4, 2020, Hertz entered into limited waiver agreements (collectively, the “Waiver Agreements”) with certain of the lenders (the “Lenders”) under its (i) Senior RCF/senior term loan facility, (ii) letter of credit facility, (iii) alternative letter of credit facility and (iv) U.S. Vehicle RCF (collectively, the “Facilities”). Pursuant to the Waiver Agreements, the Lenders agreed to (a) waive any default or event of default that could have resulted from the above referenced missed payment under the Operating Lease, (b) waive any default or event of default that had arisen as a result of Hertz’s failure to deliver its 2020 operating budget on a timely basis in accordance with the Facilities and (c) extend the grace period to cure a default with respect to Hertz’s obligation to reimburse drawings that occurred under certain letters of credit during the waiver period. The Waiver Agreements which were effective across the Facilities expired on May 22, 2020.

In accordance with the Forbearance Agreement and the Waiver Agreements, the Company made a payment of approximately $30 million reflecting certain variable payment elements of monthly rent under the Operating Lease, including an interest component on May 5, 2020.expenses.

~~Voluntary Petitions for Bankruptcy~~

~~In connection with the expiration of the Forbearance Agreement and the Waiver Agreements described above and the continuing economic impact from COVID-19, on~~On May 22, 2020 (the "Petition Date"), Hertz Global, Hertz and certain of their direct and indirect subsidiaries in the U.S. and Canada (collectively the "Debtors" and the ~~"Debtors- in-Possession"~~"Debtors-in-Possession") filed voluntary petitions for relief (collectively, the "Petitions") under chapter 11 of title 11 ("Chapter 11") of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Chapter 11 cases (the "Chapter 11 Cases") are being jointly administered for procedural purposes only under the caption In ~~re: the~~re The Hertz Corporation, et al., Case No. 20-11218 (MFW). ~~Additional information about~~

The Debtors filed with the Bankruptcy Court a proposed Joint Chapter 11 Plan of Reorganization of the Debtors, dated as of March 1, 2021, and a related proposed Disclosure Statement. The Debtors subsequently filed with the Bankruptcy Court a proposed First Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of March 29, 2021; a proposed Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 3, 2021; a proposed Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 10, 2021; a proposed Second Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, dated as of April 14, 2021 and April 15, 2021, respectively; a proposed Third Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 16, 2021; and a proposed Fourth Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 21, 2021, which Disclosure Statement the Debtors further updated on April 21, 2021. On April 22, 2021, the Debtors filed the solicitation version of the Fourth Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors (the "Proposed Plan"), and the solicitation version of the Disclosure Statement (the "Disclosure Statement").

The Disclosure Statement describes, among other things, the events leading to the Chapter 11 Cases; the Debtors contemplated financial restructuring (the “Restructuring”); the proposed plan of reorganization; certain events that have occurred or are anticipated to occur during the Chapter 11 Cases, including ~~access~~the solicitation of votes to ~~documents filed~~approve the Proposed Plan from certain of the Debtors’ stakeholders; certain risk factors related to the Plan, certain tax considerations, and certain other aspects of the Restructuring. The Disclosure Statement and solicitation

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

procedures with respect to the Proposed Plan was approved by the Bankruptcy Court at a hearing held on April 21, 2021 and an order to that effect was entered on April 22, 2021. The Proposed Plan is ~~available online at https://restructuring.primeclerk.com/hertz,~~now subject to a ~~website administered~~vote by ~~Prime Clerk,~~the Debtors' stakeholders and a subsequent confirmation hearing of the Bankruptcy Court, currently scheduled for June 10, 2021. In addition to approval by the Bankruptcy Court, consummation of the Proposed Plan remains subject to the satisfaction of other conditions.

Under the Proposed Plan, Centerbridge Partners, L.P., Warburg Pincus LLC, ~~("Prime Clerk"~~and Dundon Capital Partners, LLC (collectively, the "PE Sponsors") and certain holders of over 85% of the Debtors' unsecured notes (the "Supporting Noteholders," and together with the PE Sponsors the "Plan Sponsors") have committed to provide equity capital to fund the Debtors' exit from Chapter 11 as reflected in definitive executed documents, including (1) an Equity Purchase and Commitment Agreement (the "EPCA"), (2) a ~~third-party bankruptcy~~Plan Support Agreement and (3) a Bridge Financing Commitment for Hertz International Ltd. (collectively, along with the Proposed Plan and the Disclosure Statement, the "Transaction Documents"). Under the Proposed Plan, the Debtors anticipate exiting from Chapter 11 with approximately $2.2 billion of global liquidity (inclusive of capacity under the anticipated exit revolving credit facility) and only $1.3 billion in non-vehicle debt (exclusive of ABS facilities and a revolving credit facility).

The Proposed Plan is supported by the Supporting Noteholders, which comprise the vast majority of creditors in the largest class of claims that are voting on the Proposed Plan and ~~noticing agent. The information~~the Official Committee of Unsecured Creditors appointed in the Chapter 11 Cases. As set forth in the Transaction Documents:

•the Proposed Plan will raise approximately $3.9 billion in cash proceeds, comprised of:

◦$565 million from the purchase of common stock in the reorganized entity by the Plan Sponsors;

◦$1.6 billion from the purchase of common stock pursuant to the rights offering contemplated by the Proposed Plan, which the Plan Sponsors have committed to ensure is fully funded pursuant to the terms of the EPCA;

◦$385 million from the purchase of preferred stock by plan sponsors Centerbridge Partners, L.P. and Warburg Pincus LLC; and

◦$1.3 billion in proceeds from the Company's anticipated new exit term loan facility.

•Such cash proceeds will be used, in part, to provide the following distributions to the Company's stakeholders pursuant to the terms of the Proposed Plan:

◦administrative priority and secured claims will be paid in cash in full;

◦the holders of the Company's €725 million European Vehicle Notes will be paid in cash in full;

◦the holders of claims with respect to the unsecured Senior Notes and holders of claims with respect to the Alternative Letter of Credit Facility will receive approximately 48.2% of the equity in the reorganized entity and the right to purchase an additional $1.6 billion of equity in the reorganized entity;

◦the holders of general unsecured claims will receive cash payments of not more than $550 million in the aggregate, which the Company estimates will provide a recovery of approximately 100 percent; and

◦the Company's existing equity will be cancelled and existing equity holders will receive new six-year warrants to purchase, in the aggregate 4%, of the reorganized entity's common stock, subject to certain conditions, with an exercise price to be determined based on ~~this web site is not incorporated by reference and does not constitute part~~an equity value of ~~this Form 10-Q.~~the reorganized entity of $6.1 billion.

In ~~May 2020, the Bankruptcy Court approved motions filed by the Debtors that were designed primarily to mitigate the impact~~light of the Chapter 11 Cases on the Company’s operations, customers and employees. The Debtors are authorized to conduct their business activities in the ordinary course, and pursuant to orders entered by the Bankruptcy Court, the Debtors are authorized to, among other things and subject to the terms and conditionscontinuing interest from an alternative potential plan sponsorship group, consisting of ~~such orders (i) pay employees’ wages and related obligations; (ii) pay certain taxes; (iii) pay critical vendors~~Certares Opportunities LLC (“Certares”), Knighthead Capital Management, LLC (“Knighthead”), Apollo Capital Management, LP (“Apollo”), and certain ~~fees to airport authorities~~of each of their affiliates (together with Certares, Knighthead, and ~~provide adequate protection; (iv) continue to maintain certain customer programs; (v) maintain their insurance program; (vi) use certain cash collateral~~Apollo the “Alternative Sponsor Group”), on ~~an interim basis; and (vii) continue their cash management system.~~

~~On July 24, 2020,~~April 28, 2021, the Bankruptcy Court entered an order ~~related to the Operating Lease~~ (the ~~"Interim Lease Order"~~“Bid Procedures Order”) ~~which,~~, among other things, directed the Debtors to (i) make $650 million of base rent payments under the Operating Lease to the HVF trustee in the amount of 6 equal monthly payments of approximately $108 million commencing in July 2020 through December 2020; (ii) dispose of at least 182,521 lease vehicles between June 1, 2020establishing bidding and December 31, 2020, inclusive, where the proceeds of the dispositions, subject to certain exclusions set forth in the Interim Lease Order, will be used to make payments under the Operating Lease; (iii) fund interest payments on the Operating Lease from draws on certain existing letters of credit, which are reimbursable by the Debtors; and (iv) suspend litigationauction procedures relating to the ~~Operating Lease until January 15, 2021 with all parties reserving all rights with respect to future litigation claims. For the period from June 1, 2020 through September 30, 2020, the Company disposed~~submission of ~~approximately 165,000 vehicles which are associated with the Interim Lease Order.~~alternative plan proposals.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~In September 2020,~~On May 2, 2021, the Alternative Sponsor Group submitted an alternative plan proposal to the Debtors (the “Alternative Plan Proposal”).

On May 4, 2021, the Company determined that the Alternative Plan Proposal constitutes a “Superior Proposal” as that term is defined under the Debtors’ EPCA with the Plan Sponsors dated as of April 3, 2021 and approved by the Bankruptcy Court ~~authorized~~on April 22, 2021. Pursuant to the ~~rejection of certain unexpired leases~~Bid Procedures Order, the Plan Sponsors will have until 5:00 p.m., Eastern Time, on May 7, 2021 to indicate if they intend to counter the Alternative Plan Proposal. If the Plan Sponsors determine to counter the Alternative Plan Proposal, an auction (the ~~"Lease Rejection Orders"~~“Auction”) ~~comprised of 257 off airport and 15 airport locations in the Company's U.S. RAC segment. In October 2020,~~will be conducted on May 10, 2021. A hearing before the Bankruptcy Court ~~authorized~~to approve the ~~rejection~~results of ~~certain unexpired leases (the "October Lease Rejections Orders") comprised of 29 airport and 24 off airport locations in~~ the ~~Company's U.S. RAC segment. See Note 7, "Leases" for further details.~~Auction along with supplemental solicitation materials, if any, will be conducted on May 14, 2021.

This Quarterly Report on Form 10-Q is not a solicitation of votes to accept or reject the Proposed Plan. Information contained in the Proposed Plan and the Disclosure Statement is subject to change, whether as a result of additional amendments or supplements to the Proposed Plan or Disclosure Statement or otherwise. The documents and other information available via website or elsewhere are not part of this Quarterly Report on Form 10-Q and shall not be deemed incorporated herein.

Debtors-In-Possession

The Debtors are currently operating as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtors-in-possession under the Bankruptcy Code, the Debtors are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

Automatic Stay

Subject to certain specific exceptions under the Bankruptcy Code, the Petitions automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to obligations of the Debtors incurred prior to the Petition Date ("Pre-petition"). ~~Absent an order from the Bankruptcy Court, substantially~~Substantially all of the Debtors’ Pre-petition liabilities are subject to ~~settlement under~~resolution as provided in the Bankruptcy Code.

Potential Claims

The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. As part of the Chapter 11 Cases, parties believing that they have claims or causes of action against the Debtors may file proofs of claim evidencing such claims. Certain holders of Pre-petition claims that are not governmental units were required to file proofs of claim by the deadline for general claims, which was on October 21, 2020 (the “Bar Date”).

The Debtors' have received approximately ~~13,400~~15,000 proofs of claim for an amount of approximately $104.9 billion. Such amount includes duplicate claims across multiple debtor legal entities. These claims ~~will be~~are in the process of being reconciled to amounts recorded in the Company's accounting records. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate. The Company may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. As a result of this process, the Company may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise. As of the ~~date~~filing of this Quarterly Report on Form 10-Q, the Company’s assessment of the validity of claims received has not been ~~completed.~~completed, but the Company does not anticipate that the amount of such claims will exceed the $550 million in cash, plus the net proceeds of certain claims of the Company, currently contemplated under the Proposed Plan. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable

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Unaudited

time to complete and likely will continue after the Debtors emerge from bankruptcy. For additional information on the anticipated claims settlement process, please refer to the Disclosure Statement.

Borrowing Capacity and Availability

The filing of the Chapter 11 Cases constituted defaults, termination events and/or amortization events with respect to certain of the Company's existing debt obligations. As a result of the filing of the Chapter 11 Cases, the remaining capacity under almost all of the Company's revolving credit facilities was terminated, as disclosed in Note 6, "Debt." Consequently, the proceeds of sales of vehicles which serve as collateral for such vehicle finance facilities must be applied to the payment of the related indebtedness of the Non-Debtor Financing Subsidiaries (as defined in Note 6, "Debt") and are not otherwise available to fund the Company’s operations. Additionally, the Company is precluded from accessing any of its subordinated investment in the vehicle collateral until the related defaults are waived or the third party funding under those facilities has been retired, either through the monetization of the underlying collateral or the refinancing of the related indebtedness. Additionally, proceeds from vehicle receivables, excluding manufacturer rebates, as of March 31, 2021 and ongoing vehicle sales must be applied to vehicle debt in amortization.

The Company had waivers related to the filing of the Chapter 11 Cases under its European ABS and U.K. Financing Facility which, in April 2021, have been superseded by a comprehensive restructuring of each the European ABS and U.K. Financing Facility, as disclosed in Note 6, "Debt."

The Company's inability to retain any proceeds from the sale of vehicles under its U.S. ABS programs means that its sources of liquidity are primarily its unrestricted cash and unrestricted cash equivalents on hand, cash generated from its operations and up to $800 million from its debtor-in-possession financing facility (the "DIP Credit Agreement"). As of March 31, 2021, the Company had total liquidity of $1.7 billion comprised of $900 million of remaining, committed availability under the DIP Credit Agreement and $812 million of unrestricted cash and unrestricted cash equivalents, net of the $275 million minimum liquidity requirement under the DIP Credit Agreement, which the Company believes will be sufficient to fund its operations through approximately March 31, 2022, assuming it does not experience any unforeseen liquidity needs before then, which could result in the utilization of the liquidity in advance of March 31, 2022.

On January 13, 2021, the Bankruptcy Court entered an order authorizing the Debtors to enter into a Canadian fleet financing facility up to CAD$400 million. On January 27, 2021, TCL Funding Limited Partnership, a bankruptcy remote, indirect, wholly-owned, special purpose subsidiary of Hertz, entered into the Funding LP Series 2021-A which provides for aggregate maximum borrowings of CAD$350 million on a revolving basis. Subject to initial availability, the initial draw of CAD$120 million was used to pay the outstanding obligations under the Funding LP Series 2015-A Notes, including any unpaid default interest.

On January 20, 2021, the Bankruptcy Court authorized an extension (the "Second Lease Order") of the July 24, 2020 order related to the Company's Amended and Restated Master Motor Vehicle Operating and Servicing Agreement (Series 2013 G1) (the "Operating Lease"), which extends the forbearance period related to Operating Lease to September 30, 2021, provided that the Debtors dispose of 121,510 lease vehicles, at least 113,381 of which will be non-program vehicles, and reach a minimum cumulative vehicle disposition proceeds of $2.0 billion by September 30, 2021. Additionally, the Second Lease Order directed the Debtors to (i) have no more than 157,262 lease vehicles by September 30, 2021 and (ii) make $756 million of base rent payments under the Operating Lease to the Hertz Vehicle Financing ("HVF") trustee in the amount of 9 equal monthly payments of $84 million commencing in the period January 2021 through September 2021. Of the 121,510 lease vehicles that the Debtors are obligated to dispose of, as of March 31, 2021 the Debtors have disposed approximately 14,000 lease vehicles, of which 9,000 were non-program vehicles.

In the first quarter of 2021, the Bankruptcy Court authorized the rejection of certain unexpired leases (the "Lease Rejection Orders") comprised of 278 off airport and 26 airport locations in the Company's U.S. RAC segment. See Note 7, "Leases," for further details.

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Unaudited

~~manufacturer rebates, as of September 30, 2020 and ongoing vehicle sales must be applied to vehicle debt in amortization.~~

The Company currently has waivers related to the filing of the Chapter 11 Cases under its European Vehicle Notes, European ABS and U.K. Fleet Financing facility that were extended to December 31, 2020, as disclosed in Note 6, "Debt."

The Company's inability to access its Senior RCF facility or retain any proceeds from the sale of vehicles under its U.S. ABS programs means that its source of liquidity is almost entirely its cash and cash equivalents on hand, cash generated from its operations and other new financing opportunities to the extent available. As of September 30, 2020, the Company had $1.1 billion of unrestricted cash and unrestricted cash equivalents which the Company believes will be sufficient to fund its operations through approximately December 31, 2020, assuming it does not experience any unforeseen liquidity needs before then, which could result in the utilization of the liquidity in advance of December 31, 2020. The Company believes, however, that if, among other things, (i) it cannot successfully extend the international vehicle debt waivers that expire on December 31, 2020, as disclosed in Note 6, "Debt," (ii) it cannot successfully implement a plan of reorganization, and (iii) there is not a significant recovery in the economic conditions in its major markets, its available cash and cash equivalents and cash generated by its operations will not be sufficient to fund operating requirements for the next twelve months. Consequently, the Debtors pursued vehicle financing for certain of their operations, either through waivers on existing facilities or entering into new arrangements to fund vehicles and vehicle leases, to supplement their sources of funding.

On ~~October 12, 2020,~~April 15, 2021, the ~~Bankruptcy Court entered~~Company obtained commitments with respect to a senior secured revolving credit facility in an ~~order authorizing Hertz~~aggregate committed amount of up to $1.5 billion and ~~Donlen Corporation to enter into certain agreements in connection with~~ a ~~new asset-based securitization~~senior term loan facility ~~with a newly formed non-Debtor special purpose entity, Donlen Fleet Lease Funding LLC ("DFLF"). On October 16, 2020, DFLF issued the Series 2020-1 Notes~~ in an aggregate principal amount ~~up to $400 million pursuant to this new facility, as disclosed in~~of $1.3 billion. See Note 6, ~~"Debt.~~"Debt," for additional information.

~~On October 29, 2020, the Bankruptcy Court entered an order authorizing the Debtors to obtain certain debtor-in-possession financing.~~In accordance with the Bankruptcy Court’s order, on October 30, 2020, Hertz, as borrower, and Hertz Global and certain of its subsidiaries located in the United States and Canada, in each case that are debtors in these Chapter 11 Cases, as guarantors, entered into a Senior Secured Superpriority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”). The DIP Credit Agreement provides for a superpriority secured debtor-in-possession credit facility comprised of delayed-draw term loans in an aggregate amount of up to $1.65 billion (the “DIP Loans”), of which (i) up to $1.0 billion can be used as equity for new interim fleet financing, giving the Debtors the ability to replenish their vehicle fleet in the future, and (ii) up to $800 million can be used for working capital and general corporate purposes. The DIP Loans are available in multiple draws of at least (i) $250 million each, or (ii) the remaining available commitments if such commitments are less than $250 million. The DIP Loans bear interest at a rate of LIBOR plus 7.25% (subject to a 1.00% floor), which is reduced to LIBOR plus 6.75% upon a significant repayment of Pre-petition first lien debt.~~See Note 6, "Debt" for further details.~~

On November 5, 2020, Hertz Global issued a press release announcing that it secured commitments for fleet financing totaling $4 billion and has filed a motion for approval of Hertz entering into the documentation for the financing by the Bankruptcy Court. Upon approval, and together with the up to $1 billion of the Company's debtor-in-possession financing that may be used for equity in the fleet financing subsidiary, the Company will have access to up to $5 billion in total funding to support its fleet financing needs.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is contingent upon its ability to successfully implement a plan of reorganization, among other factors, and the realization of assets and the satisfaction of liabilities are subject to uncertainty. Further, any plan of reorganization could materially change the amounts of assets and liabilities reported in the accompanying unaudited condensed consolidated financial statements. The

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Chapter 11 Cases. As a result of the Company's financial condition, defaults under certain debt agreements as disclosed in Note 6, "Debt," and the risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that the Company will be able to continue as a going concern for one year from the issuance date of this Quarterly Report on Form 10-Q.

~~NYSE Delisting and Transfer to the Over-the-Counter ("OTC") Market~~

On May 26, 2020, the Company received a letter from the staff of NYSE Regulation, Inc. that it had determined to commence proceedings to delist the common stock of Hertz Global from the NYSE in light of the Company’s disclosure on May 22, 2020 that it had commenced voluntary petitions for reorganization under Chapter 11. The Company appealed the determination in a timely manner and requested a hearing before the NYSE. On October 15, 2020, the NYSE heard the Company’s appeal. On October 29, 2020, the NYSE informed the Company, and publicly announced its determination following such appeal, that Hertz Global common stock is no longer suitable for listing on the NYSE and that the NYSE has suspended trading in Hertz Global's common stock (NYSE ticker symbol: HTZ) after the market close on October 29, 2020. On October 30, 2020, the NYSE applied to the Securities and Exchange Commission pursuant to Form 25 to remove the common stock of Hertz Global from listing and registration on the NYSE at the opening of business on November 10, 2020.

~~As a result of the suspension and expected delisting, Hertz Global's common stock began trading exclusively on the OTC market on October 30, 2020 under the symbol HTZGQ.~~

Note 2—Basis of Presentation and Recently Issued Accounting Pronouncements

Basis of Presentation

This Quarterly Report on Form 10-Q combines the quarterly reports on Form 10-Q for the quarterly period ended ~~September 30, 2020~~March 31, 2021 of Hertz Global and Hertz. Hertz Global consolidates Hertz for financial statement purposes, therefore, disclosures that relate to activities of Hertz also apply to Hertz Global. In the sections that combine disclosure of Hertz Global and Hertz, this report refers to actions as being actions of the Company, or Hertz Global, which is appropriate because the business is one enterprise and Hertz Global operates the business through Hertz. When appropriate, Hertz Global and Hertz are named specifically for their individual disclosures and any significant differences between the operations and results of Hertz Global and Hertz are separately disclosed and explained.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The Company's vehicle rental operations are typically a seasonal business, with decreased levels of business in the winter months and heightened activity during the spring and summer months for the majority of countries where the Company generates revenues.

Effective on the Petition Date, the Company applied accounting standards applicable to reorganizations, Accounting Standards Codification 852 - Reorganizations, in preparing the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020 and the unaudited condensed consolidated financial statements as of and for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 which requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, Pre-petition obligations of the Debtors that may be impacted by the Chapter 11 Cases have been classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2021 and December 31, 2020. These liabilities are reported at the amounts the Company anticipates will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. See Note ~~16,~~15, "Liabilities Subject to Compromise," for additional information. In addition, certain charges related to the Chapter 11 Cases are recorded as reorganization items, net in the accompanying unaudited condensed consolidated statements of operations for the three months ended March 31, 2021. See Note 16, "Reorganization Items, Net," for additional information.

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Unaudited

~~three and nine months ended September 30, 2020. See Note 17, "Reorganization Items, Net," for additional information.~~

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

The December 31, ~~2019~~2020 unaudited condensed consolidated balance sheet data is derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with information included in the Company's Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~"2019~~"2020 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC") on February ~~25, 2020.~~

~~Certain prior period amounts have been reclassified to conform to current period presentation.~~26, 2021.

Principles of Consolidation

The unaudited condensed consolidated financial statements of Hertz Global include the accounts of Hertz Global, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The unaudited condensed consolidated financial statements of Hertz include the accounts of Hertz, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The Company consolidates a VIE when it is deemed the primary beneficiary of the VIE. The Company accounts for its investment in joint ventures using the equity method when it has significant influence but not control and is not the primary beneficiary of the joint venture. All significant intercompany transactions have been eliminated in consolidation.

Recently Issued Accounting Pronouncements

~~Adopted~~

~~Measurement of Credit Losses on Financial Instruments~~

In June 2016, the Financial Accounting Standards Board (the "FASB") issued guidance that sets forth a current expected credit loss impairment model for financial assets, which replaces the current incurred loss model, and issued amendments and updates to the new standard in 2018 and 2019. This model requires a financial asset (or group of financial assets), including trade receivables, measured at amortized cost to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The Company adopted this guidance when effective, on January 1, 2020, using a modified retrospective transition method. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows.

~~Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement~~

In August 2018, the FASB issued guidance on a customer's accounting for implementation fees paid in a cloud computing service contract arrangement that addresses which implementation costs to capitalize as an asset and which costs to expense. Capitalized implementation fees are to be expensed over the term of the cloud computing arrangement, and the expense is required to be recognized in the same line item in the income statement as the associated hosting service expenses. The entity is also required to present the capitalized implementation fees on the balance sheet in the same line item as the prepayment for hosting service fees associated with the cloud computing arrangement. The Company adopted this guidance when effective, on January 1, 2020, using a prospective transition method. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

The Company has hosting arrangements in connection with its Enterprise Resource Planning systems. Prior to the adoption of this guidance, the Company capitalized certain implementation costs for its hosting arrangements in intangible assets, net, in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2019. Subsequent to the adoption of this guidance on January 1, 2020, the Company records implementation fees incurred in connection with its hosting arrangements in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020.

~~Simplifying the Accounting for Income Taxes~~

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions in existing guidance and improves consistency in application by clarifying and amending existing guidance. This guidance is effective for annual periods beginning after December 15, 2020, and interim periods within those annual periods. On July 1, 2020, the Company adopted this guidance early, as permitted, on a prospective basis, where adjustments as of January 1, 2020 were not material; therefore adoption of this guidance had no material impact on the Company's financial position, results of operations or cash flows.

Not Yet Adopted

~~Facilitation of the Effects~~Scope of Reference Rate Reform

In ~~March 2020,~~January 2021, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued guidance that ~~provides optional expedients and exceptions~~clarifies that entities with derivative instruments affected by changes to the interest rates used for ~~contracts, hedging relationships and other transactions that reference LIBOR~~discounting, margining or ~~another reference rate expected to be discontinued~~contract price alignment due to reference rate reform ~~initiatives. This~~may elect to apply certain optional expedients and exceptions, including contract modification relief, provided in Topic 848. Entities may elect to apply the guidance ~~is effective~~on contract modifications either (1) retrospectively as of any date from the beginning of any interim period that includes March 12, 2020 ~~through December 31, 2022 where~~or (2) prospectively to new modifications from any date in an interim period that includes or is after January 7, 2021, up to the ~~transition method varies depending upon the specific expedient or exception.~~date that financial statements are available to be issued. The Company is in the process of assessing the available expedients and exceptions and, if applicable, the method and timing of adoption.

Note 3—Divestitures

Donlen Sale

On March 30, 2021, the Company completed the previously announced Donlen Sale. The Company recognized a pre-tax gain in its corporate operations of $392 million, net of the impact of foreign currency adjustments, based on the difference in cash proceeds received of $891 million less $543 million net book value of assets sold plus a $45 million receivable in connection with the sale recorded in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2021. The proceeds from the sale are subject to certain post-closing adjustments based on the level of assumed indebtedness, working capital and fleet equity which the Company expects to be finalized during the second quarter of 2021. On March 30, 2021, the Company and the buyer entered into a transition services agreement which provides for certain transitional services in connection with the Donlen Sale.

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Unaudited

Sale of Non-vehicle Capital Assets

During the first quarter of 2020, the Company received additional cash from the sale of certain non-vehicle capital assets in its U.S. Rental Car segment, which was completed in the fourth quarter of 2019, and recognized an additional $20 million pre-tax gain on the sale, which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statement of operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2020.

Sale of Marketable Securities

During the first quarter of 2020, the Company sold marketable securities for $74 million and recognized an immaterial gain on the sale in its corporate operations, which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statement of operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2020.

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~~Unaudited~~

Note 4—Revenue Earning Vehicles

The components of revenue earning vehicles, net are as follows:


(In millions)	(In millions)	September 30, 2020		December 31, 2019		(In millions)	March 31, 2021		December 31, 2020
Revenue earning vehicles	Revenue earning vehicles	$	11,060	$	16,626	Revenue earning vehicles	$	7,800	$	7,492
Less accumulated depreciation	Less accumulated depreciation	(2,892)		(3,159)		Less accumulated depreciation	(1,520)		(1,467)
		8,168		13,467			6,280		6,025
Revenue earning vehicles held for sale, net(1)	Revenue earning vehicles held for sale, net(1)	283		322		Revenue earning vehicles held for sale, net(1)	80		37
Revenue earning vehicles, net	Revenue earning vehicles, net	$	8,451	$	13,789	Revenue earning vehicles, net	$	6,360	$	6,062

~~Depreciation~~(1) Represents the carrying amount of ~~revenue earning~~ vehicles ~~and lease charges includes~~currently placed on the ~~following:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Depreciation of revenue earning vehicles $ 525 $ 681 $ 1,687 $ 1,906
(Gain) loss on disposal of revenue earning vehicles, net (187) (33) (81) (73)
Lease charges 9 19 28 59
Depreciation of revenue earning vehicles and lease charges $ 347 $ 667 $ 1,634 $ 1,892
Company's retail lots for sale or actively in the process of being sold through other disposition channels.

Note 5—Goodwill and Intangible Assets, Net

~~Technology-related Intangible and Other Assets~~

Due to uncertainty surrounding the Company's financial ability to complete certain information technology projects as a result of COVID-19 and the filing of the Chapter 11 Cases as disclosed in Note 1, "Background," the Company concluded in the second quarter of 2020 that there was an impairment of such technology-related intangible assets and capitalized cloud computing implementation costs. In the second quarter of 2020, the Company recorded an impairment charge of $193 million in its corporate operations, representing a full impairment of the carrying value of such assets as of June 30, 2020 of $124 million and $69 million of technology-related intangible assets and other assets, respectively.

Recoverability of Goodwill and Indefinite-lived Intangible Assets

~~Due to~~As of March 31, 2021, the ~~impact related to COVID-19, the Company's reduction in cash flow projections, the filing of the Chapter 11 Cases and declines in the stock price of Hertz Global, the~~ Company quantitatively tested the recoverability of its goodwill and indefinite-lived intangible assets asin the International RAC segment due to continued adverse impacts from COVID-19 and the Company's reduction in cash flow projections. The quantitative fair value test utilized the Company's most recent cash flow projections, including a range of ~~June 30, 2020,~~potential outcomes, along with a long-term growth rate of 1% and ~~based~~a range of discount rates between 13% and 15%. Based on the quantitative ~~test,~~tests, no ~~impairment was~~impairments were recorded in the ~~second~~first quarter of ~~2020.~~2021. However, the fair ~~values~~value of certain tradenames, which are indefinite-lived intangible assets, ~~in the Company's U.S. RAC and International RAC segments~~ were in excess by ~~3% and 18%~~6% of the carrying ~~values~~value of ~~$934 million and $560 million, respectively.~~

The Company tests the recoverability of its goodwill and indefinite-lived intangible assets by performing an impairment analysis on an annual basis, as of October 1, and at interim periods when circumstances require as$540 million. As a result of ~~a triggering event, as defined by~~the foregoing considerations, along with the consideration of other indicators noted in Accounting Standards Codification 350 – Intangibles, Goodwill and Other (“ASC 350”). The Company determined that the projected revenues, expenses and cash flows, reflecting the expected duration and extent of impact to its business, customers, economy and the travel industry from COVID-19, and the impact of the Chapter 11 Cases, were materially consistent with the assumptions utilized in the Company’s June 30, 2020 quantitative impairment assessment. As a result of the foregoing considerations, along with the

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~~Unaudited~~

~~consideration of other indicators noted in ASC 350,~~, the Company concluded there were no indicators of impairment triggered ~~in accordance with ASC 350~~for the U.S. RAC segment in the ~~third~~first quarter of ~~2020.~~2021.

Further deterioration in the general economic conditions in the travel industry, the Company’s cash flows and the Company's ability to obtain future financing to maintain its fleet or the weighted average cost of capital assumptions may result in an impairment charge to earnings in future quarters. The Company will continue to closely monitor actual results versus its expectations as well as any significant changes in the Company's expected timing of emergence from bankruptcy, market events or conditions, including the impact of COVID-19 on the Company's business and the travel industry, and the resulting impact to its assumptions about future estimated cash flows and the weighted average cost of capital. If the Company's expectations of the operating results, both in magnitude or

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Unaudited

timing, do not materialize, or if its weighted average cost of capital increases, the Company may be required to record goodwill and indefinite-lived intangible asset impairment charges, which could be material.

Note 6—Debt

The Company's debt, including its available credit facilities, consists of the following ($ in millions):

Facility Weighted-Average Interest Rate
as of
September 30, 2020 Fixed or
Floating
Interest
Rate Maturity September 30,
2020 December 31,
2019
Non-Vehicle Debt
Senior Term Loan(1)
Floating 6/2023 $ 0 $ 660
Senior RCF(1)
Floating 6/2021 0 0
Senior Notes(1)(2)
Fixed 10/2022-1/2028 0 2,700
Senior Second Priority Secured Notes(1)
Fixed 6/2022 0 350
Promissory Notes(1)
Fixed 1/2028 0 27
Alternative Letter of Credit Facility(1)
Floating 11/2023 0 0
Senior RCF Letter of Credit Facility(1)
Floating 6/2021 0 0
Other Non-Vehicle Debt 7.26% Fixed Various 18 18
Unamortized Debt Issuance Costs and Net (Discount) Premium 0 (34)
Total Non-Vehicle Debt Not Subject to Compromise 18 3,721
Non-Vehicle Debt Subject to Compromise
Senior Term Loan 3.50% Floating 6/2023 656 0
Senior RCF 3.41% Floating 6/2021 615 0
Senior Notes(2)
6.11% Fixed 10/2022-1/2028 2,700 0
Senior Second Priority Secured Notes 7.63% Fixed 6/2022 350 0
Promissory Notes 7.00% Fixed 1/2028 27 0
Alternative Letter of Credit Facility(6)
5.25% Floating 11/2023 82 0
Senior RCF Letter of Credit Facility 5.50% Floating 6/2021 11 0
Unamortized Debt Issuance Costs and Net (Discount) Premium (37) 0
Total Non-Vehicle Debt Subject to Compromise 4,404 0


Facility	Weighted-Average Interest Rate as of March 31, 2021	Fixed or Floating Interest Rate	Maturity	March 31, 2021		December 31, 2020
Non-Vehicle Debt







Senior Secured Superpriority Debtor-in-Possession Credit Agreement	8.25%	Floating	12/2021	$	750	$	250
Other Non-Vehicle Debt	8.25%	Fixed	Various	16		18
Unamortized Debt Issuance Costs and Net (Discount) Premium				(26)		(25)
Total Non-Vehicle Debt Not Subject to Compromise				740		243
Non-Vehicle Debt Subject to Compromise
Senior Term Loan	3.50%	Floating	6/2023	656		656
Senior RCF	3.38%	Floating	6/2021	615		615
Senior Notes(1)	6.11%	Fixed	10/2022-1/2028	2,700		2,700
Senior Second Priority Secured Notes	7.63%	Fixed	6/2022	350		350
Promissory Notes	7.00%	Fixed	1/2028	27		27
Alternative Letter of Credit Facility(2)	5.25%	Floating	11/2023	142		114
Senior RCF Letter of Credit Facility	5.50%	Floating	6/2021	34		17
Letter of Credit Facility	5.50%	Floating	6/2021	23		0
Unamortized Debt Issuance Costs and Net (Discount) Premium				(36)		(36)
Total Non-Vehicle Debt Subject to Compromise				4,511		4,443
Vehicle Debt
HVF II U.S. ABS Program
HVF II U.S. Vehicle Variable Funding Notes
HVF II Series 2013-A(3)(4)	3.41%	Floating	3/2022	1,665		1,940
				1,665		1,940
HVF II U.S. Vehicle Medium Term Notes

HVF II Series 2015-3(4)	3.78%	Fixed	9/2020	144		163
HVF II Series 2016-2(4)	4.12%	Fixed	3/2021	232		263
HVF II Series 2016-4(4)	3.78%	Fixed	7/2021	165		187
HVF II Series 2017-1(4)	4.03%	Fixed	10/2020	176		199
HVF II Series 2017-2(4)	4.45%	Fixed	10/2022	145		164
HVF II Series 2018-1(4)	3.93%	Fixed	2/2023	414		468
HVF II Series 2018-2(4)	4.40%	Fixed	6/2021	84		94
HVF II Series 2018-3(4)	4.69%	Fixed	7/2023	84		95

2221

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

Facility Weighted-Average Interest Rate
as of
September 30, 2020 Fixed or
Floating
Interest
Rate Maturity September 30,
2020 December 31,
2019
Vehicle Debt
HVF II U.S. ABS Program
HVF II U.S. Vehicle Variable Funding Notes
HVF II Series 2013-A(3)(6)
3.36% Floating 3/2022 2,501 2,644
2,501 2,644
HVF II U.S. Vehicle Medium Term Notes
HVF II Series 2015-1(3)
N/A Fixed 3/2020 0 780
HVF II Series 2015-3(3)
3.44% Fixed 9/2020 207 371
HVF II Series 2016-2(3)
3.76% Fixed 3/2021 333 595
HVF II Series 2016-4(3)
3.44% Fixed 7/2021 237 424
HVF II Series 2017-1(3)
3.71% Fixed 10/2020 252 450
HVF II Series 2017-2(3)
4.10% Fixed 10/2022 207 350
HVF II Series 2018-1(3)
3.74% Fixed 2/2023 592 1,000
HVF II Series 2018-2(3)
4.17% Fixed 6/2021 119 200
HVF II Series 2018-3(3)
4.49% Fixed 7/2023 120 200
HVF II Series 2019-1(3)
4.23% Fixed 3/2022 418 700
HVF II Series 2019-2(3)
3.86% Fixed 5/2024 447 750
HVF II Series 2019-3(3)
3.11% Fixed 12/2024 446 800
3,378 6,620
Donlen U.S. ABS Program
HFLF Variable Funding Notes
HFLF Series 2013-2(4)(6)
6.11% Floating 10/2020-7/2022 382 286
382 286
HFLF Medium Term Notes
HFLF Series 2016-1(4)
N/A Both 1/2020-2/2020 0 34
HFLF Series 2017-1(4)
2.72% Both 10/2020-9/2022 115 229
HFLF Series 2018-1(4)
2.66% Both 10/2020-9/2022 292 462
HFLF Series 2019-1(4)
2.27% Both 10/2020-9/2022 456 650
863 1,375
Vehicle Debt - Other
U.S. Vehicle RCF N/A Floating 6/2021 0 146
European Vehicle Notes(5)
5.07% Fixed 10/2021-3/2023 846 810
European ABS(3)
1.60% Floating 11/2021 410 766
Hertz Canadian Securitization(3)(6)
3.68% Floating 3/2021 119 241
Donlen Canadian Securitization(3)
1.63% Floating 12/2022 27 24
Australian Securitization(3)
1.74% Floating 6/2021 106 177
New Zealand RCF 2.94% Floating 6/2021 37 50
U.K. Financing Facility 3.00% Floating 10/2020-8/2023 122 247
Other Vehicle Debt 3.60% Floating 10/2020-11/2024 28 29

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

Facility Weighted-Average Interest Rate
as of
September 30, 2020 Fixed or
Floating
Interest
Rate Maturity September 30,
2020 December 31,
2019
1,695 2,490
Unamortized Debt Issuance Costs and Net (Discount) Premium (66) (47)
Total Vehicle Debt Not Subject to Compromise 8,753 13,368
Total Debt Not Subject to Compromise $ 8,771 $ 17,089

~~N/A - Not applicable~~


Facility	Weighted-Average Interest Rate as of March 31, 2021	Fixed or Floating Interest Rate	Maturity	March 31, 2021		December 31, 2020
HVF II Series 2019-1(4)	4.45%	Fixed	3/2022	292		330
HVF II Series 2019-2(4)	4.05%	Fixed	5/2024	313		354
HVF II Series 2019-3(4)	3.30%	Fixed	12/2024	311		352
				2,360		2,669










HVIF U.S. Fleet Medium Term Notes:
HVIF Series 2020-1	3.53%	Fixed	11/2021	881		0
				881		0
Vehicle Debt - Other

European Vehicle Notes(5)	5.07%	Fixed	10/2021-3/2023	853		888
European ABS(4)	1.60%	Floating	11/2021	212		263
Hertz Canadian Securitization(4)	2.44%	Floating	1/2023	95		53

Australian Securitization(4)	1.66%	Floating	6/2021	99		97
New Zealand RCF	2.95%	Floating	6/2021	31		35
U.K. Financing Facility	3.03%	Floating	4/2021-2/2024	91		105
Other Vehicle Debt	3.35%	Floating	4/2021-11/2024	53		37
				1,434		1,478
Unamortized Debt Issuance Costs and Net (Discount) Premium				(54)		(63)




Total Vehicle Debt Not Subject to Compromise				6,286		6,024
Total Debt Not Subject to Compromise				$	7,026	$	6,267

(1)As a result of filing the Chapter 11 Cases, certain debt was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020. The weighted-average interest rate for such debt is disclosed in subsequent rows under "non-vehicle debt subject to compromise".

~~(2)~~References to the "Senior Notes" include the series of Hertz's unsecured senior notes set forth in the table below which are included in liabilities subject to compromise in the accompanying unaudited condensed consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2021 and December 31, 2020. Outstanding principal amounts for each such series of the Senior Notes is also specified below:


(In millions)	(In millions)	Outstanding Principal				(In millions)	Outstanding Principal
Senior Notes	Senior Notes	September 30, 2020		December 31, 2019		Senior Notes	March 31, 2021		December 31, 2020
6.250% Senior Notes due October 2022	6.250% Senior Notes due October 2022	$	500	$	500	6.250% Senior Notes due October 2022	$	500	$	500
5.500% Senior Notes due October 2024	5.500% Senior Notes due October 2024	800		800		5.500% Senior Notes due October 2024	800		800
7.125% Senior Notes due August 2026	7.125% Senior Notes due August 2026	500		500		7.125% Senior Notes due August 2026	500		500
6.000% Senior Notes due January 2028	6.000% Senior Notes due January 2028	900		900		6.000% Senior Notes due January 2028	900		900
		$	2,700	$	2,700		$	2,700	$	2,700

(2)Includes default interest.

(3)Includes default interest which is comprised of an increase in the contractual spread.

(4)Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal final maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness originally expected the outstanding principal of the relevant indebtedness to be repaid in full. The legal final maturity date is the date on which the outstanding principal of the relevant indebtedness is legally due and payable in full. ~~Refer to the~~While HVF II remains in an amortization event, as described below, ~~where~~ the expected maturity will deviate from its stated, contractual maturity date during amortization as payoff is based on the sale of the underlying vehicles and ~~payments under~~ the ~~Interim Lease Order~~pro-rata application of those proceeds across all outstanding HVF II Series of Notes in accordance with their seniority. During the amortization event, the ultimate maturity of the notes will depend upon the length of time the underlying vehicle collateral is sold or the timing of the refinancing of the ~~current debt.~~

~~(4)~~In the case of the Hertz Fleet Lease Funding LP ("HFLF") Medium Term Notes, such notes are repayable from cash flows derived from third-party leases comprising the underlying HFLF collateral pool. As a result of the Chapter 11 Cases and the resulting amortization events, as described below, the revolving period for all series were terminated, and are amortizing monthly by an amount equal to the lease collections payable to that series and the maturity date referenced for each series of HFLF Medium Term Notes represents the date by which Hertz expects such series of notes to be repaid in full, which is based upon the contractual amortization of the underlying leases as well as the assumed rate of prepayments of such leases. Such maturity reference is to the “expected final maturity date” as opposed to the subsequent “legal final maturity date.” The legal final maturity date is the date on which the relevant indebtedness is legally due and payable. Although the underlying lease cash flows that support the repayment of the HFLF Medium Term Notes may vary, the cash flows generally are expected to approximate a straight-line amortization of the related notes from the initial maturity date through the expected final maturity date.

~~(5)~~References to the "European Vehicle Notes" include the series of Hertz Holdings Netherlands B.V.'s, an indirect wholly-owned subsidiary of Hertz organized under the laws of the Netherlands, unsecured senior notes (converted from Euros to U.S. dollars at a rate of 1.17 to 1 and 1.12 to 1 as of September 30, 2020 and December 31, 2019, respectively), set forth in the table below. Outstanding principal amounts for each such series of the European Vehicle Notes is also specified below:

(In millions) Outstanding Principal
European Vehicle Notes September 30, 2020 December 31, 2019
4.125% Senior Notes due October 2021 $ 263 $ 251
5.500% Senior Notes due March 2023 583 559
$ 846 $ 810

~~(6) Includes default interest which is comprised of an increase in the contractual spread and may also include a change in the benchmark rate from the U.S. Dollar LIBOR rate to the prime rate.~~

notes.

2422

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

(5)References to the "European Vehicle Notes" include the series of Hertz Holdings Netherlands B.V.'s, an indirect wholly-owned subsidiary of Hertz organized under the laws of the Netherlands, ("Hertz Netherlands") unsecured senior notes (converted from Euros to U.S. Dollars at a rate of 1.18 to 1 and 1.22 to 1 as of March 31, 2021 and December 31, 2020, respectively), set forth in the table below. Outstanding principal amounts for each such series of the European Vehicle Notes is also specified below:


(In millions)	Outstanding Principal
European Vehicle Notes	March 31, 2021		December 31, 2020
4.125% Senior Notes due October 2021	$	265	$	276
5.500% Senior Notes due March 2023	588		612
	$	853	$	888

Chapter 11

As a result of filing the Chapter 11 Cases, as disclosed in Note 1, "Background," the Company reclassified certain of its non-vehicle debt instruments, net of deferred financing costs, discounts and premiums, as applicable, to liabilities subject to compromise in the accompanying unaudited condensed consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2021, and December 31, 2020. The Company has suspended accruing and paying interest and amortizing deferred financing costs, discounts and premiums, as applicable, on the Senior Notes, Promissory Notes and Alternative Letter of Credit Facility, as of the Petition Date. The Company is continuing to pay in cash an amount equal to the monthly interest at the non-default rate for the Senior Term Loan and Senior RCF (collectively, "the First Lien Facilities"), and has suspended amortizing the associated deferred financing costs, discounts and premiums for the First Lien Facilities, as applicable, as of the Petition Date. Additionally, the Company is continuing to pay ~~in kind an amount equal to~~half of the ~~monthly~~ interest at the non-default rate for the Senior Second Priority Secured Notes ~~as of July 1, 2020. On August 25, 2020,~~with the ~~Bankruptcy Court entered an order, which among other things, directed that on December 1, 2020, the Company is to pay~~remaining half paid in cash an amount equal to half of the interest that would have accrued on the Senior Second Priority Secured Notes during the period July 1, 2020 through November 30, 2020. On October 29, 2020, the Bankruptcy Court entered an order, which among other things, directed the Company to pay in cash an amount equal to the monthly interest that would have accrued on the First Lien Facilities during the period May 1, 2020 through June 30, 2020 upon entry of the DIP Order as defined below.kind.

The filing of the Chapter 11 Cases constituted an event of default that accelerated the Debtors’ obligations under the Senior Term Loan, the Senior ~~RCF, the U.S. Vehicle~~ RCF, the Letter of Credit Facility and the Alternative Letter of Credit Facility. Additionally, the filing triggered defaults, termination events and/or amortization events under certain obligations of (i) Hertz International Limited, Hertz ~~Holdings~~ Netherlands ~~BV ("Hertz Netherlands")~~ and the direct and indirect subsidiary companies located outside of the United States and Canada (collectively the "International Subsidiaries") (some of which were waived or amended, subject to certain time limitations, ~~as disclosed further below),~~ and (ii) HVF, HVF II ~~HFLF~~ and certain other vehicle financing subsidiaries (collectively the "Non-Debtor Financing Subsidiaries").

As disclosed in Note 1, "Background," based on the Proposed Plan, the Disclosure Statement and commitments received by the Company in April 2021, all of which are subject to approval by the Bankruptcy Court and certain other conditions, events related to the Company's debt are as follows:

•Upon exit from Chapter 11, which is currently anticipated to occur in June 2021, the Debtors anticipate eliminating approximately $5.0 billion of existing debt and eliminating the €725 million European Vehicle Notes where the holders' guaranty claims against the Debtors' U.S. entities will be unimpaired as the balance of their debt is expected to be paid by the issuer, Hertz Holdings Netherlands BV.

•The Company anticipates obtaining a new secured rental car asset-backed credit facility (the “ABS Facility”) in an aggregate amount of $7.0 billion, comprised of a secured rental car asset-backed variable funding note in the aggregate amount of $3.0 billion and a secured rental car asset-backed bridge financing facility in an aggregate amount of up to $4.0 billion. Certain of the proceeds of the ABS Facility are expected to be used to repay outstanding vehicle financing facilities and to support the Company’s fleet financing needs for its U.S. rental car operations.

•The Company also anticipates obtaining new exit credit facilities (the "Exit Credit Facilities") in an aggregate amount of $2.8 billion comprised of a senior secured revolving credit facility in an aggregate committed amount of $1.5 billion plus a senior secured term loan facility in an aggregate principal amount of $1.3 billion. The Exit Credit Facilities will be secured by a first lien of substantially all assets owned as of the date of execution of the Exit Credit Facilities or acquired thereafter.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

Non-Vehicle Debt

Senior Secured Superpriority Debtor-in-Possession Credit Agreement ("DIP Credit Agreement")

On October 15, 2020, Hertz entered into a commitment letter for debtor-in-possession financing (the “DIP Commitment Letter”) with the holders of a majority in aggregate outstanding amount of its Pre-petition first-lien debt (collectively, the “Initial Commitment Parties”) pursuant to which the Initial Commitment Parties committed to backstop a superpriority senior secured debtor-in-possession, non-amortizing, delayed draw term loan facility (the “DIP Facility”) in an aggregate amount of $1.65 billion under Section 364 of the Bankruptcy Code, subject to the terms and conditions set forth in the Initial Commitment Letter. The Initial Commitment Letter was amended on October 28, 2020 to add certain additional commitment parties (together with the Initial Commitment Parties, the “Commitment Parties”).

On October 29, 2020, the Bankruptcy Court entered an order authorizing the Debtors to obtain certain debtor-in-possession financing (the "DIP Order"). In accordance with the Bankruptcy Court's order, on October 30, 2020, Hertz, as borrower, and Hertz Global and certain of its subsidiaries located in the United States and Canada, in each case that are debtors in these Chapter 11 Cases, as guarantors (collectively, the “DIP Debtors”), entered into the DIP Credit Agreement with the financial institutions identified therein as lenders and Barclays Bank PLC as administrative agent. The DIP Credit Agreement provides for DIP Loans, of which (i) up to $1.0 billion can be used as equity for new interim fleet financing, giving the DIP Debtors the ability to replenish their vehicle fleet in the future, and (ii) up to $800 million can be used for working capital and general corporate purposes. The DIP Loans are available in multiple draws of at least (i) $250 million each, or (ii) the remaining available commitments if such commitments are less than $250 million. The DIP Loans bear interest at a rate of LIBOR plus 7.25% (subject to a 1.00% floor), which is reduced to LIBOR plus 6.75% upon a significant repayment of Pre-petition first lien debt.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

The DIP Facility matures on December 31, 2021 and has limited covenants and events of default, including one milestone requiring the filing of a plan of reorganization by August 1, 2021. ~~The DIP Facility will be secured by first priority liens on substantially all~~On April 21, 2021, the Company received approval of ~~the DIP Debtors’ assets (subject to certain exclusions)~~its Proposed Plan and has the support of the requisite majority of the DIP Debtors’ first lien Pre-petition debt to allow for consensual priming of existing liens. The DIP Facility does not contain a roll-up or cross-collateralization of Pre-petition debt or otherwise dictate how Pre-petition claims will be addressedrelated Disclosure Statement, as further disclosed in ~~a plan of reorganization.~~

The DIP Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the loan parties and their subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of junior or Pre-petition indebtedness, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP Credit Agreement also includes conditions precedent, representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of title 11 of the United States Code, the appointment of a trustee pursuant to chapter 11 of title 11 of the United States Code, and certain other events related to the impairment of the lenders’ rights or liens granted under the DIP Credit Agreement.Note 1, "Background."

Vehicle Debt

HVF II U.S. ABS Program

~~HVF II U.S. Vehicle Variable Funding Notes~~

~~HVF II Series 2013-A Notes: In February 2020, HVF II extended~~On January 20, 2021, the ~~maturity of~~Bankruptcy Court entered the Series 2013-A Notes from March 2021 to March 2022 and increased the commitments thereunder by $750 million. After giving effect to the transactions, the aggregate maximum principal amount of the Series 2013-A Notes was $4.9 billion, where $0.2 billion of commitments have a maturity of March 2021.

As a result of the failure to make the full rent payments on April 27, 2020, an amortization event was in effect as of May 5, 2020 for all series of notes issued by HVF II and a liquidation event was in effect with respect to the Series 2013-A Notes issued by HVF II. As a result of the amortization event, proceeds from the sales of vehicles that collateralize the notes issued by HVF II must be primarily applied to the payment of principal and are allocated on what approximates a pro rata basis to the reduction of principal on the basis of seniority by class. As disclosed in Note 1, "Background," per the terms of the InterimSecond Lease Order, ~~entered on July 24, 2020,~~which directed the Debtors, ~~were directed,~~ among other things, to make ~~$650~~$756 million of base rent payments under the Operating Lease to the HVF trustee in the amount of ~~six~~9 equal monthly payments of ~~approximately $108~~$84 million commencing in ~~July 2020~~January 2021 through ~~December 2020.~~September 2021. The parties have agreed to defer litigation related to the Operating Lease until ~~January 15,~~September 30, 2021. HVF II is accruing default interest ~~while~~on the HVF II Variable Funding Notes and accruing non-default interest on the U.S. Vehicle Medium Term Notes. Non-default interest is being paid on the HVF II Variable Funding Notes and the U.S. Vehicle Medium Term Notes from funds drawn on existing letter of credit facilities, as described below.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

~~HVF II U.S. Vehicle Medium Term Notes~~

~~In March 2020, HVF II sold the below notes, which it had acquired at the time of the respective initial offerings and which were previously eliminated in consolidation, to third parties.~~


~~(In millions)~~	~~Aggregate Principal Amount~~
~~HVF II Series 2017-2 Class D Notes~~	$	20
~~HVF II Series 2018-1 Class D Notes~~	58
~~HVF II Series 2018-2 Class D Notes~~	13
~~HVF II Series 2018-3 Class D Notes~~	13
~~HVF II Series 2019-1 Class D Notes~~	45
~~HVF II Series 2019-2 Class D Notes~~	49
~~Total~~	$	~~198~~

~~New Facility - Fleet Financing~~

~~Donlen U.S. ABS Program~~

~~HFLF Variable Funding Notes~~

~~HFLF Series 2013-2 Notes~~: In February 2020, HFLF amended the HFLF Series 2013-2 Notes ("2013-2 Notes") to extend the end of the revolving period from March 2021 to March 2022 and increased the commitments thereunder by $100 million, such that the aggregate maximum borrowings of the 2013-2 Notes increased to $600 million.

The filing of the Chapter 11 Cases triggered an amortization event under the HFLF Variable Funding Notes and the HFLF Medium Term Notes. As a result, the remaining commitments under the HFLF Series 2013-2 Notes were terminated and, while the amortization events continue, proceeds from lease payments and from the sales of vehicles that collateralize the notes issued by HFLF must be applied to the reduction of principal and payment of interest on the notes. The principal will be allocated on approximately a pro rata basis and distributed to the note holders on the basis of seniority by class. HFLF is accruing default interest, while non-default interest is being paid on the HFLF Variable Funding Notes and the HFLF Medium Term Notes.

~~DFLF Variable Funding Notes~~

On October 12, 2020, the Bankruptcy Court entered an order authorizing Hertz and Donlen Corporation to enter into certain agreements in connection with a new asset-based securitization facility with a newly formed non-Debtor special purpose entity, DFLF. On October 16, 2020, DFLF issued the Series 2020-1 Notes to offset funding needs created by the amortization of the HFLF Variable Funding Notes disclosed above, where DFLF will fund lease originations going forward.~~As of the closing date in October 2020, DFLF will have access to up to up to $400 million of available funding subject to certain conditions.Currently, DFLF has $200 million of committed funding available, subject to the payment of incremental up-front fees.~~

Vehicle Debt-Other

~~The filing~~European Vehicle Notes

Hertz Netherlands and certain other international subsidiaries entered into a limited forbearance and lock-up agreement (the “Lock-up Agreement”), as extended, in respect of the European Vehicle Notes pursuant to which the majority noteholders agreed not to take action in respect of any default or event of default that could have resulted from the Chapter 11 Cases, ~~constituted defaults, termination events and/or amortization events with respect~~in order to ~~certain~~support a transaction set-forth in the Lock-up Agreement, and to be implemented by a scheme of arrangement (subject to conditions and approvals), subsequent to the waiver expiration on December 31, 2020. The transaction set out in the Lock-up Agreement was superseded by positive developments in the Chapter 11 Cases in April 2021 in which the Proposed Plan will both fully repay the European Vehicle Notes and also provide the necessary liquidity for the European business. On April 23, 2021, Hertz International Limited entered into a multi-draw term loan facility (the "HIL Credit Agreement") which provides an aggregate maximum principal of €250 million to meet the liquidity requirements of the ~~Company's existing debt~~European business. As a result, the Lock-Up Agreement has been terminated and the scheme arrangement has been cancelled.

European ABS

An amortization event, that would have arisen under the European ABS as a result of filing the Chapter 11 Cases, was waived in May 2020 (as amended from time to time) and, in April 2021, such waivers have been superseded by a comprehensive restructuring of the European ABS. The terms of the restructured European ABS provide for aggregate maximum borrowings of €450 million and extend the maturity to April 2022 and, in respect of the guarantees given by Hertz relating to these facilities, the terms of the restructuring also acknowledge that the Proposed Plan will provide for a complete release of any contingent claims.

Hertz Canadian Securitization

On January 13, 2021, the Bankruptcy Court entered an order authorizing the Debtors to enter into a new series under the Hertz Canadian Securitization, Funding LP Series 2021-A Notes. On January 27, 2021, Funding LP entered into aggregate maximum borrowings of CAD$350 million on a revolving basis, subject to availability under the borrowing base limitation. The initial draw was used, in part, to pay outstanding obligations ~~as described below.~~under the Funding LP Series 2015-A Notes, including any unpaid default interest. As a result of the payoff of the Funding LP Series 2015-A Notes, the Hertz Canadian Securitization amortization event ceased to exist.

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Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~U.S. Vehicle Revolving Credit Facility~~

~~In August 2020, Hertz terminated the U.S. Vehicle Revolving Credit Facility by utilizing available cash to pay in full amounts outstanding of $93 million.~~

~~European Vehicle Notes~~

Hertz Netherlands and certain other international subsidiaries entered into a limited waiver agreement in respect of the European Vehicle Notes pursuant to which the majority noteholders agreed to waive any default or event of default that could have resulted from the Chapter 11 Cases with an expiration of September 30, 2020.

On September 30, 2020, Hertz Netherlands and certain other international subsidiaries entered into an extension of the waiver agreement with respect to the European Vehicle Notes which expires on December 31, 2020, or earlier if certain conditions are not met.

~~European ABS~~

An amortization event that would have arisen under the European ABS as a result of filing the Chapter 11 Cases was waived in May 2020 as International Fleet Financing No.2 B.V (“IFF No. 2”) entered into a waiver agreement with an expiration of September 30, 2020 such that the aggregate maximum borrowings were reduced from €1.1 billion to €600 million.

Effective October 1, 2020, IFF No. 2 entered into an extension of the waiver agreement under the European ABS (the "European Waiver") through December 31, 2020, or earlier if certain conditions are not met. Under the European Waiver, aggregate maximum borrowings cannot exceed (i) €351 million from September 30, 2020 to October 30, 2020, (ii) €310 million from October 31, 2020 to November 5, 2020, (iii) €300 million from November 6, 2020 to November 29, 2020, (iv) €280 million from November 30, 2020 to December 3, 2020 and (v) €270 million from and including December 4, 2020.

~~Hertz Canadian Securitization~~

The filing of the Chapter 11 Cases triggered an amortization event under the Hertz Canadian Securitization. As a result, the remaining committed available borrowings were terminated and proceeds from the sales of vehicles and receipt of vehicle receivables that collateralize the Hertz Canadian Securitization must be applied to the payment of principal.

On September 23, 2020, TCL Funding Limited Partnership, a bankruptcy remote, indirect, wholly-owned, special purpose subsidiary of Hertz entered into an interim agreement under the Hertz Canadian Securitization in which default interest will be paid.

~~Donlen Canadian Securitization~~

The filing of the Chapter 11 Cases triggered an event of default under the Donlen Canadian Securitization. In June 2020, Donlen entered into a waiver agreement under the Donlen Canadian Securitization with an expiration of August 28, 2020 such that the aggregate maximum borrowings were reduced from CAD$50 million to CAD$37 million.

In August 2020, Donlen entered into an extension of the waiver agreement under the Donlen Canadian Securitization with an expiration of October 29, 2020. In October 2020, the waiver agreement was extended an additional 60 days and expires on December 29, 2020.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

~~Australian Securitization~~

An amortization event that would have arisen under the Australian Securitization as a result of filing the Chapter 11 Cases was waived in May 2020 as HA Fleet Pty Limited, an indirect, wholly-owned subsidiary of Hertz, entered into a permanent waiver agreement under the Australian Securitization such that the aggregate maximum borrowing capacity was reduced from AUD$270 million to AUD$210 million.

U.K. Financing Facility

~~In April 2020, the aggregate maximum borrowing capacity under the U.K. Financing Facility was reduced from £250 million to £200 million as result of a downgrade in the credit rating of Hertz.~~ Events of default that would have arisen under the U.K. Financing Facility as a result of filing the Chapter 11 Cases were waived in May 2020 ~~as Hertz U.K. Limited entered into~~(as amended from time to time), and, in April 2021, such waivers have been superseded by a ~~waiver agreement under~~comprehensive restructuring of the U.K. Financing ~~Facility which expired on September 30, 2020, and on October 1, 2020, Hertz U.K. Limited entered into an extension~~Facility. The terms of the ~~waiver agreement under the~~restructured U.K. Financing Facility ~~which expires on December 31, 2020, or earlier if certain conditions are not met. Under the waiver agreement, the~~provide for aggregate maximum ~~borrowing capacity under~~borrowings of £100 million and extend the ~~U.K. Financing Facility was reduced~~maturity to ~~£110 million.~~April 2022 and, in respect of the guarantees given by Hertz relating to these facilities, the terms of the restructuring also acknowledge that the Proposed Plan will provide for a complete release of any contingent claims.

Borrowing Capacity and Availability

Borrowing capacity and availability comes from the Company's ~~"revolving~~revolving credit facilities." As a result of the filing of the Chapter 11 Cases, almost all of the Company's ~~"revolving~~revolving credit ~~facilities"~~facilities were terminated, as disclosed in the following table. The remaining ~~"revolving~~revolving credit ~~facilities"~~facilities are a combination of cash-flow-based revolving credit facilities and asset-based revolving credit facilities. Creditors under each such asset-backed securitization facility and asset-based revolving credit facility have a claim on a specific pool of assets as collateral. With respect to each such asset-backed securitization facility and asset-based revolving credit facility, the Company refers to the amount of debt it can borrow given a certain pool of assets as the borrowing base.

The Company refers to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., with respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the amount of debt the Company could borrow assuming it possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility. With respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the Company refers to "Availability Under Borrowing Base Limitation" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt that can be borrowed given the collateral possessed at such time).

The following facilities were available to the Company as of March 31, 2021 and are presented net of any outstanding letters of credit:


(In millions)	Remaining Capacity		Availability Under Borrowing Base Limitation
Non-Vehicle Debt
Senior RCF(1)	$	0	$	0
Senior Secured Superpriority Debtor-in-Possession Credit Agreement	900		900
Letter of Credit Facility(1)	0		0
Alternative Letter of Credit Facility(1)	0		0
Total Non-Vehicle Debt	900		900
Vehicle Debt

HVF II U.S. Vehicle Variable Funding Notes(1)	0		0

HVIF Series 2020-1	3,119		35
European ABS	494		4
Hertz Canadian Securitization	183		0

Australian Securitization	62		4
U.K. Financing Facility	19		0
New Zealand RCF	21		0
Total Vehicle Debt	3,898		43
Total	$	4,798	$	943

(1) As a result of the filing of the Chapter 11 Cases, there is no longer remaining capacity or availability under these facilities, as such unused commitments were terminated.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~The following facilities were available to the Company as of September 30, 2020 and are presented net of any outstanding letters of credit:~~

(In millions) Remaining
Capacity Availability Under
Borrowing Base
Limitation
Non-Vehicle Debt
Senior RCF(1)
$ 0 $ 0
Letter of Credit Facility(1)
0 0
Alternative Letter of Credit Facility(1)
0 0
Total Non-Vehicle Debt 0 0
Vehicle Debt
HVF II U.S. Vehicle Variable Funding Notes(1)
0 0
HFLF Variable Funding Notes(1)
0 0
European ABS 291 0
Hertz Canadian Securitization(1)
0 0
Donlen Canadian Securitization 1 0
Australian Securitization 42 0
U.K. Financing Facility 134 0
New Zealand RCF 12 2
Total Vehicle Debt 480 2
Total $ 480 $ 2

~~(1) As a result of the filing of the Chapter 11 Cases, there is no longer remaining capacity or availability under these facilities, as such unused commitments were terminated.~~

Letters of Credit

As of ~~September 30, 2020,~~March 31, 2021, there were outstanding standby letters of credit totaling ~~$736~~$688 million. Such letters of credit have been issued primarily to support the Company's insurance programs, vehicle rental concessions and leaseholds as well as to provide credit enhancement for its asset-backed securitization facilities. Of this amount, ~~$231 million were issued under the Senior RCF, $299~~$278 million were issued under the Letter of Credit Facility, $194 million were issued under the Senior RCF and $200 million were issued under the Alternative Letter of Credit Facility. As of ~~September 30, 2020, $11~~March 31, 2021, $142 million, $34 million and ~~$82~~$23 million of the issued letters of credit have been drawn upon under the Alternative Letter of Credit Facility, Senior RCF and ~~Alternative~~ Letter of Credit Facility, respectively, to primarily fund interest payments due under the HVF II ~~Notes.~~Notes and concession payments. The draws remain unreimbursed by the Company, and, except as otherwise set forth in orders from the Bankruptcy Court, asthe interest on the Senior RCF and Letter of Credit Facility draws are being paid on a ~~result~~monthly basis at a non-default rate, and interest on the Alternative Letter of Credit Facility draws are ~~accruing interest at the non-default rate.~~not being paid or accrued.

Special Purpose Entities

Substantially all of the Company's revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of the lenders under the various credit facilities, other secured financings and asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing II LP, HVF II GP Corp., Hertz Vehicle Interim Financing LLC, Hertz Vehicle Financing LLC, Rental Car Finance LLC ~~HFLF~~ and various international subsidiaries that facilitate the Company's international securitizations) will be available to satisfy the claims of unsecured creditors unless the secured creditors are paid in full.

The Company has a 25% ownership interest in IFF No. 2, whose sole purpose is to provide commitments to lend in various currencies subject to borrowing bases comprised of revenue earning vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. IFF No. 2 is a VIE and the Company is the primary ~~beneficiary,~~beneficiary; therefore, the assets, liabilities and results of operations of IFF No. 2 are included in the accompanying unaudited condensed consolidated financial statements. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, IFF No. 2 had total assets of ~~$640~~$393 million and ~~$1.1 billion,~~$464 million, respectively, primarily comprised of loans receivable, and total liabilities of ~~$640~~$393 million and ~~$1.1 billion,~~$464 million, respectively, primarily comprised of debt.

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~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

Covenant Compliance

Prior to the filing of the Chapter 11 Cases, ~~the financial covenant provided that~~ Hertz’s consolidated first lien net leverage ratio (the "Leverage Ratio"), as defined in the credit agreements governing the Senior RCF, the Letter of Credit Facility and the Alternative Letter of Credit Facility, as of the last day of any fiscal quarter may not exceed a ratio of 3.00 to 1.00. As a result of the filing of the Chapter 11 Cases, the Company is currently in default under its Senior RCF, the Letter of Credit Facility and the Alternative Letter of Credit Facility, and the Company is in breach of the Leverage Ratio.

The DIP Credit Agreement requires a liquidity maintenance test of $275 million, as defined in the DIP Credit Agreement, as of each month end period. As of March 31, 2021, Hertz was in compliance with the liquidity maintenance test.

Note 7—Leases

The Company enters into certain agreements as a lessor under which it rents vehicles and leases fleets to customers.

The Company's operating leases for vehicle rentals have rental periods that are typically short term (e.g., daily or weekly) and can generally be extended for up to one month or terminated at the customer's discretion. Rental charges are computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge. In connection with the vehicle rental, the Company offers supplemental equipment rentals (e.g., child seats and ski racks) which

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

are deemed lease components. The Company also offers value-added services in connection with the vehicle rental, which are deemed non-lease components, such as loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and satellite radio. Additionally, the Company charges for variable services primarily consisting of tolls and refueling charges incurred during the rental period, and for fees associated with the early or late termination of the vehicle lease. The Company mitigates residual value risk of its revenue earning vehicles by utilizing manufacturer repurchase and guaranteed depreciation programs, using sophisticated vehicle diagnostic and repair equipment to maintain the condition of its vehicles and through periodic reviews of vehicle depreciation rates based on management's ongoing assessment of present and estimated future market conditions.

~~The Company's~~Prior to the Donlen Sale on March 30, 2021, as further disclosed in Note 3, "Divestitures," the Company had operating leases for fleets ~~have~~as part of its Donlen business which had lease periods that ~~are~~were typically for twelve months, after which the lease ~~converts~~converted to a month-to-month lease, allowing the vehicle to be surrendered any time thereafter. ~~The Company's fleet~~These leases ~~contain a~~contained terminal rental adjustment ~~clause~~clauses which ~~are~~were considered variable charges.

As a result of the continuing impact from COVID-19 as disclosed in Note 1, "Background," the Company received rent concessions in the form of ~~abatement and payment deferrals~~abatements of fixed and variable rent payments for certain of its airport and off airport locations in the amount of ~~$84~~approximately $100 million ~~and $221 million for~~during the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021, which ~~represent~~substantially represents amounts previously due in the period between January 1, 2021 and March ~~1, 2020 and September 30, 2020.~~31, 2021. The Company elected to apply the accounting relief provided by the FASB and elected to not evaluate whether the concession is a modification. The Company will account for the concession as if it were part of the existing contract.

In ~~September 2020,~~the first quarter of 2021, the Bankruptcy Court ~~approved~~entered the Lease Rejection Orders which ~~authorized~~applied, in the ~~rejection of certain unexpired leases comprised of 257~~aggregate, to 278 off airport and 15 airport locations in the Company's U.S. RAC segment. In October 2020, the Bankruptcy Court approved the October Lease Rejection Orders which authorized the rejection of certain unexpired leases comprised of 29 airport and 24 off26 airport locations in the Company's U.S. RAC segment.

The following table summarizes the amount of operating lease income and other income included in total revenues in the accompanying unaudited condensed consolidated statements of operations:


	Three Months Ended March 31,
(In millions)	2021		2020
Operating lease income from vehicle rentals	$	1,099	$	1,637
Operating lease income from fleet leasing	149		169
Variable operating lease income	1		33
Revenue accounted for under Topic 842	1,249		1,839
Revenue accounted for under Topic 606	40		84
Total revenues	$	1,289	$	1,923

Note 8—Restructuring

Europe Restructuring

Due to the continued impact from COVID-19 as disclosed in Note 1, "Background," and recent reductions in European government support, the Company initiated a restructuring program in March 2021 in its International RAC segment, primarily Ireland, affecting 150 employees. The Company accrued charges of $7 million for termination benefits at March 31, 2021, which were recorded in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statement of operations for three months ended March 31, 2021. The program is expected to be completed within the next twelve months.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~The following table summarizes the amount of operating lease income and other income included in total revenues in the accompanying condensed consolidated statements of operations:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Operating lease income from vehicle rentals $ 1,037 $ 2,516 $ 3,278 $ 6,555
Operating lease income from fleet leasing 155 174 485 499
Variable operating lease income 0 46 34 124
Revenue accounted for under Topic 842 1,192 2,736 3,797 7,178
Revenue accounted for under Topic 606 76 100 226 276
Total revenues $ 1,268 $ 2,836 $ 4,023 $ 7,454

~~Note 8—Restructuring~~

Due to the impact from COVID-19 as disclosed in Note 1, "Background," the Company initiated a restructuring program, beginning in April 2020, affecting approximately 11,000 employees in its U.S. Rental Car segment and corporate operations and incurred approximately $37 million of charges for termination benefits during the second quarter of 2020, where $7 million was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020 as disclosed below. This program is expected to be completed within the next twelve months.

No termination charges were incurred during the three months ended September 30, 2020. The following tables summarize restructuring charges under this program incurred during the nine months ended September 30, 2020:


~~(In millions)~~	Nine Months Ended September 30, 2020
~~Termination charges:~~
~~Direct vehicle and operating~~	$	25
~~Selling, general and administrative~~	12
~~Total~~	$	37


~~(In millions)~~	Nine Months Ended September 30, 2020
~~Termination charges:~~
~~U.S. Rental Car Segment~~	$	34


~~Corporate operations~~	3
~~Total~~	$	37

~~The tables above do not include pension-related settlement charges incurred during the nine months ended September 30, 2020. See Note 11, "Employee Retirement Benefits".~~

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~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

The following table summarizes the activity affecting the restructuring accrual, which is recorded in accrued liabilities or was reclassified to liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet, during the nine months ended September 30, 2020.

~~(In millions)~~

Termination
Benefits

~~Balance as of December 31, 2019~~

~~Charges incurred~~

~~Cash payments~~

~~(28)~~

~~Liabilities subject to compromise(1)~~

~~(7)~~

~~Balance as of September 30, 2020~~

(1) As a result of filing the Chapter 11 Cases, as disclosed in Note 1, "Background," the Company classified $7 million of restructuring charges as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020. See Note 16, "Liabilities Subject to Compromise".

Note 9—Income Tax (Provision) Benefit

On March 27, 2020, the U.S. federal government passed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act contains many tax provisions including, but not limited to, accelerated alternative minimum tax ("AMT") refunds, payroll tax payment deferrals, employee retention credits, temporary enhanced net operating loss ("NOL") ~~carryback~~utilization rules and ana temporary increase to the interest deduction limitation. The Company has considered the income tax provisions of the CARES Act in the tax benefit ~~calculation~~calculations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 as well the amounts reported for income taxes on the unaudited condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. The Company continues to monitor ~~and analyze the CARES Act along with~~ global legislation issued in response to ~~the COVID-19 pandemic.~~COVID-19.

Hertz Global

The effective tax rate is ~~14%~~29% and ~~30%~~1% for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The effective tax rate is ~~14%~~impacted and ~~54% for~~differs from the ~~nine months ended September 30, 2020~~U.S. federal statutory rate of 21% as a result of the level and ~~2019, respectively.~~mix of earnings among tax jurisdiction and valuation allowances in certain jurisdictions.

Hertz Global recorded a tax ~~benefit~~provision of ~~$36 million and $232~~$79 million for the three ~~and nine~~ months ended ~~September 30, 2020, respectively,~~March 31, 2021 compared to a tax ~~provision~~benefit of ~~$74 million and $78~~$4 million for the three ~~and nine~~ months ended ~~September 30, 2019, respectively.~~March 31, 2020. The tax provision for the three months ended March 31, 2021 compared to the tax benefit for the ~~three and nine months ended September 30,~~ 2020 ~~compared to 2019~~period is ~~due to increased losses on Hertz Global's operations~~primarily due to the ~~effect of COVID-19, primarily offset by~~gain on the impact of valuation allowances on net deferred tax assets for certain foreign and domestic jurisdictions. Additionally, Hertz Global no longer asserts permanent reinvestment of foreign earnings, due to the impact from COVID-19Donlen Sale as disclosed in Note ~~1, "Background.~~3, "Divestitures." ~~Hertz Global does not anticipate that the change in its assertion will have a material impact on its cash flows during the next twelve months, between October 1, 2020 and September 30, 2021.~~

Hertz

The effective tax rate is ~~14%~~29% and ~~30%~~1% for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. The effective tax rate is ~~14%~~impacted and ~~53% for~~differs from the ~~nine months ended September 30, 2020~~U.S. federal statutory rate of 21% as a result of the level and ~~2019, respectively.~~mix of earnings among tax jurisdiction and valuation allowances in certain jurisdictions.

Hertz recorded a tax ~~benefit of $36 million and $259 million for the three and nine months ended September 30, 2020, respectively, compared to a tax~~ provision of ~~$75 million and~~ $79 million for the three months ended ~~September 30, 2019, respectively.~~March 31, 2021 compared to a tax benefit of $3 million for the three months ended March 31, 2020. The tax benefit for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2019~~the tax benefit for the 2020 period is ~~due to increased losses on Hertz's operations due~~primarily to the ~~effect of COVID-19, primarily offset by~~gain on the impact of valuation allowances on net deferred tax assets for certain foreign and domestic jurisdictions. Additionally, Hertz no longer asserts permanent reinvestment of foreign earnings, due to the impact from COVID-19

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

Donlen Sale as disclosed in Note ~~1, "Background.~~3, "Divestitures." ~~Hertz does not anticipate that the change in its assertion will have a material impact on its cash flows during the next twelve months, between October 1, 2020 and September 30, 2021.~~

Note 10—Earnings (Loss) Per Share -– Hertz Global

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

~~Rights Offering~~

In June 2019, Hertz Global filed a prospectus supplement to its Registration Statement on Form S-3 declared effective by the SEC on June 12, 2019 (the "Registration Statement") for a rights offering to raise gross proceeds of approximately $750 million and providing for the issuance of up to an aggregate of 57,915,055 new shares of Hertz Global common stock (the "Rights Offering"). Upon closing in July 2019, the Rights Offering was fully subscribed resulting in Hertz Global selling 57,915,055 shares of its common stock for gross proceeds of $750 million.

~~Open Market Sale Agreement~~

In June 2020, subsequent to approval from the Bankruptcy Court and pursuant to a prospectus supplement to the Registration Statement, Hertz Global entered into an open market sale agreement under which it may offer and sell, from time to time, shares of its common stock, par value $0.01 per share, having an aggregate offering price of up to $500 million ("ATM Program"). Prior to its suspension on June 15, 2020 and ultimate termination on June 18, 2020, Hertz Global issued 13,912,368 shares under the ATM Program for net proceeds of approximately $28 million, which is included in non-vehicle restricted cash in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020.

~~The following table sets forth the computation of basic and diluted earnings (loss) per share:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per share data) 2020 2019 2020 2019
Numerator:
Net income (loss) attributable to Hertz Global $ (222) $ 169 $ (1,425) $ 61
Denominator:
Basic weighted-average shares outstanding (excluding the impact of the Rights Offering) 156 84 148 84
Rights Offering adjustment(1)
0 49 0 25
Basic weighted-average shares outstanding 156 133 148 109
Dilutive stock options, RSUs and PSUs 0 1 0 0
Diluted weighted-average shares outstanding 156 134 148 109
Antidilutive stock options, RSUs, PSUs and PSAs 2 1 2 1
Earnings (loss) per share:
Basic earnings (loss) per share $ (1.42) $ 1.26 $ (9.65) $ 0.56
Diluted earnings (loss) per share $ (1.42) $ 1.26 $ (9.65) $ 0.56

~~(1) Reflects the impact of the Rights Offering subscription period.~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~Note 11—Employee Retirement Benefits~~

The Company sponsors several employee retirement plans for its U.S. employees. The Hertz Corporation Account Balance Defined Benefit Pension Plan (the "Hertz Retirement Plan") is a U.S. cash balance plan which was amended in 2014 to permanently discontinue future benefit accruals and participation under the plan for non-union employees. Additionally, the Company sponsors the Hertz Corporation Benefit Equalization Plan ("BEP") and the Hertz Corporation Supplemental Executive Retirement Plans (together with the BEP, the "Supplemental Plans"), where benefit accruals and participation under the Supplemental Plans were discontinued by the Company effective December 31, 2014, although service continues to vest.

As a result of filing the Chapter 11 Cases, as disclosed in Note 1, "Background," participants of the Supplemental Plans are no longer entitled to benefit payments and are considered general creditors of the Company. As such, the Company classified $24 million of its U.S. pension benefit obligation as liabilities subject to compromise in the accompanying unaudited consolidated balance sheet as of September 30, 2020. Also, amounts accrued for benefit payments under the Company's multiemployer pension plans of $4 million have been classified as liabilities subject to compromise in the accompanying unaudited consolidated balance sheet as of September 30, 2020.

The following table sets forth the ~~net periodic pension cost~~computation of ~~the Hertz Retirement Plan~~basic and the Supplemental Plans (collectively, the "U.S. Plan"), which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statements of operations, excluding service cost which is included in direct vehicle and operating expense. Due to settlement accounting, the discount rate for the U.S. Plan has been revised from a weighted average rate of 3.1% as of December 31, 2019 to 2.4% as of October 1, 2020.diluted earnings (loss) per share:

U.S. Plan
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 2020 2019
Interest cost $ 3 $ 5 $ 12 $ 16
Expected return on plan assets (5) (6) (15) (17)
Net amortizations 0 2 1 5
Settlement loss(1)
1 1 5 1
Net pension expense (benefit) $ (1) $ 2 $ 3 $ 5

(1) The Company incurred $4 million for the nine months ended September 30, 2020 in settlement charges primarily associated with a restructuring program that commenced in the second quarter of 2020. See Note 8, "Restructuring."


	Three Months Ended March 31,
(In millions, except per share data)	2021		2020
Numerator:
Net income (loss) attributable to Hertz Global	$	190	$	(356)
Denominator:


Basic weighted-average shares outstanding	156		142
Dilutive stock options, RSUs and PSUs	1		0
Diluted weighted-average shares outstanding	157		142
Antidilutive stock options, RSUs, PSUs and PSAs	1		2
Earnings (loss) per share:
Basic earnings (loss) per share	$	1.22	$	(2.50)
Diluted earnings (loss) per share	$	1.21	$	(2.50)

Note ~~12—~~11—Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Investments in equity securities that were measured at fair value on a recurring basis consisted of marketable securities which the Company divested of in the first quarter of 2020. See Note 3, "Divestitures," for further information.

Fair Value Disclosures

The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments.

~~Cash Equivalents, Restricted Cash Equivalents and Investments~~

The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and ~~time deposits.~~bank money market and interest-bearing accounts. The Company determines the fair value of cash equivalents and restricted cash equivalents using a market approach based on quoted prices in active markets (i.e., Level 1 inputs).

~~Investments in equity securities that are measured at fair value on a recurring basis consisted~~The following table summarizes the ending balances of ~~marketable securities as of December 31, 2019. See Note 3, "Divestitures." for further information.~~the Company's cash equivalents and restricted cash equivalents:


	March 31, 2021								December 31, 2020
(In millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	1,567	$	0	$	0	$	1,567	$	723	$	0	$	0	$	723

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~The following table summarizes the ending balances of the Company's cash equivalents, restricted cash equivalents and investments:~~

September 30, 2020 December 31, 2019
(In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Money market funds and time deposits $ 780 $ 0 $ 0 $ 780 $ 531 $ 0 $ 0 $ 531
Marketable securities 0 0 0 0 74 0 0 74

Debt Obligations

The fair value of debt is estimated based on quoted market rates as well as borrowing rates currently available to the Company for loans with similar terms and average maturities (i.e., Level 2 inputs).


		As of September 30, 2020				As of December 31, 2019					March 31, 2021				As of December 31, 2020
(In millions)	(In millions)	Nominal Unpaid Principal Balance		Aggregate Fair Value (1)		Nominal Unpaid Principal Balance		Aggregate Fair Value		(In millions)	Nominal Unpaid Principal Balance		Aggregate Fair Value		Nominal Unpaid Principal Balance		Aggregate Fair Value
Non-Vehicle Debt~~(2)~~(1)	Non-Vehicle Debt~~(2)~~(1)	$	4,459	$	2,859	$	3,755	$	3,840	Non-Vehicle Debt~~(2)~~(1)	$	5,313	$	5,316	$	4,747	$	3,382
Vehicle Debt	Vehicle Debt	8,819		8,683		13,415		13,529		Vehicle Debt	6,340		6,254		6,087		6,021
Total	Total	$	13,278	$	11,542	$	17,170	$	17,369	Total	$	11,653	$	11,570	$	10,834	$	9,403

(1)~~The decrease in the aggregate fair value of the Company's debt is due to the impact from COVID-19 and the filing of the Chapter 11 Cases, as disclosed in Note 1, "Background."~~

~~(2)~~Includes Non-Vehicle Debt included in liabilities subject to compromise in the accompanying unaudited condensed consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2021 and December 31, 2020. See Note 6, "Debt."

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

~~In the second quarter of~~Donlen Assets

At December 31, 2020 as ~~disclosed in Note 5, Goodwill and Intangible Assets, Net,~~a result of the ~~Company recorded impairment charges for certain technology-related intangible~~then impending Donlen Sale, the associated assets and ~~other assets.~~liabilities were classified as assets held for sale and liabilities held for sale, respectively, in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020 and were recorded at the lower of carrying value or fair value less any costs to sell. The Company completed the Donlen Sale in March 2021. See Note 3, "Divestitures," for additional information.

Note ~~13—~~12—Contingencies and Off-Balance Sheet Commitments

Legal Proceedings

~~Legal Proceedings~~

~~Self-insured~~Self-Insured Liabilities

The Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet commenced for self-insured liabilities arising from the operation of motor vehicles rented from the Company. The obligation for self-insured liabilities on self-insured U.S. and international vehicles, as stated in the accompanying unaudited condensed consolidated balance sheets, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet ~~reported and~~reported. The related liabilities are recorded on an undiscounted ~~basis. Reserve requirements~~basis and are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company's liability recorded for self-insured liabilities is ~~$481~~$470 million and ~~$553~~$488 million, respectively. The Company believes that its analysis is based on the most relevant information available, combined with reasonable assumptions. The liability is subject to significant uncertainties. The adequacy of the liability is regularly monitored based on evolving accident claim history and insurance related state legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

~~Loss Contingencies~~Hertz Global

~~From time to time~~The effective tax rate is 29% and 1% for the ~~Company~~three months ended March 31, 2021 and 2020, respectively. The effective tax rate is ~~a party to various legal proceedings, typically involving operational issues common to the vehicle rental business, including claims by employees~~impacted and former employees and governmental investigations. The Company has summarized below the most significant legal proceedings to which the Company was and/or is a party as of September 30, 2020 or the period after September 30, 2020, but before the filing of this Quarterly Report on Form 10-Q.

~~Governmental Investigations~~ - The Company previously identified certain activities in Brazil that raised issues under the Foreign Corrupt Practices Act (the "FCPA") and other federal and local laws, which the Company self-reported to appropriate government entities. The matters associated with the FCPA and other federal matters were previously resolved without further action by the applicable U.S. government entities. The Company entered into a leniency agreement in August 2020 with the Brazilian authorities for a monetary sanction against a Hertz non-Debtor subsidiary, and the matters under local Brazilian laws are now closed.

~~In re Hertz Global Holdings, Inc. Securities Litigation~~ ~~- In November 2013, a purported shareholder class action, Pedro Ramirez, Jr. v. Hertz Global Holdings, Inc., et al., was commenced in~~differs from the U.S. ~~District Court for the District~~federal statutory rate of ~~New Jersey naming Old Hertz Holdings (as defined in the Company's 2019 Form 10-K) and certain of its officers~~21% as defendants and alleging violations of the federal securities laws. The complaint alleged that Old Hertz Holdings made material misrepresentations and/or omissions of material fact in certain of its public disclosures in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The complaint sought an unspecified amount of monetary damages on behalf of the purported class and an award of costs and expenses, including counsel fees and expert fees. The complaint, as amended, was dismissed with prejudice on April 27, 2017 and on September 20, 2018, the Third Circuit affirmed the dismissal of the complaint with prejudice. On February 5, 2019, the plaintiffs filed a motion asking the federal district court to exercise its discretion and allow the plaintiffs to reinstate their claims to include additional allegations from the administrative order agreed to by the SEC and the Company in December 2018, which was supplemented by reference to the Company’s subsequently filed litigation against former executives (discussed below). On September 30, 2019, the federal district court of New Jersey denied the plaintiffs’ motion for relief from the April 27, 2017 judgment and a related motion to allow the filing of a proposed fifth amended complaint. On October 30, 2019, the plaintiffs filed a notice of appeal as to the district court’s latest denial with the U. S. Court of Appeals for the Third Circuit. The parties fully briefed the appeal and oral argument had been scheduled for June 19, 2020. As a result of the ~~Company's bankruptcy,~~level and mix of earnings among tax jurisdiction and valuation allowances in certain jurisdictions.

Hertz Global recorded a tax provision of $79 million for the ~~appeal was stayed as~~three months ended March 31, 2021 compared to a tax benefit of $4 million for the three months ended March 31, 2020. The tax provision for the three months ended March 31, 2021 compared to the ~~Company, but~~tax benefit for the ~~plaintiffs advocated that the appeal could proceed against the individual defendants. On October 13,~~ 2020 ~~the Third Circuit affirmed the District Court’s dismissal of the plaintiffs’ motion for relief since the motion was not timely filed and the appeal as~~period is primarily due to the ~~Company remains stayed.~~gain on the Donlen Sale as disclosed in Note 3, "Divestitures."

Hertz

The ~~Company has established reserves~~effective tax rate is 29% and 1% for ~~matters where~~ the ~~Company believes that losses are probable~~three months ended March 31, 2021 and ~~can be reasonably estimated. Other than~~2020, respectively. The effective tax rate is impacted and differs from the ~~aggregate reserve established for claims for self-insured liabilities, none~~U.S. federal statutory rate of ~~those reserves are material. For matters, including certain of those described above, where the Company has not established~~21% as 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. These matters are subject to many uncertainties and the outcomeresult of the ~~individual litigated matters is not predictable with assurance. It is possible that~~level and mix of earnings among tax jurisdiction and valuation allowances in certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided unfavorably to the Company or any of its 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 the accompanying consolidated financial condition, results of operations or cash flows in any particular reporting period.jurisdictions.

~~Other Proceedings~~Hertz recorded a tax provision of $79 million for the three months ended March 31, 2021 compared to a tax benefit of $3 million for the three months ended March 31, 2020. The tax benefit for the three months ended March 31, 2021 compared to the tax benefit for the 2020 period is primarily to the gain on the Donlen Sale as disclosed in Note 3, "Divestitures."

Note 10—Earnings (Loss) Per Share – Hertz Global

~~Litigation Against Former Executives~~

~~- The Company filed litigation in federal court in New Jersey against Mark Frissora, Elyse Douglas and John Jefferey Zimmerman on March 25, 2019, and in state court in Florida against~~

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~Scott Sider on March 28, 2019, all~~The following table sets forth the computation of ~~whom were former executive officers of Old Hertz Holdings. The complaints predominantly allege breach of contract~~basic and seek repayment of incentive-based compensation received by the defendants in connection with restatements included in the Old Hertz Holdings Form 10-K for the year ended December 31, 2014 and related accounting for prior periods. The Company is also seeking recovery for the costs of the SEC investigation that resulted in an administrative order on December 31, 2018 with respect to events generally involving the restatements included in Old Hertz Holdings Form 10-K for the year ended December 31, 2014 and other damages resulting from the necessity of the restatements. The Company is pursuing these legal proceedings in accordance with its clawback policy and contractual rights. The parties are currently involved in motion practice in the New Jersey action and discovery and depositions have commenced in the Florida action. In October 2019, the Company entered into a confidential Settlement Agreement with Elyse Douglas. In September and October 2020, the judge in the New Jersey action entered orders requiring the parties and applicable insurers to attend and participate in mediation. The attorneys in the Florida action voluntarily agreed to participate in the same mediation which is now scheduled for the end of November 2020. Pursuant to the agreements governing the separation of Herc Holdings from Hertz Global that occurred on June 30, 2016, Herc Holdings is entitled to 15% of the net proceeds of any repayment or recovery.diluted earnings (loss) per share:

~~Indemnification Obligations~~

In the ordinary course of business, the Company has executed contracts involving indemnification obligations customary in the relevant industry and indemnifications specific to a transaction such as the sale of a business. These indemnification obligations might include claims relating to the following: environmental matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships and financial matters. Specifically, the Company has 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 the Company may be held responsible could be substantial. In addition, Hertz entered into customary indemnification agreements with Hertz Holdings and certain of the Company's stockholders and their affiliates pursuant to which Hertz Holdings and Hertz will indemnify those entities and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of such entities and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. The Company has entered into customary indemnification agreements with each of its directors and certain of its officers. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-party claim. In connection with the Spin-Off (as defined in the Company's 2019 Form 10-K), the Company executed an agreement with Herc Holdings that contains mutual indemnification clauses and a customary indemnification provision with respect to liability arising out of or resulting from assumed legal matters. The Company regularly evaluates the probability of having to incur costs associated with these indemnification obligations and has accrued for expected losses that are probable and estimable.


	Three Months Ended March 31,
(In millions, except per share data)	2021		2020
Numerator:
Net income (loss) attributable to Hertz Global	$	190	$	(356)
Denominator:


Basic weighted-average shares outstanding	156		142
Dilutive stock options, RSUs and PSUs	1		0
Diluted weighted-average shares outstanding	157		142
Antidilutive stock options, RSUs, PSUs and PSAs	1		2
Earnings (loss) per share:
Basic earnings (loss) per share	$	1.22	$	(2.50)
Diluted earnings (loss) per share	$	1.21	$	(2.50)

Note ~~14—Related Party Transactions~~11—Fair Value Measurements

~~Agreements with the Icahn Group~~Assets and Liabilities Measured at Fair Value on a Recurring Basis

~~In the normal course~~Investments in equity securities that were measured at fair value on a recurring basis consisted of ~~business,~~marketable securities which the Company ~~purchases goods and services and leases property from entities controlled by Carl C. Icahn and his affiliates, including The Pep Boys - Manny, Moe & Jack (collectively,~~divested of in the ~~"Icahn Group"). In May 2020, the Icahn Group fully divested all owned shares~~first quarter of Hertz Global common stock (the "Icahn Divestiture"). During the five months ended May 31, 2020, the Company purchased approximately $23 million worth of goods and services from these related parties. During the three months and nine months ended September 30, 2019, the Company purchased approximately $15 million and $39 million, respectively, worth of goods and services from these related parties.2020. See Note 3, "Divestitures," for further information.

~~As a result~~Fair Value Disclosures

The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and bank money market and interest-bearing accounts. The Company determines the ~~Icahn Group is no longer~~fair value of cash equivalents and restricted cash equivalents using a ~~related party~~market approach based on quoted prices in active markets (i.e., Level 1 inputs).

The following table summarizes the ending balances of the ~~Company. Subsequent to the Icahn Divestiture, there continue to be arms-length transactions between the Company~~Company's cash equivalents and ~~the Icahn Group.~~restricted cash equivalents:


	March 31, 2021								December 31, 2020
(In millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	1,567	$	0	$	0	$	1,567	$	723	$	0	$	0	$	723

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(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

~~Transactions and Agreements between Hertz Holdings and Hertz~~Debt Obligations

~~In June 2019, Hertz entered into a master loan agreement with Hertz Holdings for a facility size~~The fair value of ~~$425 million with an expiration in June 2020 (the "2019 Master Loan"). The interest rate~~debt is estimated based on quoted market rates as well as borrowing rates currently available to the ~~U.S. Dollar LIBOR rate plus a margin. As of December 31, 2019, the amount outstanding under the 2019 Master Loan was $129 million, representing advances~~Company for loans with similar terms and any accrued but unpaid interest. Additionally, Hertz had a loan due to an affiliate in the amount of $65 million as of December 31, 2019 which represents a tax-related liability to Hertz Holdings. The net impact of the above amounts are included in stockholder's equity in the accompanying unaudited condensed consolidated balance sheet of Hertz as of December 31, 2019.average maturities (i.e., Level 2 inputs).


	March 31, 2021				As of December 31, 2020
(In millions)	Nominal Unpaid Principal Balance		Aggregate Fair Value		Nominal Unpaid Principal Balance		Aggregate Fair Value
Non-Vehicle Debt(1)	$	5,313	$	5,316	$	4,747	$	3,382
Vehicle Debt	6,340		6,254		6,087		6,021
Total	$	11,653	$	11,570	$	10,834	$	9,403

As a result of filing the Chapter 11 Cases, as disclosed in Note 1, "Background," the full amount outstanding under the 2019 Master Loan was deemed uncollectible, resulting in a charge of $133 million during the second quarter of 2020, which is(1)Includes Non-Vehicle Debt included in the accompanying unaudited condensed consolidated statement of operations for Hertz for the nine months ended September 30, 2020. Additionally, the loan due to an affiliate, which represents a tax-related liability from Hertz to Hertz Holdings, in the amount of $65 million was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance ~~sheet of Hertz~~sheets as of ~~September 30,~~March 31, 2021 and December 31, 2020. See Note ~~16, "Liabilities Subject to Compromise".~~6, "Debt."

~~On May 23, 2020, Hertz entered into~~Assets and Liabilities Measured at Fair Value on a new master loan agreement with Hertz Holdings for a facility size of $25 million with an expiration in May 2021 (the "New Loan"). The interest rate is based on the U.S. Dollar LIBOR rate plus a margin. As of September 30, 2020, there is $1 million outstanding under the New Loan representing additional charges incurred in the third quarter of 2020 associated with the ATM Program, as disclosed in Note 10, "Earnings (Loss) Per Share - Hertz Global," paid by Hertz on behalf of Hertz Holdings.Non-Recurring Basis

~~767 Auto Leasing LLC~~Donlen Assets

~~In January 2018, Hertz entered into~~At December 31, 2020 as a Master Motor Vehicle Lease and Management Agreement (the “767 Lease Agreement”) pursuant to which Hertz granted 767 Auto Leasing LLC (“767”), an entity affiliated with the Icahn Group, the option to acquire certain vehicles from Hertz at rates aligned with the rates at which Hertz sells vehicles to third parties. As disclosed above, due to the Icahn Divestiture, the Icahn Group is no longer a related partyresult of the ~~Company. Hertz leases~~then impending Donlen Sale, the ~~vehicles purchased by 767 under~~associated assets and liabilities were classified as assets held for sale and liabilities held for sale, respectively, in the ~~767 Lease Agreement~~accompanying unaudited condensed consolidated balance sheet as of December 31, 2020 and were recorded at the lower of carrying value or ~~from third parties, under a mutually developed fleet plan and Hertz manages, services, repairs, sells and maintains those leased vehicles on behalf of 767. Hertz currently rents~~fair value less any costs to sell. The Company completed the leased vehicles to drivers of transportation network companies ("TNC") from rental counters within locations leased or owned by affiliates of 767 ("Icahn Locations"), including locations operated under a master lease agreement with The Pep Boys - Manny, Joe & Jack. The 767 Lease Agreement had an initial term, as extended, of approximately 22 months, and is subject to automatic six month renewals thereafter, unless terminated by either party (with or without cause) prior to the start of any such six month renewal. Donlen Sale in March 2021. See Note 3, "Divestitures," for additional information.

~~767’s payment obligations under the 767 Lease Agreement are guaranteed by American Entertainment Properties Corp. ("AEPC"), an entity affiliated with the Icahn Group. During the three~~

Note 12—Contingencies and nine months ended September 30, 2020, 767 distributed $55 million to AEPC, and there were no cash contributions from AEPC to 767, except for certain services. During the three and nine months ended September 30, 2019, AEPC contributed $5 million and $50 million, respectively, to 767 along with certain services.Off-Balance Sheet Commitments

Legal Proceedings

Self-Insured Liabilities

The Company is ~~entitled~~currently a defendant in numerous actions and has received numerous claims on which actions have not yet commenced for self-insured liabilities arising from the operation of motor vehicles rented from the Company. The obligation for self-insured liabilities on self-insured U.S. and international vehicles, as stated in the accompanying unaudited condensed consolidated balance sheets, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded on an undiscounted basis and are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. As of March 31, 2021 and December 31, 2020, the Company's liability recorded for self-insured liabilities is $470 million and $488 million, respectively. The Company believes that its analysis is based on the most relevant information available, combined with reasonable assumptions. The liability is subject to ~~25%~~significant uncertainties. The adequacy of the ~~profit~~liability is regularly monitored based on evolving accident claim history and insurance related state legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the ~~rental~~amount of the ~~leased vehicles, as specified in the 767 Lease Agreement, which~~recorded liability is variable and based primarily on the rental revenue, less certain vehicle-related costs, such as depreciation, licensing and maintenance expenses. The Company has determined that it is the primary beneficiary of 767 dueadjusted to its power to direct the activities of 767 that most significantly impact 767's economic performance and the Company's obligation to absorb 25% of 767's gains/losses. Accordingly, 767 is consolidated by the Company as a VIE.reflect these results.

In October 2019, the 767 Lease Agreement was amended such that, among other changes, 767 vehicles will be available for rent from Hertz locations that are opened in replacement of closed Icahn Locations, and the 767

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

~~vehicles may be available for rent to traditional off airport customers in addition to TNC drivers, when certain conditions apply.~~

~~Note 15—Segment Information~~

The Company’s chief operating decision maker assesses performance and allocates resources based upon the financial information for the Company’s operating segments. The Company aggregates certain of its operating segments into its reportable segments. The Company has identified 3 reportable segments, which are organized based on the products and services provided by its operating segments and the geographic areas in which its operating segments conduct business, as follows:

•U.S. Rental Car ("U.S. RAC") - rental of vehicles (i.e., cars, crossovers, vans and light trucks), as well as sales of value-added services, in the U.S. and consists of the Company's U.S. operating segment;

•International Rental Car ("International RAC") - rental and leasing of vehicles (i.e., cars, vans, crossovers and light trucks), as well as sales of value-added services, internationally and consists of the Company's Europe and Other International operating segments, which are aggregated into a reportable segment based primarily upon similar economic characteristics, products and services, customers, delivery methods and general regulatory environments;

•All Other Operations - primarily consists of the Company's Donlen business, which provides vehicle leasing and fleet management services, together with other business activities which represent less than 1% of revenues and expenses of the segment.

In addition to the above reportable segments, the Company has corporate operations ("Corporate") which includes general corporate assets and expenses and certain interest expense (including net interest on non-vehicle debt). Corporate includes other items necessary to reconcile the reportable segments to the Company's total amounts.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

The following tables provide significant statements of operations and balance sheet information by reportable segment for each of Hertz Global and Hertz, as well as Adjusted EBITDA, the measure used to determine segment profitability.

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Revenues
U.S. Rental Car $ 866 $ 1,962 $ 2,780 $ 5,266
International Rental Car 253 702 755 1,695
All Other Operations 149 172 488 493
Total Hertz Global and Hertz $ 1,268 $ 2,836 $ 4,023 $ 7,454
Depreciation of revenue earning vehicles and lease charges
U.S. Rental Car $ 182 $ 420 $ 1,054 $ 1,217
International Rental Car 59 126 228 329
All Other Operations 106 121 352 346
Total Hertz Global and Hertz $ 347 $ 667 $ 1,634 $ 1,892
Adjusted EBITDA
U.S. Rental Car $ (10) $ 269 $ (678) $ 432
International Rental Car (35) 115 (207) 157
All Other Operations 24 24 71 70
Corporate (5) (16) (41) (64)
Total Hertz Global and Hertz $ (26) $ 392 $ (855) $ 595

(In millions) September 30, 2020 December 31, 2019
Total assets
U.S. Rental Car $ 12,066 $ 16,459
International Rental Car 3,355 4,563
All Other Operations 1,853 2,115
Corporate 1,483 1,490
Total Hertz Global(1)
18,757 24,627
Corporate - Hertz(2)
(28) 0
Total Hertz(1)
$ 18,729 $ 24,627

(1) The consolidated total assets of Hertz Global and Hertz as of September 30, 2020 and December 31, 2019 include total assets of VIEs of $705 million and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. See "Special Purpose Entities" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note 14, "Related Party Transactions," for further information.

~~(2) Excludes net proceeds from the ATM Program of $28 million as disclosed in Note 10, "Earnings (Loss) Per Share - Hertz Global."~~

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)~~

~~Unaudited~~

~~Reconciliations of Adjusted EBITDA by reportable segment to consolidated amounts are summarized below:~~

Hertz Global

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Adjusted EBITDA:
U.S. Rental Car $ (10) $ 269 $ (678) $ 432
International Rental Car (35) 115 (207) 157
All Other Operations 24 24 71 70
Total reportable segments (21) 408 (814) 659
Corporate(1)
(5) (16) (41) (64)
Total Hertz Global (26) 392 (855) 595
Adjustments:
Non-vehicle depreciation and amortization (58) (51) (168) (151)
Non-vehicle debt interest, net (17) (70) (118) (214)
Vehicle debt-related charges(2)
(13) (10) (37) (29)
Restructuring and restructuring related charges(3)
(7) (1) (54) (11)
Technology-related intangible and other asset impairments(4)
0 0 (193) 0
Information technology and finance transformation costs(5)
(8) (17) (34) (77)
Reorganization items, net(6)
(78) 0 (101) 0
Pre-reorganization charges and non-debtor financing charges(7)
(44) 0 (89) 0
Other items(8)
(8) 4 (15) 30
Income (loss) before income taxes $ (259) $ 247 $ (1,664) $ 143
The effective tax rate is 29% and 1% for the three months ended March 31, 2021 and 2020, respectively. The effective tax rate is impacted and differs from the U.S. federal statutory rate of 21% as a result of the level and mix of earnings among tax jurisdiction and valuation allowances in certain jurisdictions.

Hertz Global recorded a tax provision of $79 million for the three months ended March 31, 2021 compared to a tax benefit of $4 million for the three months ended March 31, 2020. The tax provision for the three months ended March 31, 2021 compared to the tax benefit for the 2020 period is primarily due to the gain on the Donlen Sale as disclosed in Note 3, "Divestitures."

Hertz

The effective tax rate is 29% and 1% for the three months ended March 31, 2021 and 2020, respectively. The effective tax rate is impacted and differs from the U.S. federal statutory rate of 21% as a result of the level and mix of earnings among tax jurisdiction and valuation allowances in certain jurisdictions.

Hertz recorded a tax provision of $79 million for the three months ended March 31, 2021 compared to a tax benefit of $3 million for the three months ended March 31, 2020. The tax benefit for the three months ended March 31, 2021 compared to the tax benefit for the 2020 period is primarily to the gain on the Donlen Sale as disclosed in Note 3, "Divestitures."

Note 10—Earnings (Loss) Per Share – Hertz Global

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(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

The following table sets forth the computation of basic and diluted earnings (loss) per share:


	Three Months Ended March 31,
(In millions, except per share data)	2021		2020
Numerator:
Net income (loss) attributable to Hertz Global	$	190	$	(356)
Denominator:


Basic weighted-average shares outstanding	156		142
Dilutive stock options, RSUs and PSUs	1		0
Diluted weighted-average shares outstanding	157		142
Antidilutive stock options, RSUs, PSUs and PSAs	1		2
Earnings (loss) per share:
Basic earnings (loss) per share	$	1.22	$	(2.50)
Diluted earnings (loss) per share	$	1.21	$	(2.50)

Note 11—Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Fair Value Disclosures

The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and bank money market and interest-bearing accounts. The Company determines the fair value of cash equivalents and restricted cash equivalents using a market approach based on quoted prices in active markets (i.e., Level 1 inputs).

The following table summarizes the ending balances of the Company's cash equivalents and restricted cash equivalents:


	March 31, 2021								December 31, 2020
(In millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents	$	1,567	$	0	$	0	$	1,567	$	723	$	0	$	0	$	723

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

Debt Obligations


	March 31, 2021				As of December 31, 2020
(In millions)	Nominal Unpaid Principal Balance		Aggregate Fair Value		Nominal Unpaid Principal Balance		Aggregate Fair Value
Non-Vehicle Debt(1)	$	5,313	$	5,316	$	4,747	$	3,382
Vehicle Debt	6,340		6,254		6,087		6,021
Total	$	11,653	$	11,570	$	10,834	$	9,403

(1)Includes Non-Vehicle Debt included in liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. See Note 6, "Debt."

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

Donlen Assets

At December 31, 2020 as a result of the then impending Donlen Sale, the associated assets and liabilities were classified as assets held for sale and liabilities held for sale, respectively, in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020 and were recorded at the lower of carrying value or fair value less any costs to sell. The Company completed the Donlen Sale in March 2021. See Note 3, "Divestitures," for additional information.

Note 12—Contingencies and Off-Balance Sheet Commitments

Legal Proceedings

Self-Insured Liabilities

The Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet commenced for self-insured liabilities arising from the operation of motor vehicles rented from the Company. The obligation for self-insured liabilities on self-insured U.S. and international vehicles, as stated in the accompanying unaudited condensed consolidated balance sheets, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded on an undiscounted basis and are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. As of March 31, 2021 and December 31, 2020, the Company's liability recorded for self-insured liabilities is $470 million and $488 million, respectively. The Company believes that its analysis is based on the most relevant information available, combined with reasonable assumptions. The liability is subject to significant uncertainties. The adequacy of the liability is regularly monitored based on evolving accident claim history and insurance related state legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.

Loss Contingencies

From time to time the Company is a party to various legal proceedings, typically involving operational issues common to the vehicle rental business, including claims by employees and former employees and governmental investigations. The Company has summarized below the most significant legal proceeding to which the Company was a party during the period ending March 31, 2021 or the period after March 31, 2021, but before the filing of this Quarterly Report on Form 10-Q.

In re Hertz Global Holdings, Inc. Securities Litigation - In November 2013, a purported shareholder class action, Pedro Ramirez, Jr. v. Hertz Global Holdings, Inc., et al., was commenced in the U.S. District Court

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Unaudited

for the District of New Jersey naming Old Hertz Holdings (as defined in the Company's 2020 Form 10-K) and certain of its officers as defendants and alleging violations of the federal securities laws. The complaint alleged that Old Hertz Holdings made material misrepresentations and/or omissions of material fact in certain of its public disclosures in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The complaint sought an unspecified amount of monetary damages on behalf of the purported class and an award of costs and expenses, including counsel fees and expert fees. The complaint, as amended, was dismissed with prejudice on April 27, 2017 and on September 20, 2018, the Third Circuit affirmed the dismissal of the complaint with prejudice. On February 5, 2019, the plaintiffs filed a motion asking the federal district court to exercise its discretion and allow the plaintiffs to reinstate their claims to include additional allegations from the administrative order agreed to by the SEC and the Company in December 2018, which was supplemented by reference to the Company’s subsequently filed litigation against former executives (disclosed below). On September 30, 2019, the federal district court of New Jersey denied the plaintiffs’ motion for relief from the April 27, 2017 judgment and a related motion to allow the filing of a proposed fifth amended complaint. On October 30, 2019, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Third Circuit. The parties fully briefed the appeal and oral argument had been scheduled for June 19, 2020. As a result of the Company's bankruptcy, the appeal was stayed as to the Company, but the plaintiffs advocated that the appeal could proceed against the individual defendants. On October 13, 2020, the Third Circuit affirmed the District Court’s dismissal of the plaintiffs’ motion for relief against the individual defendants since the motion was not timely filed and the appeal as to the Company remained stayed. In February 2021, the parties participated in a bankruptcy-related mediation process and arrived at a tentative settlement wherein the Company would pay a $250,000 cash settlement. In return, the plaintiffs would voluntarily dismiss all claims in the underlying action with prejudice and withdraw the plaintiffs’ Proofs of Claim with prejudice. On March 12, 2021, the Bankruptcy Court approved the tentative settlement and the terms of the settlement have now been fully implemented. This matter is now closed.

In addition to the matters described above, the Company maintains an internal compliance program through which it from time to time identifies other potential violations of laws and regulations applicable to the Company. When the Company identifies such matters, the Company conducts an internal investigation and otherwise cooperates with governmental authorities, as appropriate.

The Company has established reserves for matters where the Company believes that losses are probable and can be reasonably estimated. Other than the aggregate reserve established for claims for self-insured liabilities, none of those reserves are material. For matters, including the matter described above, where the Company has 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. These matters are 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, could be decided unfavorably to the Company or any of its 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 the Company's consolidated financial condition, results of operations or cash flows in any particular reporting period.

Other Proceedings

Litigation Against Former Executives - The Company filed litigation in the U.S. District Court for the District of New Jersey against Mark Frissora, Elyse Douglas and John Jefferey Zimmerman on March 25, 2019, and in state court in Florida against Scott Sider on March 28, 2019, all of whom were former executive officers of Old Hertz Holdings. The complaints predominantly allege breach of contract and seek repayment of incentive-based compensation received by the defendants in connection with restatements included in the Old Hertz Holdings Form 10-K for the year ended December 31, 2014 and related accounting for prior periods. The Company is also seeking recovery for the costs of the SEC investigation that resulted in an administrative order on December 31, 2018 with respect to events generally involving the restatements included in Old Hertz Holdings Form 10-K for the year ended December 31, 2014 and other damages resulting from the necessity of the restatements. The Company is pursuing these legal proceedings in accordance with its clawback policy and contractual rights. The parties are currently involved in motion practice in the New Jersey action and discovery and depositions have commenced in the Florida action. In

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Unaudited

October 2019, the Company entered into a confidential Settlement Agreement with Elyse Douglas. In September and October 2020, the judge in the New Jersey action entered orders requiring the parties and applicable insurers to attend and participate in mediation. The attorneys in the Florida action voluntarily agreed to participate in the same mediation which was held on November 30, 2020. The mediation was unsuccessful, but settlement discussions continued and, on April 14, 2021, the Bankruptcy Court approved a Settlement Agreement between the Company and Scott Sider. Depositions are continuing in the New Jersey action. Pursuant to the agreements governing the separation of Herc Holdings from Hertz Global that occurred on June 30, 2016, Herc Holdings is entitled to 15% of the net proceeds of any repayment or recovery.

Indemnification Obligations

Note 13—Related Party Transactions

Transactions and Agreements between Hertz Holdings and Hertz

In June 2019, Hertz entered into a master loan agreement with Hertz Holdings for a facility size of $425 million with an expiration in June 2020 (the "2019 Master Loan"). The interest rate was based on the U.S. Dollar LIBOR rate plus a margin.

As a result of filing the Chapter 11 Cases, as disclosed in Note 1, "Background," the full amount outstanding under the 2019 Master Loan was deemed uncollectible, resulting in a charge of $133 million during the second quarter of 2020. Additionally, the loan due to an affiliate, which represents a tax-related liability from Hertz to Hertz Holdings, in the amount of $65 million was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheets of Hertz as of March 31, 2021 and December 31, 2020. See Note 15, "Liabilities Subject to Compromise."

On May 23, 2020, Hertz entered into a new master loan agreement with Hertz Holdings for a facility size of $25 million with an expiration in May 2021 (the "New Loan"). The interest rate is based on the U.S. Dollar LIBOR rate plus a margin. As of March 31, 2021 and December 31, 2020, there was $1 million, respectively, outstanding under the New Loan.

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Unaudited

767 Auto Leasing LLC

In January 2018, Hertz entered into a Master Motor Vehicle Lease and Management Agreement (the “767 Lease Agreement”) pursuant to which Hertz granted 767 Auto Leasing LLC (“767”), an entity affiliated with the Icahn Group, a related party during the first quarter of 2020, the option to acquire certain vehicles from Hertz at rates aligned with the rates at which Hertz sells vehicles to third parties. Hertz leases the vehicles purchased by 767 under the 767 Lease Agreement or from third parties, under a mutually developed fleet plan and Hertz manages, services, repairs, sells and maintains those leased vehicles on behalf of 767. Hertz currently rents the leased vehicles to drivers of transportation network companies ("TNC") from rental counters within locations leased or owned by affiliates of 767, including locations operated under a master lease agreement with The Pep Boys – Manny, Joe & Jack. The 767 Lease Agreement had an initial term, as extended, of approximately 22 months, and is subject to automatic six month renewals thereafter, unless terminated by either party (with or without cause) prior to the start of any such six month renewal.

767’s payment obligations under the 767 Lease Agreement are guaranteed by American Entertainment Properties Corp. ("AEPC"), an entity affiliated with Carl C. Icahn and his affiliates. During the three months ended March 31, 2021, 767 distributed $10 million to AEPC along with the return of certain vehicles, and there were no cash contributions from AEPC to 767. There were no cash distributions or contributions to or from AEPC during the three months ended March 31, 2020, except for certain services.

The Company is entitled to 25% of the profit from the rental of the leased vehicles, as specified in the 767 Lease Agreement, which is variable and based primarily on the rental revenue, less certain vehicle-related costs, such as depreciation, licensing and maintenance expenses. The Company has determined that it is the primary beneficiary of 767 due to its power to direct the activities of 767 that most significantly impact 767's economic performance and the Company's obligation to absorb 25% of 767's gains/losses. Accordingly, 767 is consolidated by the Company as a VIE.

Note 14—Segment Information

•U.S. Rental Car ("U.S. RAC") – rental of vehicles (cars, crossovers, vans and light trucks), as well as sales of value-added services, in the U.S. and consists of the Company's U.S. operating segment;

•International Rental Car ("International RAC") – rental and leasing of vehicles (cars, vans, crossovers and light trucks), as well as sales of value-added services, internationally and consists of the Company's Europe and Other International operating segments, which are aggregated into a reportable segment based primarily upon similar economic characteristics, products and services, customers, delivery methods and general regulatory environments; and

•All Other Operations – primarily consists of the Company's Donlen vehicle leasing and fleet management business, which was sold on March 30, 2021, together with other business activities which represented less than 1% of revenues and expenses of the segment. See Note 3, "Divestitures," for further information. As a result of the Donlen Sale, the Company will be revising its reportable segments in the second quarter of 2021, and All Other Operations will no longer be a reportable segment.

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Unaudited


	Three Months Ended March 31,
(In millions)	2021		2020
Revenues
U.S. Rental Car	$	946	$	1,381
International Rental Car	207		368
All Other Operations(1)	136		174
Total Hertz Global and Hertz	$	1,289	$	1,923
Depreciation of revenue earning vehicles and lease charges
U.S. Rental Car	$	205	$	463
International Rental Car	38		89
All Other Operations(1)(2)	0		125
Total Hertz Global and Hertz	$	243	$	677
Adjusted EBITDA
U.S. Rental Car	$	24	$	(199)
International Rental Car	(6)		(45)
All Other Operations(1)	13		24
Corporate	(29)		(23)
Total Hertz Global and Hertz	$	2	$	(243)

(1) Substantially all of this reportable segment is comprised of the Company's Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures."

(2) The decrease in depreciation of revenue earning vehicles and lease charges is due to the suspension of depreciation for the Donlen business while classified as held for sale, prior to closing on March 30, 2021 as disclosed in Note 3, "Divestitures."


(In millions)	March 31, 2021		December 31, 2020
Total assets
U.S. Rental Car	$	11,509	$	11,042
International Rental Car	2,940		2,956
All Other Operations(1)	1		1,818
Corporate	2,160		1,092
Total Hertz Global(2)	16,610		16,908
Corporate - Hertz(3)	(28)		(28)
Total Hertz(2)	$	16,582	$	16,880

(1) Substantially all of this reportable segment is comprised of the Company's Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures." At December 31, 2020, includes $1.8 billion of Donlen's assets which were classified as held for sale in the accompanying unaudited condensed consolidated balance sheet.

(2) The consolidated total assets of Hertz Global and Hertz as of March 31, 2021 and December 31, 2020 include total assets of VIEs of $513 million and $511 million, respectively, which can only be used to settle obligations of the VIEs. See "Special Purpose Entities" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note 13, "Related Party Transactions," for further information.

(3) Excludes net proceeds of $28 million from an open market sale of Hertz Global common stock completed in June 2020, which is included in non-vehicle restricted cash in the accompanying unaudited condensed consolidated balance sheets at March 31, 2021 and December 31, 2020.

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Unaudited

Reconciliations of Adjusted EBITDA by reportable segment to consolidated amounts are summarized below:

Hertz Global


	Three Months Ended March 31,
(In millions)	2021		2020
Adjusted EBITDA:
U.S. Rental Car	$	24	$	(199)
International Rental Car	(6)		(45)
All Other Operations(1)	13		24
Total reportable segments	31		(220)
Corporate(2)	(29)		(23)
Total Hertz Global	2		(243)
Adjustments:
Non-vehicle depreciation and amortization	(54)		(53)
Non-vehicle debt interest, net	(44)		(57)
Vehicle debt-related charges(3)	(28)		(9)

Restructuring and restructuring related charges(4)	(12)		(7)

Information technology and finance transformation costs(5)	(6)		(17)
Reorganization items, net(6)	(42)		0
Pre-reorganization charges and non-debtor financing charges(7)	(23)		0
Gain from the Donlen Sale(8)	392		0
Other items(9)	83		25
Income (loss) before income taxes	$	268	$	(361)

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Unaudited

Hertz


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In millions)	(In millions)	2020		2019		2020		2019		(In millions)	2021		2020
Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
U.S. Rental Car	U.S. Rental Car	$	(10)	$	269	$	(678)	$	432	U.S. Rental Car	$	24	$	(199)
International Rental Car	International Rental Car	(35)		115		(207)		157		International Rental Car	(6)		(45)
All Other Operations(1)	All Other Operations(1)	24		24		71		70		All Other Operations(1)	13		24
Total reportable segments	Total reportable segments	(21)		408		(814)		659		Total reportable segments	31		(220)
Corporate~~(1)~~(2)	Corporate~~(1)~~(2)	(5)		(16)		(41)		(64)		Corporate~~(1)~~(2)	(29)		(23)
Total Hertz Global	Total Hertz Global	(26)		392		(855)		595		Total Hertz Global	2		(243)
Adjustments:	Adjustments:									Adjustments:
Non-vehicle depreciation and amortization	Non-vehicle depreciation and amortization	(58)		(51)		(168)		(151)		Non-vehicle depreciation and amortization	(54)		(53)
Non-vehicle debt interest, net	Non-vehicle debt interest, net	(17)		(68)		(116)		(209)		Non-vehicle debt interest, net	(44)		(55)
Vehicle debt-related charges~~(2)~~(3)	Vehicle debt-related charges~~(2)~~(3)	(13)		(10)		(37)		(29)		Vehicle debt-related charges~~(2)~~(3)	(28)		(9)

Restructuring and restructuring related charges~~(3)~~(4)	Restructuring and restructuring related charges~~(3)~~(4)	(7)		(1)		(54)		(11)		Restructuring and restructuring related charges~~(3)~~(4)	(12)		(7)
Technology-related intangible and other asset impairments(4)		0		0		(193)		0
Write-off of intercompany loan(9)		0		0		(133)		0

Information technology and finance transformation costs(5)	Information technology and finance transformation costs(5)	(8)		(17)		(34)		(77)		Information technology and finance transformation costs(5)	(6)		(17)
Reorganization items, net(6)	Reorganization items, net(6)	(78)		0		(101)		0		Reorganization items, net(6)	(42)		0
Pre-reorganization charges and non-debtor financing charges(7)	Pre-reorganization charges and non-debtor financing charges(7)	(44)		0		(89)		0		Pre-reorganization charges and non-debtor financing charges(7)	(23)		0
Other items(8)		(8)		4		(15)		30
Gain from the Donlen Sale(8)										Gain from the Donlen Sale(8)	392		0
Other items(9)										Other items(9)	83		25
Income (loss) before income taxes	Income (loss) before income taxes	$	(259)	$	249	$	(1,795)	$	148	Income (loss) before income taxes	$	268	$	(359)

(1)Substantially all of this reportable segment is comprised of the Company's Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures."

(2)Represents other reconciling items primarily consisting of general corporate expenses, non-vehicle interest expense, as well as other business activities.

~~(2)~~(3)Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.

~~(3)~~(4)Represents charges incurred under restructuring actions as defined in U.S. ~~GAAP.~~GAAP, excluding impairments and asset write-downs. See Note 8, ~~"Restructuring"~~"Restructuring," for further information. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.

~~(4)Represents the impairment of technology-related intangible assets and capitalized cloud computing implementation costs, as disclosed in Note 5, "Goodwill and Intangible Assets, Net."~~

(5)Represents costs associated with the Company’s information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes.

(6)Represents charges incurred associated with the filing of the Chapter 11 Cases, as disclosed in Note ~~17,~~16, "Reorganization Items, ~~Net,~~Net." ~~including professional fees.~~

(7)Represents charges incurred prior to the filing of the Chapter 11 Cases, as disclosed in Note 1, "Background,"~~in the second quarter of 2020~~ which are comprised of preparation charges for the reorganization, such as professional fees. Also, includes certain non-debtor financing and professional fee charges.

(8)Represents the net gain from the sale of the Company's Donlen business on March 30, 2021 as disclosed in Note 3, "Divestitures."

(9)Represents miscellaneous items, including non-cash stock-based compensation charges, and amounts attributable to noncontrolling interests. InFor the three months ended March 31, 2021, also includes $100 million associated with the suspension of depreciation for the Donlen business while classified as held for sale, partially offset by charges for a multiemployer pension plan withdrawal liability. For the three months ended March 31, 2020, also includes ~~$18 million for losses associated with certain vehicle damages, which were recorded in the second quarter, partially offset by~~ a $20 million gain on the sale of non-vehicle capital assets ~~which was recorded~~and $13 million in ~~the first quarter. In 2019, includes a $26 million gain~~unrealized gains on ~~marketable securities, of which $6 million was recorded in the third quarter, and a $15 million gain on the sale of non-vehicle capital assets, of which $3 million was recorded in the third quarter.~~

~~(9)Represents the write-off of the 2019 Master Loan between Hertz and Hertz Holdings, which was recorded in the second quarter 2020, as disclosed in Note 14, "Related Party Transactions."~~derivative financial instruments.

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Unaudited

Note ~~16—~~15—Liabilities Subject to Compromise

The accompanying unaudited condensed consolidated balance ~~sheet~~sheets as of ~~September 30,~~March 31, 2021 and December 31, 2020 ~~includes~~include amounts classified as liabilities subject to compromise, which represent Pre-petition liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases. These amounts represent the Debtors' current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases and may differ from actual future settlement amounts. The Company will continue to evaluate these liabilities throughout the Chapter 11 process and adjust amounts as necessary. Such adjustments could be material and will be recorded in reorganization items, net in the accompanying unaudited condensed consolidated ~~statements~~statement of operations.

The following table summarizes liabilities subject to compromise:


~~(In millions)~~	~~September 30, 2020~~

~~Accounts payable~~	$	~~300~~

~~Accrued liabilities~~	~~199~~
~~Accrued taxes, net~~	23
~~Accrued interest on debt subject to compromise~~	75

~~Debt subject to compromise(1)~~	~~4,404~~


~~Liabilities subject to compromise - Hertz Global~~	$	~~5,001~~
~~Due from Affiliate - Hertz(2)~~	65
~~Liabilities subject to compromise - Hertz~~	$	~~5,066~~


(In millions)	March 31, 2021		December 31, 2020
Accounts payable	$	239	$	267
Accrued liabilities(1)	139		166
Accrued taxes, net	16		19
Accrued interest on debt subject to compromise	73		70

Debt subject to compromise(2)	4,511		4,443


Liabilities subject to compromise - Hertz Global	$	4,978	$	4,965
Due from Affiliate - Hertz(3)	65		65
Liabilities subject to compromise - Hertz	$	5,043	$	5,030

(1) Includes $24 million of U.S. pension benefit obligation reported as liabilities subject to compromise as of March 31, 2021 and December 31, 2020.

(2) See Note 6, ~~"Debt"~~"Debt," for details of Pre-petition, non-vehicle debt reported as liabilities subject to compromise as of ~~September 30,~~March 31, 2021 and December 31, 2020.

~~(2)~~(3) See Note ~~14,~~13, "Related Party ~~Transactions"~~Transactions," for details of a Pre-petition intercompany loan due to an affiliate reported as liabilities subject to compromise as of ~~September 30,~~March 31, 2021 and December 31, 2020.

Note ~~17—~~16—Reorganization Items, Net

The Debtors have incurred and will continue to incur costs associated with the reorganization, including professional and consulting fees. Charges associated with the Chapter 11 Cases have been recorded as reorganization items, net in the accompanying unaudited condensed consolidated ~~statements~~statement of operations for the three ~~and nine~~ months ended ~~September 30, 2020.~~March 31, 2021.

For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company incurred ~~$78~~$42 million ~~and $101 million, respectively,~~ of charges primarily for professional fees totaling $57 million, partially offset by the write-off of ~~which $35 million was paid as of September 30, 2020,~~certain Pre-petition claims and lease settlements totaling $15 million. Cash payments during the three months ended March 31, 2021 totaled $58 million. Additionally, $57 million and $9$7 million were recorded in accrued liabilities and accounts payable, respectively, in the accompanying unaudited condensed consolidated balance sheet as of ~~September 30, 2020.~~March 31, 2021. The Company incurred $175 million of charges during the year ended December 31, 2020 comprised primarily of professional fees, of which $102 million were paid as December 31, 2020 and $46 million and $19 million were recorded in accrued liabilities and accounts payable, respectively, in the accompanying unaudited condensed consolidated balance sheet.

Note ~~18—~~17—Condensed Combined Debtor-in-Possession Financial Information

The following financial statements represent the unaudited condensed combined financial statements of the Debtors. The results of the non-debtor entities are not included in these financial statements. Intercompany transactions among the Debtors have been eliminated in the following financial statements. Intercompany transactions among the Debtor and non-debtor entities have not been eliminated in the following financial statements.

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Unaudited

Amounts reported for Hertz Global and Hertz are substantially the same, with the exception of that related to interest expense (income) and tax provision (benefit), as well as activity associated with the master loan agreement between Hertz and Hertz Global as disclosed in Note 13, "Related Party Transactions."

THE DEBTORS

CONDENSED COMBINED BALANCE SHEET

(in millions)


	~~September 30, 2020~~
~~ASSETS~~
~~Cash and cash equivalents~~	$	~~595~~
~~Restricted cash and cash equivalents~~	~~338~~
~~Total cash, cash equivalents, restricted cash and restricted cash equivalents~~	~~933~~
~~Receivables, net~~	~~448~~
~~Due from non-debtor affiliates~~	~~50,189~~
~~Prepaid expenses and other assets~~	~~652~~
~~Revenue earning vehicles, net~~	59
~~Property and equipment, net~~	~~579~~
~~Operating lease right-of-use assets~~	~~1,482~~
~~Investment in subsidiaries, net~~	~~4,567~~
~~Intangible assets, net~~	~~3,059~~
~~Goodwill~~	~~524~~
~~Total assets~~	$	~~62,492~~

~~LIABILITIES AND EQUITY~~
~~Accounts payable~~	$	~~283~~
~~Due to non-debtor affiliates~~	0
~~Accrued liabilities~~	~~466~~
~~Accrued taxes, net~~	59
~~Debt~~	18
~~Operating lease liabilities~~	~~1,449~~
~~Self-insured liabilities~~	~~252~~
~~Deferred income taxes, net~~	0
~~Total liabilities not subject to compromise~~	~~2,527~~
~~Liabilities subject to compromise~~	~~59,624~~
~~Total liabilities~~	~~62,151~~
~~Total equity attributable to the Debtors~~	~~341~~


~~Total liabilities and equity~~	$	~~62,492~~


	March 31, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	534	$	492
Restricted cash and cash equivalents	1,179		305
Total cash, cash equivalents, restricted cash and restricted cash equivalents	1,713		797
Receivables, net	404		388
Due from non-debtor affiliates	51,607		51,638
Prepaid expenses and other assets	265		183
Revenue earning vehicles, net	5		37
Property and equipment, net	530		549
Operating lease right-of-use assets	1,353		1,424
Investment in subsidiaries, net	4,893		4,527
Intangible assets, net	2,966		2,988
Goodwill	488		488
Assets held for sale(1)	0		173
Total assets	$	64,224	$	63,192

LIABILITIES AND EQUITY
Accounts payable	$	219	$	200

Accrued liabilities	477		412
Accrued taxes, net	84		48
Debt	740		242
Operating lease liabilities	1,314		1,385
Self-insured liabilities	243		251
Deferred income taxes, net	1,208		887
Total liabilities not subject to compromise	4,285		3,425
Liabilities subject to compromise	59,674		59,637
Liabilities held for sale(1)	0		74
Total liabilities	63,959		63,136
Total equity attributable to the Debtors	265		56


Total liabilities and equity	$	64,224	$	63,192

(1) At December 31, 2020, the assets and certain liabilities of the Company's Donlen business were classified as assets held for sale and liabilities held for sale, respectively. On March 30, 2021, the Company's Donlen business was sold as disclosed in Note 3, "Divestitures."

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

THE DEBTORS

CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in millions)

Three Months Ended
September 30, 2020 Nine Months Ended
September 30, 2020
Total revenues $ 864 $ 2,737
Expenses:
Direct vehicle and operating 660 2,214
Depreciation of revenue earning vehicles and lease charges 403 2,767
Selling, general and administrative 90 387
Interest (income) expense, net 8 96
Technology-related intangible and other asset impairments 0 193
Other (income) expense, net 0 (18)
Reorganization items, net 78 101
Total expenses 1,239 5,740
Income (loss) before income taxes and equity in earnings (losses) of non-debtor entities (375) (3,003)
Income tax (provision) benefit 63 590
Equity in earnings (losses) of non-debtor entities 90 988
Net income (loss) (222) (1,425)
Total other comprehensive income (loss), net of tax 5 (27)
Comprehensive income (loss) attributable to the Debtors $ (217) $ (1,452)


	Three Months Ended March 31, 2021
Total revenues	$	942
Expenses:
Direct vehicle and operating	687
Depreciation of revenue earning vehicles and lease charges	322
Selling, general and administrative	117
Interest (income) expense, net	34

Other (income) expense, net	18
Reorganization items, net	42
(Gain) from the sale of a business	(392)
Total expenses	828
Income (loss) before income taxes and equity in earnings (losses) of non-debtor entities	114
Income tax (provision) benefit	(335)
Equity in earnings (losses) of non-debtor entities	411
Net income (loss)	190


Total other comprehensive income (loss), net of tax	17
Comprehensive income (loss) attributable to the Debtors	$	207

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited

THE DEBTORS

CONDENSED COMBINED STATEMENT OF CASH FLOWS

(in millions)


	~~Nine~~Three Months Ended ~~September 30, 2020~~March 31, 2021

























Net cash provided by (used in) operating activities	$	~~(459)~~(53)
Cash flows from investing activities:
Revenue earning vehicles expenditures	~~(466)~~(10)
Proceeds from disposal of revenue earning vehicles	~~596~~ (25)
Non-vehicle capital asset expenditures	~~(71)~~(8)
Proceeds from non-vehicle capital assets disposed of	483

~~Sales~~Proceeds from the sale of ~~marketable securities~~business, net of cash sold	74818
Capital contributions to non-debtor entities	~~(741)~~(411)
Return of capital from non-debtor entities	~~838~~43
~~Loan to non-debtor entity~~	~~(180)~~
~~Loan repayment from non-debtor entity~~	~~189~~

Net cash provided by (used in) investing activities	~~287~~410
Cash flows from financing activities:
~~Proceeds from issuance of vehicle debt~~	~~321~~
~~Repayments of vehicle debt~~	~~(467)~~
Proceeds from issuance of non-vehicle debt	~~1,553~~560
Repayments of non-vehicle debt	~~(854)~~
~~Proceeds from the issuance of stock, net~~	28 (1)





~~Other~~	~~(2)~~

Net cash provided by (used in) financing activities	~~579~~559

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period	~~407~~916
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	~~526~~797
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period	$	~~933~~1,713

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Hertz Global Holdings, Inc. (together with its consolidated subsidiaries and variable interest entities, "Hertz Global") is a holding company and its principal, wholly-owned subsidiary is The Hertz Corporation (together with its consolidated subsidiaries and variable interest entities, "Hertz"). Hertz Global consolidates Hertz for financial statement purposes, and Hertz comprises approximately the entire balance of Hertz Global's assets, liabilities and operating cash flows. In addition, Hertz's operating revenues and operating expenses comprise nearly 100% of Hertz Global's revenues and operating expenses. As such, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") that follows herein is for Hertz and also applies to Hertz Global in all material respects, unless otherwise noted. Differences between the operations and results of Hertz and Hertz Global are separately disclosed and explained. We sometimes use the words "we," "our," "us" and the "Company" in this MD&A for disclosures that relate to all of Hertz and Hertz Global. ~~Please refer to the defined terms in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q when reviewing the MD&A.~~

This MD&A should be read in conjunction with the MD&A presented in our ~~2019~~2020 Form 10-K together with the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” Part II, Item 1A, "Risk Factors,” and our unaudited condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2020~~March 31, 2021 (this "Report"), which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements and the accompanying notes including revenue earning vehicle depreciation and various claims and contingencies related to lawsuits, taxes and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and our knowledge of actions that we may undertake in the future in determining the estimates that will affect our unaudited condensed consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe to be appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates.

In this MD&A we refer to the following non-GAAP measure and key metrics:

•Adjusted Corporate EBITDA -– important non-GAAP measure to management because it allows management to assess the operational performance of our business, exclusive of certain items, and 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~~investors to assess our operational performance on the same basis that management uses internally. Adjusted EBITDA, the segment measure of profitability and accordingly a GAAP measure, is calculated exclusive of certain items which are largely consistent with those used in the calculation of Adjusted Corporate EBITDA.

•Depreciation Per Unit Per Month -– important key metric to management and investors as depreciation of revenue earning vehicles and lease charges is one of our largest expenses for the vehicle rental business and is driven by the number of vehicles, expected residual values at the expected time of disposal and expected hold period of the vehicles. Depreciation Per Unit Per Month is reflective of how we are managing the costs of our vehicles and facilitates a comparison with other participants in the vehicle rental industry.

•Total Revenue Per Transaction Day ("Total RPD," also referred to as "pricing") -– important key metric to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.

•Total Revenue Per Unit Per Month ("Total RPU") – important key metric to management and investors as it provides a measure of revenue productivity relative to the total number of vehicles in our fleet whether owned or leased ("Average Vehicles" or "fleet capacity").

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

•Total Revenue Per Unit Per Month ("Total RPU") - important key metric to management and investors as it provides a measure of revenue productivity relative to the total number of vehicles in our fleet whether owned or leased ("Average Vehicles" or "fleet capacity").

•Transaction Days -– important key metric to management and investors as it represents the number of revenue generating days ("volume"). It is used as a component to measure Total RPD and Vehicle Utilization. Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.

•Vehicle Utilization -– important key metric to management and investors because it is the measurement of the proportion of our vehicles that are being used to generate revenues relative to fleet capacity. Higher Vehicle Utilization means more vehicles are being utilized to generate revenues.

Our non-GAAP measure and key metrics should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP. The above non-GAAP measure and key metrics are defined, and the non-GAAP measure is reconciled to its most comparable U.S. GAAP measure, in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.

OUR COMPANY

Hertz Holdings was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns Hertz, Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918. We are engaged principally in the business of renting vehicles primarily through our Hertz, Dollar and Thrifty brands. In addition to vehicle rental, we provide integrated vehicle leasing and fleet management solutions through our Donlen ~~subsidiary.~~subsidiary, which was sold on March 30, 2021. We operate our vehicle rental business globally from company-owned, licensee and franchisee locations in North America, Europe, Latin America, Africa, Asia, Australia, the Caribbean, the Middle East and New Zealand.

OVERVIEW OF OUR BUSINESS AND OPERATING ENVIRONMENT

~~Overview~~Impact of ~~the Impact from~~ COVID-19 on our Business

~~The outbreak of~~In March 2020, the World Health Organization declared COVID-19 ~~was declared~~ a pandemic, ~~in March 2020 and has spread to~~affecting multiple global regions. The impact of this pandemic has been ~~and will likely continue to be~~ extensive in many aspects of society, which has resulted ~~in, and will likely continue to result~~ in significant disruptions to the global economy, as well as businesses around the world. In an effort to halt the ~~outbreak~~spread of COVID-19, many governments around the world ~~initially~~ placed significant restrictions on travel, individuals voluntarily reduced their air and other travel in attempts to avoid of the outbreak, and many businesses announced closures and imposed travel restrictions. There is continued uncertainty about the ~~magnitude and~~ duration of the negative impact from COVID-19 and the length and scope of travel restrictions and business closures imposed by governments of impacted countries and voluntarily undertaken by private businesses.

In response to the outbreak of COVID-19, we began aggressively managing costs and (i) initiated a restructuring program affecting approximately 11,000 employees in our U.S. RAC segment and U.S. corporate operations, the majority of which were previously furloughed, (ii) actively negotiated to abate or defer our airport rent and concession payments, (iii) substantially reduced capital expenditures; (iv) eliminated discretionary marketing spend; and (v) reduced our commitments to purchase vehicles by approximately $4.0 billion from original commitments in our U.S. RAC segment, the majority of which were delivered during the second quarter of 2020.Voluntary Petitions for Bankruptcy

~~Although we took aggressive action~~On May 22, 2020, the Debtors filed Petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re The Hertz Corporation, et al., Case No. 20-11218 (MFW). Additional information about the Chapter 11 Cases, including access to ~~eliminate costs, we faced significant ongoing monthly expenses,~~documents filed with the Bankruptcy Court, is available online at https://restructuring.primeclerk.com/hertz, a website administered by Prime Clerk. The information on this website is not incorporated by reference and does not constitute part of this Quarterly Report on Form 10-Q.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

proposed Disclosure Statement, in each case dated as of March 29, 2021; a proposed Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 3, 2021; a proposed Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 10, 2021; a proposed Second Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, dated as of April 14, 2021 and April 15, 2021, respectively; a proposed Third Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 16, 2021; and a proposed Fourth Modified Second Amended Joint Chapter 11 Plan of Reorganization of the Debtors and a related proposed Disclosure Statement, in each case dated as of April 21, 2021, which Disclosure Statement the Debtors further updated on April 21, 2021. On April 22, 2021, the Debtors filed the Proposed Plan and Disclosure Statement.

The Disclosure Statement describes, among other things, the events leading to the Chapter 11 Cases; the Debtors contemplated Restructuring; the proposed plan of reorganization; certain events that have occurred or are anticipated to occur during the Chapter 11 Cases, including ~~monthly payments~~the solicitation of votes to approve the Proposed Plan from certain of the Debtors’ stakeholders; certain risk factors related to the Plan, certain tax considerations, and certain other aspects of the Restructuring. The Disclosure Statement and solicitation procedures with respect to the Proposed Plan was approved by the Bankruptcy Court at a hearing held on April 21, 2021 and an order to that effect was entered on April 22, 2021. The Proposed Plan is now subject to a vote by the Debtors' stakeholders and a subsequent confirmation hearing of the Bankruptcy Court, currently scheduled for June 10, 2021. In addition to approval by the Bankruptcy Court, consummation of the Proposed Plan remains subject to the satisfaction of other conditions.

Under the Proposed Plan, the Plan Sponsors have committed to provide equity capital to fund the Debtors' exit from Chapter 11 as reflected in Transaction Documents. Under the Proposed Plan, the Debtors anticipate exiting from Chapter 11 with approximately $2.2 billion of global liquidity (inclusive of capacity under ~~our Operating Lease,~~the anticipated exit revolving credit facility) and only $1.3 billion in non-vehicle debt (exclusive of ABS facilities and a revolving credit facility).

The Proposed Plan is supported by the Supporting Noteholders, which comprise the vast majority of creditors in the largest class of claims that are voting on the Proposed Plan and the Official Committee of Unsecured Creditors appointed in the Chapter 11 Cases. As set forth in the Transaction Documents:

•the Proposed Plan will raise approximately $3.9 billion in cash proceeds, comprised of:

◦$565 million from the purchase of common stock in the reorganized entity by the Plan Sponsors;

◦$1.6 billion from the purchase of common stock pursuant to the rights offering contemplated by the Proposed Plan, which ~~Hertz leases vehicles which we use~~the Plan Sponsors have committed to ensure is fully funded pursuant to the terms of the EPCA;

◦$385 million from the purchase of preferred stock by plan sponsors Centerbridge Partners, L.P. and Warburg Pincus LLC; and

◦$1.3 billion in proceeds from our ~~U.S.~~anticipated new exit term loan facility.

•Such cash proceeds will be used, in part, to provide the following distributions to our stakeholders pursuant to the terms of the Proposed Plan:

◦administrative priority and secured claims will be paid in cash in full;

◦the holders of our €725 million European Vehicle Notes will be paid in cash in full;

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~rental car operations.~~ ◦the holders of general unsecured claims will receive cash payments of not more than $550 million in the aggregate, which we estimate will provide a recovery of approximately 100 percent; and

◦our existing equity will be cancelled and existing equity holders will receive new six-year warrants to purchase, in the aggregate 4%, of the reorganized entity's common stock, subject to certain conditions, with an exercise price to be determined based on an equity value of the reorganized entity of $6.1 billion.

In light of continuing interest from the Alternative Sponsor Group, on April 28, 2021, the Bankruptcy Court entered the Bid Procedures Order, among other things, establishing bidding and auction procedures relating to the submission of alternative plan proposals.

On ~~April 27, 2020, Hertz did not make certain payments in accordance~~May 2, 2021, the Alternative Sponsor Group submitted the Alternative Plan Proposal.

On May 4, 2021, we determined that the Alternative Plan Proposal constitutes a “Superior Proposal” as that term is defined under the Debtors’ EPCA with the ~~Operating Lease,~~Plan Sponsors dated as of April 3, 2021 and approved by the Bankruptcy Court on April 22, 2021. Pursuant to the Bid Procedures Order, the Plan Sponsors will have until 5:00 p.m., Eastern Time, on May 7, 2021 to indicate if they intend to counter the Alternative Plan Proposal. If the Plan Sponsors determine to counter the Alternative Plan Proposal, an Auction will be conducted on May 10, 2021. A hearing before the Bankruptcy Court to approve the results of the Auction along with supplemental solicitation materials, if any, will be conducted on May 14, 2021.

This Quarterly Report on Form 10-Q is not a solicitation of votes to accept or reject the Proposed Plan. Information contained in the Proposed Plan and the Disclosure Statement is subject to change, whether as a result ~~an amortization event was in effect as~~ of ~~May 5, 2020 for all series of notes issued by HVF II and a liquidation event was in effect with respect~~additional amendments or supplements to the ~~Series 2013-A Notes issued by HVF II. Refer to Part I, Item 1~~Proposed Plan or Disclosure Statement or otherwise. The documents and other information available via website or elsewhere are not part of this Quarterly Report on Form 10-Q ~~in Note 1~~, ~~"Background" for additional information on the Forbearance Agreement~~ and ~~Waiver Agreements which expired on May 22, 2020.~~

~~Voluntary Petitions for Bankruptcy~~shall not be deemed incorporated herein.

In connection with the expiration of the Forbearance Agreement and the Waiver Agreements described above and the continuing economic impact from COVID-19, on May 22, 2020, the Debtors filed Petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Chapter 11 Cases are being jointly administered under the caption ~~In re: the Hertz Corporation, et al., Case No. 20-11218 (MFW)~~. Additional information about the Chapter 11 Cases, including access to documents filed with the Bankruptcy Court, is available online at https://restructuring.primeclerk.com/hertz, a website administered by Prime Clerk, a third party bankruptcy claims and noticing agent. The information on this web site is not incorporated by reference and does not constitute part of this Form 10-Q.

Liquidity Considerations Following the Chapter 11 Filing

On ~~July 24, 2020, per~~January 20, 2021, the ~~terms of~~Bankruptcy Court authorized the ~~Interim~~Second Lease Order, ~~entered on July 24, 2020,~~which extended the forbearance period related to the Operating Lease to September 30, 2021, provided that the Debtors ~~were~~dispose of 121,510 lease vehicles, at least 113,381 of which will be non-program vehicles, and reach a minimum cumulative vehicle disposition proceeds of $2.0 billion by September 30, 2021. Additionally, the Second Lease Order directed ~~among other things,~~the Debtors to (i) have no more than 157,262 lease vehicles by September 30, 2021 and (ii) make ~~$650~~$756 million of base rent payments under the Operating Lease to the HVF trustee in the amount of ~~six~~nine equal monthly payments of ~~approximately $108~~$84 million commencing in ~~July 2020~~January 2021 through ~~December 2020; (ii)~~September 2021. Of the 121,510 lease vehicles that the Debtors are obligated to dispose of, ~~at least 182,521~~as of March 31, 2021 the Debtors have disposed approximately 14,000 lease vehicles, ~~between June 1, 2020 and December 31, 2020, inclusive, where~~of which 9,000 were non-program vehicles. See the proceeds of the dispositions, subject to certain exclusions set forth in the Interim Lease Order, will be used to make payments under the Operating Lease; (iii) fund interest payments on the Operating Lease from draws on certain existing letters of credit, which are reimbursable by the Debtors; and (iv) suspend litigation relating to the Operating Lease until January 15, 2021 with all parties reserving all rights with respect to future litigation claims. For the period from June 1, 2020 through September 30, 2020, we disposed of approximately 165,000 vehicles which are associated with the Interim Lease Order. Also, refer to "Liquidity and Capital Resources" section ~~below.~~of this MD&A for further information.

AsOn January 27, 2021, Hertz subsidiary, TCL Funding Limited Partnership, entered into the Funding LP Series 2021-A Notes which provide for aggregate maximum borrowings of CAD$350 million on a ~~result~~revolving basis, subject to availability. The initial draw of CAD$120 million was used, in part, to pay the ~~Lease Rejection Orders approved by~~outstanding obligations under the ~~Bankruptcy Court~~Funding LP Series 2015-A Notes, including any unpaid default interest, as disclosed in ~~September 2020, 257~~Note 6, "Debt," in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During the first quarter of 2021 an additional 278 off airport and 1526 airport locations with unexpired leases were authorized by the Bankruptcy Court for rejection in our U.S. RAC ~~segment. In October 2020, the Bankruptcy Court approved the October Lease Rejection Orders comprised~~segment, as further disclosed in Note 7, "Leases," in Part I, Item 1 of ~~29 airport and 24 off airport locations in our U.S. RAC segment.~~this Quarterly Report on Form 10-Q. These rejections did not materially change the minimum fixed obligations for operating leases as disclosed in Part II, Item 7, "Contractual Obligations" included in our ~~2019~~2020 Form 10-K.

As a result of our ongoing actions to eliminate costs, in the third quarter of 2020, we (i) negotiated rent concessions in the form of abatement and payment deferrals of fixed and variable rent payments for our airport and off airport locations in the amount of $84 million which represent amounts previously due in the period between July 1, 2020 and September 30, 2020; (ii) reduced our revenue earning vehicle expenditures by $2.4 billion, or 91%, in the third quarter of 2020 compared to 2019; (iii) reduced our non-vehicle capital asset expenditures by $35 million, or 67%,in the third quarter of 2020 compared to 2019 primarily due to a reduction in information technology and finance transformation program costs; and (iv) sold 56,000, or 72%, more vehicles in our U.S. RAC segment in the third quarter of 2020 compared to 2019 ~~due to the Interim Lease Order and strength in residual values. We are continuing to review our cost structure and fleet size to align with expected rental car volumes.~~

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

interim fleet financing, giving the Debtors the ability to replenish their vehicle fleet in the future, and (ii) up to $800 million can be used for working capital and general corporate purposes. The DIP Loans are available in multiple draws of at least (i) $250 million each, or (ii) the remaining available commitments if such commitments are less than $250 million. The DIP Loans bear interest at a rate of LIBOR plus 7.25% (subject to a 1.00% floor), which is reduced to LIBOR plus 6.75% upon a significant repayment of Pre-petition first lien debt.~~Refer to Part I, Item 1 of this Quarterly Report on Form 10-Q in Note 6, "Debt" for further details.~~

On November 5, 2020, Hertz Global issued a press release announcing that it secured commitments for fleet financing totaling $4 billion and has filed a motion for approval of Hertz entering into the documentation for the financing by the Bankruptcy Court. Upon approval, and together with the up to $1 billion of our debtor-in-possession financing that may be used for equity in our fleet financing subsidiary, we will have access to up to $5 billion in total funding to support its fleet financing needs.

~~NYSE Delisting~~

As a result of our actions to continue to eliminate costs in 2021, we (i) negotiated rent concessions in the ~~filing~~form of abatements of fixed and variable rent payments for certain of our airport and off airport locations in the ~~Chapter 11 Cases, on October 29, 2020,~~amount of approximately $100 million which substantially represents amounts previously due in the ~~NYSE informed us that Hertz Global common stock is no longer suitable for listing on~~period between January 1, 2021 and March 31, 2021; (ii) initiated a restructuring program in our International RAC segment; and (iii) reduced our vehicle expenditures by $2.8 billion, or 65%, and reduced our capital expenditures by $50 million, or 85%, in the ~~NYSE~~first quarter of 2021 compared to 2020. We continue to review our cost structure and ~~that~~fleet size to align with expected rental car volumes, including in response to potential increases in travel as indicated by traveler throughput increases beginning in March 2021, as measured by the NYSE has suspended trading in Hertz Global's common stock (NYSE ticker symbol: HTZ) after the market close on October 29, 2020. As a result of the suspension and expected delisting, Hertz Global's common stock began trading exclusively on the OTC market on October 30, 2020 under the symbol HTZGQ.U.S. Transportation Security Administration.

Our Business

We are engaged principally in the business of renting vehicles primarily through our Hertz, Dollar and Thrifty brands. In addition to vehicle rental, we provided integrated vehicle leasing and fleet management solutions through our Donlen business, which was sold on March 30, 2021. Our profitability is primarily a function of the volume, mix and pricing of rental transactions and the utilization of vehicles, the related ownership cost of vehicles and other operating costs. Significant changes in the purchase price or residual values of vehicles or interest rates can have a significant effect on our profitability depending on our ability to adjust pricing for these changes. We continue to balance our mix of non-program and program vehicles based on market conditions, including residual values. Our business requires significant expenditures for vehicles, and as such, we require substantial liquidity to finance such expenditures. However, as a result of the Interim Lease Order, Hertz will dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020, where the proceeds from the dispositions will be used to make payments under the Operating Lease. See the "Liquidity and Capital Resources" section of this MD&A for further information.

Our strategy includes optimization of our vehicle rental operations, disciplined performance management and evaluation of all locations and the pursuit of same-store sales growth.

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

•Worldwide vehicle rental revenues -– revenues from all company-operated vehicle rental operations, including charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and revenues associated with value-added services, including the sale of loss or collision damage waivers, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and other products and fees. Also included are ancillary revenues associated with retail vehicle sales and certain royalty fees from our franchisees (such fees are less than 2% of total revenues each period); and

•All other operations revenues -– revenues from vehicle leasing and fleet management services by our Donlen business, which was sold on March 30, 2021, and other business activities.

Our expenses primarily consist of:

•Direct vehicle and operating expense ("DOE"), primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservation

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

costs; and other costs relating to the operation and rental of revenue earning vehicles, such as damage, maintenance and fuel costs;

•Depreciation expense and lease charges relating to revenue earning vehicles, including costs associated with the disposal of vehicles;

•Selling, general and administrative expense ("SG&A"), which includes advertising costs and administrative personnel costs, along with costs for information technology and finance transformation programs;

•Interest expense, net; and

•Reorganization items, net, which includes charges associated with the Chapter 11 Cases, primarily professional fees.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Our Business Segments

We have identified three reportable segments, which are organized based on the products and services provided by our operating segments and the geographic areas in which our operating segments conduct business, as follows:

•U.S. RAC -– Rental of vehicles, as well as sales of value-added services, in the U.S.;

•International RAC -– Rental and leasing of vehicles, as well as sales of value-added services, internationally; and

•All Other Operations -– Comprised primarily of our Donlen business, which provides vehicle leasing and fleet management services, and other business activities. Substantially all of the assets and liabilities of our Donlen business were classified as held for sale in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020, and were sold on March 30, 2021 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report on Form 10-Q.

In addition to the above reportable segments, we have corporate operations. We assess performance and allocate resources based upon the financial information for our operating segments.

Seasonality

Our vehicle rental operations are a seasonal business, with decreased levels of business in the winter months and heightened activity during the spring and summer months ("our peak season") for the majority of countries where we generate our revenues. To accommodate increased demand, we typically increase our available fleet and staff during the second and third quarters of the year. However, as a result of the ~~COVID-19 mitigation actions, we initiated~~Second Lease Order, the Debtors are to dispose of 121,510 lease vehicles, at least 113,381 of which will be non-program vehicles, and reach a ~~restructuring program in~~minimum cumulative vehicle disposition proceeds of $2.0 billion by September 30, 2021. Additionally, the ~~second~~Second Lease Order directed the Debtors to (i) have no more than 157,262 lease vehicles by September 30, 2021. The continuing semiconductor microchip manufacturing shortage may delay or impact our ability to obtain a sufficient supply of new vehicles to align with rental demands through the first quarter of ~~2020 affecting approximately 11,000 employees~~2022. This shortage may result in our U.S. RAC segment and U.S. corporate operations. Additionally, as a result of the Interim Lease Order, Hertz will dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020, where the proceeds from the dispositions will be used to make payments under the Operating Lease.increased vehicle acquisition costs. A number of our other major operating costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes. In addition, our management expects to utilize enhanced process improvements, including utilization initiatives and the use of our information technology systems, to help manage our variable costs. We also maintain a flexible workforce, with a significant number of part-time and seasonal workers. Certain operating expenses, including real estate taxes, rent, insurance, utilities, maintenance and other facility-related expenses, the costs of operating our information technology systems and minimum staffing costs, remain fixed and cannot be adjusted for seasonal demand. ~~As a result~~During the first quarter of ~~the Lease Rejection Orders in September 2020, 257~~2021, 278 off airport and 1526 airport locations with unexpired leases were authorized ~~for rejection in our U.S. RAC segment. Additionally, in October 2020,~~by the Bankruptcy Court ~~approved the October Lease Rejection Orders comprised of 29 airport and 24 off airport locations~~for rejection in our U.S. RAC segment.

Three ~~and Nine~~ Months Ended ~~September 30, 2020~~March 31, 2021 Operating Overview

The global COVID-19 pandemic ~~has~~ continued to ~~cause a substantial reduction to~~negatively affect airline travel ~~for~~during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 compared to the three months ended March 31, 2020. As a large portion of our business is generated at airport locations, ~~these~~ disruptions ~~during~~in airline travel has continued to adversely impact our ~~peak season have had,~~results of operations. However, U.S. airline travel saw traveler throughput increase, as measured by the U.S. Transportation Security Administration, beginning in March 2021 which generated increased demand for rental vehicles and improved pricing across the industry. This increase in travel demand appears to be accelerating into the second quarter as reflected in Total RPD and Transaction Days. Consequently, we expect itincreased demand and improved pricing to continue ~~to have, a material adverse impact on our results~~in the second quarter of 2021.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~operations until such travel returns to historic levels.~~ The following ~~provides an overview of our business and financial performance and~~charts provide several key factors influencing our ~~results:~~results for the three months ended March 31, 2021 and 2020.

~~U.S. RAC~~

◦~~3Q 2020 versus 3Q 2019:~~

▪~~Total revenues decreased $1.1 billion, or 56%~~

▪~~Total RPU decreased 35% and Total RPD decreased 1%~~

▪~~Transaction Days decreased 57%~~

▪~~Depreciation of revenue earning vehicles and lease charges decreased 57% to $182 million~~

▪~~Depreciation Per Unit Per Month decreased 35% to $161~~

▪~~Vehicle Utilization decreased to 52% from 79%~~

▪~~DOE as a percentage of total revenues increased to 75% from 56%~~

▪~~SG&A as a percentage of total revenues decreased to 5% from 6%~~

◦~~Nine months 2020 versus Nine months 2019:~~

▪~~Total revenues decreased $2.5 billion, or 47%~~

▪~~Total RPU decreased 40% and Total RPD decreased 2%~~

▪~~Transaction Days decreased 47%~~

▪~~Depreciation of revenue earning vehicles and lease charges decreased 13% to $1.1 billion~~

▪~~Depreciation Per Unit Per Month was flat~~

▪~~Vehicle Utilization decreased to 49% from 80%~~

▪~~DOE as a percentage of total revenues increased to 78% from 59%~~

▪~~SG&A as a percentage of total revenues increased to 8% from 7%~~

~~International RAC~~

◦~~3Q 2020 versus 3Q 2019:~~

▪~~Total revenues decreased $449 million, or 64%, and decreased $459 million, or 64%, excluding the~~(1) Includes impact of foreign currency exchange at average rates ("fx").

▪~~Total RPU decreased 29% and Total RPD decreased 13%~~(2) Results shown are in constant currency as of December 31, 2020.

▪~~Transaction Days decreased 60%~~

▪~~Depreciation of revenue earning vehicles and lease charges decreased 53% to $59 million, and decreased $69 million, or 54%, excluding fx~~

▪~~Depreciation Per Unit Per Month decreased 8% to $183~~

▪(3) The percentages shown in this chart reflect Vehicle Utilization ~~decreased to 65% from 80%~~

▪~~DOE as a percentage of total revenues increased to 71% from 55%~~

▪~~SG&A as a percentage of total revenues increased to 22% from 9%~~

◦~~Nine months 2020~~ versus ~~Nine months 2019:~~

▪~~Total revenues decreased $939 million, or 55%, and decreased $933 million or 55%, excluding fx~~

▪~~Total RPU decreased 35% and Total RPD decreased 10%~~

▪~~Transaction Days decreased 50%~~

▪~~Depreciation of revenue earning vehicles and lease charges decreased 31% to $228 million, and decreased $98 million, or 30%, excluding fx~~

▪~~Depreciation Per Unit Per Month increased 2% to $202~~

▪~~Vehicle Utilization decreased to 55% from 77%~~

▪~~DOE as a percentage of total revenues increased to 77% from 59%~~

▪~~SG&A as a percentage of total revenues increased to 19% from 10%~~period-over-period change.

For more information on the above, see the discussion of our results on a consolidated basis and by segment that follows herein. In this MD&A, certain amounts in the following tables are denoted as in millions. Amounts such as

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~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

percentages are calculated from the underlying numbers in thousands, and as a result, may not agree to the amount when calculated from the tables in millions.

Critical Accounting Estimates

The continued impacts from COVID-19 could have a material impact to certain critical accounting estimates, and as a result, may have an adverse impact on our future operating results.

Revenue Earning Vehicles

COVID-19 may have a significant impact on the used-vehicle market, resulting in a material deterioration of residual values. This deterioration could impact our current fleet and sales plans resulting in changes to the holding periodOur principal assets are revenue earning vehicles, which represent approximately 48% of our ~~vehicles~~total assets as ~~well as our ability to dispose~~ of ~~vehicles in the period originally anticipated.~~March 31, 2021. As a result of the Chapter 11 Cases, the Bankruptcy Court may issue additional orders directing us to dispose of vehicles sooner than anticipated. Changes in any or all of these variables could cause a material change in our estimates regarding depreciation expense.

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(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Recoverability of Goodwill and Indefinite-lived Intangible Assets

~~Due to the impact related to COVID-19, our reduction in cash flow projections, the filing~~As of ~~the Chapter 11 Cases and declines in the stock price of Hertz Global,~~March 31, 2021, we quantitatively tested the recoverability of our goodwill and indefinite-lived intangible assets asin our International RAC segment due to continued adverse impacts from COVID-19 and a reduction in our cash flow projections. The quantitative fair value test utilized our most recent cash flow projections, including a range of ~~June 30, 2020,~~potential outcomes, along with a long-term growth rate of 1% and ~~based~~a range of discount rates between 13% and 15%. Based on the quantitative ~~test,~~tests, no ~~impairment was~~impairments were recorded in the ~~second~~first quarter of ~~2020.~~2021. However, the fair ~~values~~value of certain tradenames, which are indefinite-lived intangible assets, ~~in our U.S. RAC and International RAC segments~~ were in excess by ~~3% and 18%~~6% of the carrying ~~values~~value of ~~$934 million and $560 million, respectively.~~

We test the recoverability of our goodwill and indefinite-lived intangible assets by performing an impairment analysis on an annual basis, as of October 1, and at interim periods when circumstances require as a result of a triggering event as defined by ASC 350. We determined that the projected revenues, expenses and cash flows, reflecting the expected duration and extent of impact to our business, customers, economy and the travel industry from COVID-19, and the impact of the Chapter 11 Cases, were materially consistent with the assumptions utilized in our June 30, 2020 quantitative impairment assessment.$540 million. As a result of the foregoing considerations, along with the consideration of other indicators noted in ASC 350, we concluded there were no indicators of impairment triggered ~~in accordance with ASC 350~~for our U.S. RAC segment in the ~~third~~first quarter of ~~2020.~~2021.

Further deterioration in the general economic conditions in the travel industry, our cash flows and our ability to obtain future financing to maintain our fleet or the weighted average cost of capital assumptions may result in an impairment charge to earnings in future quarters. We will continue to closely monitor actual results versus our expectations as well as any significant changes in our expected timing of emergence from bankruptcy, market events or conditions, including the impact of COVID-19 on our business and the travel industry, and the resulting impact to our assumptions about future estimated cash flows and the weighted average cost of capital. If our expectations of ~~the~~our operating results, both in magnitude or timing, do not materialize, or if our weighted average cost of capital increases, we may be required to record goodwill and indefinite-lived intangible asset impairment charges, which could be material.

Subrogation Receivables

The continued impact of COVID-19 could result in a deterioration of the credit worthiness of our customers and third-parties regarding our subrogation receivables, and as a result we could incur material write-offs or a reduction in future collections.

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~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

Tax

We may record additional valuation allowances on our deferred tax assets. Further, in some jurisdictions, we may incur additional cash taxes due to changes in fleet acquisitions and dispositions and limitations on utilization of net operating losses.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

CONSOLIDATED RESULTS OF OPERATIONS -– HERTZ


		Three Months Ended September 30,				Percent Increase/(Decrease)			Nine Months Ended September 30,									Percent Increase/(Decrease)		Three Months Ended March 31,								Percent Increase/(Decrease)
($ In millions)	($ In millions)	2020		2019			2020				2019				($ In millions)		2021				2020
Total revenues	Total revenues	$	1,268	$	2,836		(55)	%			$	4,023			$	7,454				(46)		%	Total revenues	$	1,289		$		1,923	(33)%
Direct vehicle and operating expenses	Direct vehicle and operating expenses	832		1,492		(44)			2,777				4,147					(33)	Direct vehicle and operating expenses	827					1,241			(33)
Depreciation of revenue earning vehicles and lease charges	Depreciation of revenue earning vehicles and lease charges	347		667		(48)			1,634				1,892					(14)	Depreciation of revenue earning vehicles and lease charges	243					677			(64)
Selling, general and administrative expenses	Selling, general and administrative expenses	143		232		(38)			519				723					(28)	Selling, general and administrative expenses	156					208			(25)
Interest expense, net:	Interest expense, net:																		Interest expense, net:
Vehicle	Vehicle	110		134		(18)			360				372					(3)	Vehicle	104					118			(12)
Non-vehicle	Non-vehicle	17		68		(75)			116				209					(44)	Non-vehicle	44					55			(20)
Interest expense, net	Interest expense, net	127		202		(37)			476				581					(18)	Interest expense, net	148					173			(14)
Technology-related intangible and other asset impairments		—		—		NM			193				—					NM
Write-off of intercompany loan		—		—		NM			133				—					NM

Other (income) expense, net	Other (income) expense, net	—		(6)		NM			(15)				(37)					(59)	Other (income) expense, net	(3)					(17)			(84)
Reorganization items, net	Reorganization items, net	78		—		NM			101				—					NM	Reorganization items, net	42					—			NM
(Gain) from the sale of a business																			(Gain) from the sale of a business	(392)					—			NM
Income (loss) before income taxes	Income (loss) before income taxes	(259)		249		NM			(1,795)				148					NM	Income (loss) before income taxes	268					(359)			NM
Income tax (provision) benefit	Income tax (provision) benefit	36		(75)		NM			259				(79)					NM	Income tax (provision) benefit	(79)					3			NM
Net income (loss)	Net income (loss)	(223)		174		NM			(1,536)				69					NM	Net income (loss)	189					(356)			NM
Net (income) loss attributable to noncontrolling interests	Net (income) loss attributable to noncontrolling interests	1		(4)		NM			7				(4)					NM	Net (income) loss attributable to noncontrolling interests	1					1			(5)
Net income (loss) attributable to Hertz	Net income (loss) attributable to Hertz	$	(222)	$	170	NM			$	(1,529)			$	65				NM	Net income (loss) attributable to Hertz	$	190				$	(355)		NM
Adjusted Corporate EBITDA(a)	Adjusted Corporate EBITDA(a)	$	(26)	$	392	NM			$	(855)			$	595				NM	Adjusted Corporate EBITDA(a)	$	2				$	(243)		NM

~~Footnotes to~~The footnote in the table above ~~are~~is shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.

NM - Not meaningful

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared with Three Months Ended ~~September 30, 2019~~March 31, 2020

Total revenues decreased ~~$1.6 billion~~$634 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019 due primarily to~~2020 resulting from the continued impact ~~from~~of COVID-19, where there was a decrease of ~~$1.1 billion~~$435 million and ~~$449~~$161 million in our U.S. RAC and International RAC segments, respectively. U.S. RAC revenues decreased due primarily to lower ~~volume.~~volume, partially offset by higher pricing. Excluding a $9$19 million fx impact, revenues for our International RAC segment decreased ~~$459~~$180 million ~~also~~ due to lower volume and pricing.

DOE decreased ~~$661~~$414 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to a decrease of ~~$451~~$299 million and ~~$208~~$124 million in our U.S. RAC and International RAC segments, respectively. DOE in our U.S. RAC segment decreased due primarily to lower personnel costs, lower volume driven by the impact from COVID-19 on total revenues described above and a reduction in fixed costs. Excluding a $7$14 million fx impact, DOE in our International RAC segment decreased ~~$215~~$138 million due primarily to lower volume driven by the impact from COVID-19 on total revenues described ~~above.~~above and lower personnel costs.

Depreciation of revenue earning vehicles and lease charges decreased $434 million in the first quarter of 2021 compared to 2020 due primarily to a decrease of $258 million, $125 million and $51 million in our U.S. RAC, All Other Operations and International RAC segments, respectively. The decrease in our U.S. RAC segment is due primarily to strength in residual values and a reduction in fleet size in response to the Chapter 11 Cases. The decrease in our All Other Operations is due to the suspension of depreciation for the Donlen business while classified as held for sale. Excluding a $3 million fx impact, depreciation in our International RAC segment decreased $54 million due primarily to reduced fleet size and strength in residual values.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~Depreciation of revenue earning vehicles and lease charges~~SG&A decreased ~~$319~~$52 million in the ~~third~~first quarter of ~~2020~~2021 compared to 2019 due primarily to a decrease of $238 million and $67 million in our U.S. RAC and International RAC segments, respectively. The decrease in our U.S. RAC segment is due primarily to a reduction in fleet size in response to pandemic-related volume declines and strength in residual values. Excluding a $2 million fx impact, depreciation in our International RAC segment decreased $69 million due primarily to a reduced fleet size.

~~SG&A decreased $89 million in the third quarter of~~ 2020 ~~compared to 2019 due primarily to lower marketing costs in our U.S. and International RAC segments and lower personnel costs in our U.S. RAC segment.~~

~~Vehicle interest expense, net decreased $24 million in the third quarter of 2020 compared to 2019 due primarily to lower debt levels primarily in our U.S. RAC segment and lower market interest rates.~~

Non-vehicle interest expense, net decreased $51 million in the third quarter of 2020 compared to 2019 due primarily to interest on certain non-vehicle debt being suspended as a result of filing the Chapter 11 Cases, lower debt levels in the third quarter of 2020 compared to 2019 and lower market interest rates.

~~We had other income of $6 million in the third quarter of 2019, which was primarily comprised of a $6 million gain on marketable securities.~~

~~We incurred $78 million of net reorganization charges in the third quarter of 2020 in our corporate operations for professional fees associated with the Chapter 11 Cases.~~

The effective tax rate was 14% and 30% in the third quarter of 2020 and 2019, respectively, and we recorded a tax benefit of $36 million in the third quarter of 2020 compared to a tax provision of $75 million in the third quarter of 2019. The effective income tax rate and related tax benefit in 2020 compared to 2019 were driven by increased losses on our operations due to the effect of COVID-19, primarily offset by the impact of valuation allowances on net deferred tax assets for certain foreign and domestic jurisdictions.

~~Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019~~

Total revenues decreased $3.4 billion in the nine months of 2020 compared to 2019 due primarily to a decrease of $2.5 billion and $939 million in our U.S. RAC and International RAC segments, respectively. U.S. RAC revenues decreased due primarily to lower volume. Excluding a $7 million impact of fx, revenues for our International RAC segment decreased $933 million also due to lower volume and pricing.

DOE decreased $1.4 billion in the nine months of 2020 compared to 2019 due primarily to a decrease of $949 million and $421 million in our U.S. RAC and International RAC segments, respectively. The decrease in U.S. RAC DOE was due primarily to lower volume driven by the impact from COVID-19 on total revenues described above and a reduction in fixed costs. Excluding the $6 million impact of fx, DOE for International RAC decreased $415 million due to lower volume driven by the impact from COVID-19 on total revenues described above.

Depreciation of revenue earning vehicles and lease charges decreased $259 million in the nine months of 2020 compared to 2019 due to decreases of $164 million and $101 million in our U.S. RAC and International RAC segments, respectively. The decrease in our U.S. RAC segment is due to a reduction in fleet size in response to pandemic-related volume declines and strength in residual values. Excluding the $3 million impact of fx, depreciation of revenue earning vehicles and lease charges for our International RAC segment decreased $98 million due primarily to a reduced fleet size.

~~SG&A decreased $204 million in the nine months of 2020 compared to 2019~~ due primarily to lower marketing costs in our U.S. and International RAC segments, lower personnel costs in our U.S. RAC segment and lower ~~information technology and finance transformation~~facility costs in our ~~corporate operations.~~International RAC segment.

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~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

Vehicle interest expense, net decreased ~~$13~~$14 million in the ~~nine months~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to lower ~~market interest rates and lower vehicle~~ debt levels primarily in our ~~International~~U.S. RAC segment.

Non-vehicle interest expense, net decreased ~~$93~~$11 million in the ~~nine months~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to ~~lower debt levels, lower market interest rates and the suspension of~~ interest on certain non-vehicle debt being suspended as a result of filing the Chapter 11 Cases.

We had ~~a $193~~other income of $3 million ~~impairment~~for the first quarter of ~~technology-related intangible assets and capitalized cloud computing implementation costs in the nine months~~2021 compared to other income of 2020 in our corporate operations due to uncertainty surrounding our financial ability to complete certain information technology projects as a result of COVID-19 and the filing of the Chapter 11 Cases.

~~We incurred a charge of $133~~$17 million in the ~~nine months~~first quarter of 2020 ~~in our corporate operations resulting from the full write-off of the 2019 Master Loan with Hertz Holdings due to the filing of the Chapter 11 Cases.~~

~~We had other income of $15 million in the nine months of 2020 compared to $37 million in the nine months of 2019. Other income in 2020~~which was primarily comprised of a $20 million gain due to additional cash received from the sale of non-vehicle capital assets, which was completed in the fourth quarter of 2019, partially offset by $4 million in pension-related settlement charges. Other income in 2019 was primarily comprised of a $26 million gain on marketable securities and a $15 million gain on the sale of non-vehicle capital assets.2019.

We incurred ~~$101~~$42 million of net reorganization charges in the ~~nine months~~first quarter of ~~2020~~2021 in our corporate operations primarily for professional fees totaling $57 million, partially offset by the write-off of certain Pre-petition claims and lease settlements totaling $15 million, associated with the Chapter 11 Cases.

We recognized a pre-tax gain of $392 million from the sale of our Donlen business which was completed on March 30, 2021.

The effective tax rate was 29% and 1% in the ~~nine months~~first quarter of 2021 and 2020, ~~was 14% compared to 53% in the nine months of 2019. We~~respectively, and we recorded ~~a tax benefit of $259 million in the nine months of 2020 compared to~~ a tax provision of $79 million and a tax benefit of $3 million in the ~~nine months~~first quarter of ~~2019.~~2021 and 2020, respectively. The effective income tax rate and related tax provision in 2021 compared to the tax benefit in 2020 ~~compared to 2019~~ were ~~driven by increased losses on our operations~~primarily due to the ~~effect of COVID-19, primarily offset by~~gain on the ~~impact of valuation allowances on net deferred tax assets for certain foreign and domestic jurisdictions.~~Donlen Sale.

CONSOLIDATED RESULTS OF OPERATIONS -– HERTZ GLOBAL

The above discussion for Hertz also applies to Hertz Global.

Hertz Global had $2 million of interest expense, net, for the ~~nine months ended September 30,~~first quarter of 2020 ~~and $2 million and $5 million of interest expense, net for the three and nine months ended September 30, 2019, respectively,~~ that was incremental to the amounts shown for Hertz. This amount represents interest associated with amounts outstanding under a master loan agreement between the companies. Hertz includes this amount as interest income in its statement of operations, but this amount is eliminated in consolidation for purposes of presenting Hertz Global. For the ~~nine months ended September 30,~~first quarter of 2020, Hertz Global had ~~$27~~$1 million of income tax benefit that was incremental to the ~~amounts~~amount shown for Hertz Global due primarily to the master loan write-off included in Hertz's unaudited condensed consolidated statements of operations in Part I, Item 1 of this Quarterly Report on Form 10-Q. For the three and nine months ended September 30, 2019, Hertz had $1 million of income tax provision that was incremental to the amounts shown for Hertz Global.Hertz.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS AND SELECTED OPERATING DATA BY SEGMENT

U.S. Rental Car


		Three Months Ended September 30,						Percent Increase/(Decrease)			Nine Months Ended September 30,											Percent Increase/(Decrease)		Three Months Ended March 31,									Percent Increase/(Decrease)
($ In millions, except as noted)	($ In millions, except as noted)	2020			2019				2020					2019					($ In millions, except as noted)		2021				2020
Total revenues	Total revenues	$	866		$	1,962			(56)	%				$	2,780				$	5,266				(47)		%	Total revenues	$	946			$		1,381	(32)%
Depreciation of revenue earning vehicles and lease charges	Depreciation of revenue earning vehicles and lease charges	$	182		$	420		(57)			$	1,054				$	1,217					(13)	Depreciation of revenue earning vehicles and lease charges	$	205				$	463			(56)
Direct vehicle and operating expenses	Direct vehicle and operating expenses	$	648		$	1,099		(41)			$	2,178				$	3,127					(30)	Direct vehicle and operating expenses	$	670				$	969			(31)
Direct vehicle and operating expenses as a percentage of total revenues	Direct vehicle and operating expenses as a percentage of total revenues	75		%	56		%				78		%			59		%					Direct vehicle and operating expenses as a percentage of total revenues	71		%			70		%
Selling, general and administrative expenses	Selling, general and administrative expenses	$	46		$	125		(63)			$	224				$	365					(39)	Selling, general and administrative expenses	$	51				$	115			(56)
Selling, general and administrative expenses as a percentage of total revenues	Selling, general and administrative expenses as a percentage of total revenues	5		%	6		%				8		%			7		%					Selling, general and administrative expenses as a percentage of total revenues	5		%			8		%
Vehicle interest expense	Vehicle interest expense	$	77		$	93		(17)			$	260				$	260					—	Vehicle interest expense	$	71				$	86			(18)
Adjusted EBITDA	Adjusted EBITDA	$	(10)		$	269		NM			$	(678)				$	432					NM	Adjusted EBITDA	$	24				$	(199)			NM
Transaction Days (in thousands)(b)	Transaction Days (in thousands)(b)	17,971			41,399			(57)			62,499					118,153						(47)	Transaction Days (in thousands)(b)	19,776					31,564				(37)
Average Vehicles (in whole units)(c)	Average Vehicles (in whole units)(c)	376,443			566,229			(34)			465,929					540,930						(14)	Average Vehicles (in whole units)(c)	292,154					518,580				(44)
Vehicle Utilization(c)	Vehicle Utilization(c)	52		%	79		%				49		%			80		%					Vehicle Utilization(c)	75		%			67		%
Total RPD (in whole dollars)(d)	Total RPD (in whole dollars)(d)	$	46.27		$	46.67		(1)			$	42.81				$	43.79					(2)	Total RPD (in whole dollars)(d)	$	47.63				$	42.74			11
Total RPU Per Month (in whole dollars)(e)	Total RPU Per Month (in whole dollars)(e)	$	736		$	1,137		(35)			$	638				$	1,063					(40)	Total RPU Per Month (in whole dollars)(e)	$	1,075				$	867			24
Depreciation Per Unit Per Month (in whole dollars)(f)	Depreciation Per Unit Per Month (in whole dollars)(f)	$	161		$	247		(35)			$	251				$	250					—	Depreciation Per Unit Per Month (in whole dollars)(f)	$	234				$	298			(21)
Percentage of program vehicles as of period end	Percentage of program vehicles as of period end	4		%	16		%				4		%			16		%					Percentage of program vehicles as of period end	1		%			9		%

Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.

NM - Not meaningful

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared with Three Months Ended ~~September 30, 2019~~March 31, 2020

Total U.S. RAC revenues decreased ~~$1.1 billion~~$435 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to lower ~~volume.~~volume, partially offset by higher pricing. The ~~57%~~37% decrease in Transaction Days was driven by the impact from COVID-19 with volume declines in leisure and most business categories. There was an 11% increase in Total RPD partially offsetting declines in volume due primarily to stronger pricing in leisure and most business categories ~~excluding delivery services where volume and pricing increased year over year. Volume decreased~~resulting from lower fleet levels in ~~both our airport and off airport business by 70% and 35%, respectively.~~order to meet the increasing demand from travel commencing in the middle of the first quarter 2021. Off airport revenues comprised ~~48%~~37% of total revenues for the segment in the ~~third~~first quarter of ~~2020~~2021 as compared to ~~32%~~35% in the ~~third~~first quarter of ~~2019,~~2020, due primarily to customer demand changes associated with COVID-19.

Depreciation of revenue earning vehicles and lease charges for U.S. RAC decreased ~~$238~~$258 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019.~~2020. Average Vehicles decreased ~~34%~~44% due in part to a reduction in fleet size ~~in response~~due to ~~pandemic-related volume declines.~~the Chapter 11 Cases. Depreciation Per Unit Per Month decreased to ~~$161~~$234 in the ~~third~~first quarter of ~~2020~~2021 compared to ~~$247~~$298 in the ~~third~~first quarter of ~~2019~~2020 due primarily to strength in residual ~~values~~.values.

DOE for U.S. RAC decreased ~~$451~~$299 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to lower volume driven by the impact from COVID-19 ~~on total revenues described~~discussed above, lower personnel costs due to cost-reduction initiatives and lower facility costs due primarily to rent abatements and the consolidation of our off airport locations. This was partially offset by increased per vehicle maintenance and other vehicle related costs due to an aging fleet, as well as rising labor costs both of which we expect to continue throughout 2021.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~employee restructuring program that commenced in the second quarter of 2020 in response to COVID-19 and other cost-reduction initiatives during the third quarter of 2020.~~

SG&A for U.S. RAC decreased ~~$79~~$64 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to lower marketing and personnel costs ~~in response~~due to ~~COVID-19.~~cost-reduction initiatives.

Vehicle interest expense for U.S. RAC decreased ~~$16~~$15 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due primarily to vehicle dispositions and lower debt levels ~~as a result of vehicle dispositions~~ resulting from the ~~Interim Lease Order.~~

~~Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019~~

~~Total U.S. RAC revenues decreased $2.5 billion~~decline in ~~the nine months of 2020 compared to 2019~~travel due primarily to lower volume. The 47% decrease in Transaction Days and 2% decrease in Total RPD were driven by the impact from COVID-19 with declines in leisure and most business categories, excluding delivery services, where volume and pricing increased year over year. Volume decreased in both our airport and off airport locations by 58% and 30%, respectively. Off airport revenues comprised 44% of total revenues for the segment in the nine months of 2020 as compared to 32% in 2019, due primarily to customer demand changes associated with COVID-19.

Depreciation of revenue earning vehicles and lease charges for U.S. RAC decreased $164 million in the nine months of 2020 compared to 2019. Average Vehicles decreased 14% due primarily to a reduction in fleet size in response to pandemic-related volume declines and strength in residual values. Depreciation Per Unit Per Month in the nine months of 2020 was comparable to 2019.

DOE for U.S. RAC decreased $949 million in the nine months of 2020 compared to 2019 due primarily to lower volume driven by the impact from COVID-19 on total revenues for the nine months of 2020 described above, lower personnel costs due to an employee restructuring program that commenced in the second quarter of 2020 in response to COVID-19 and other cost-reduction initiatives during the third quarter of 2020.

~~SG&A for U.S. RAC decreased $141 million in the nine months of 2020 compared to 2019 due primarily to lower marketing and personnel costs in response~~ to COVID-19.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

International Rental Car

Three Months Ended
September 30, Percent Increase/(Decrease) Nine Months Ended
September 30, Percent Increase/(Decrease)
($ in millions, except as noted) 2020 2019 2020 2019
Total revenues $ 253 $ 702 (64) % $ 755 $ 1,695 (55) %
Depreciation of revenue earning vehicles and lease charges $ 59 $ 126 (53) $ 228 $ 329 (31)
Direct vehicle and operating expenses $ 179 $ 386 (54) $ 579 $ 1,001 (42)
Direct vehicle and operating expenses as a percentage of total revenues 71 % 55 % 77 % 59 %
Selling, general and administrative expenses $ 56 $ 60 (6) $ 142 $ 169 (16)
Selling, general and administrative expenses as a percentage of total revenues 22 % 9 % 19 % 10 %
Vehicle interest expense $ 21 $ 27 (21) $ 66 $ 73 (9)
Adjusted EBITDA $ (35) $ 115 NM $ (207) $ 157 NM
Transaction Days (in thousands)(b)
6,194 15,631 (60) 19,314 38,884 (50)
Average Vehicles (in whole units)(c)
104,045 213,294 (51) 127,216 184,307 (31)
Vehicle Utilization(c)
65 % 80 % 55 % 77 %
Total RPD (in whole dollars)(d)
$ 39.75 $ 45.44 (13) $ 39.36 $ 43.68 (10)
Total RPU Per Month (in whole dollars)(e)
$ 789 $ 1,110 (29) $ 664 $ 1,024 (35)
Depreciation Per Unit Per Month (in whole dollars)(f)
$ 183 $ 199 (8) $ 202 $ 198 2
Percentage of program vehicles as of period end 32 % 47 % 32 % 47 %


	Three Months Ended March 31,						Percent Increase/(Decrease)
($ in millions, except as noted)	2021			2020
Total revenues	$	207		$	368		(44)%
Depreciation of revenue earning vehicles and lease charges	$	38		$	89		(58)
Direct vehicle and operating expenses	$	141		$	265		(47)
Direct vehicle and operating expenses as a percentage of total revenues	68		%	72		%
Selling, general and administrative expenses	$	36		$	48		(24)
Selling, general and administrative expenses as a percentage of total revenues	17		%	13		%
Vehicle interest expense	$	21		$	21		(1)
Adjusted EBITDA	$	(6)		$	(45)		(86)
Transaction Days (in thousands)(b)	4,872			8,863			(45)
Average Vehicles (in whole units)(c)	75,446			147,987			(49)
Vehicle Utilization(c)	72		%	66		%
Total RPD (in whole dollars)(d)	$	42.49		$	45.57		(7)
Total RPU Per Month (in whole dollars)(e)	$	915		$	910		1
Depreciation Per Unit Per Month (in whole dollars)(f)	$	168		$	220		(24)
Percentage of program vehicles as of period end	26		%	37		%

Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.

~~NM - Not meaningful~~

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared with Three Months Ended ~~September 30, 2019~~March 31, 2020

Total revenues for International RAC decreased ~~$449~~$161 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 due to lower volume and pricing. ~~Transaction days decreased 60% and Total RPD decreased 13%.~~ Excluding a $9$19 million fx impact, revenues decreased ~~$459~~$180 million due to lower volume and pricing across all leisure and most business categories driven by the continued impact of ~~COVID-19.~~COVID-19, partially offset by higher pricing in Australia.

Depreciation of revenue earning vehicles and lease charges for International RAC decreased ~~$67~~$51 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019.~~2020. Excluding a $2$3 million fx impact, depreciation decreased ~~$69~~$54 million. Average Vehicles for International RAC decreased ~~51%~~49% due to downsizing the fleet as a result of COVID-19. Depreciation Per Unit Per Month for International RAC decreased to ~~$183~~$168 for the ~~third~~first quarter of ~~2020~~2021 compared to ~~$199~~$220 in ~~2019~~2020 due to the strength in residual values.

DOE for International RAC decreased ~~$208~~$124 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019.~~2020. Excluding a $7$14 million fx impact, DOE decreased ~~$215~~$138 million due primarily to lower volume driven by the impact from COVID-19 on total revenues described above and lower personnel costs due to employee furloughs and associated government support across Europe related to ~~COVID-19 and reduced seasonal staff for the peak travel season in Europe.~~COVID-19.

~~Vehicle interest expense for International RAC decreased 21% in the third quarter of 2020 compared to 2019 due to downsizing the fleet as a result of COVID-19.~~

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~Nine Months Ended September 30, 2020 Compared with Nine Months Ended September 30, 2019~~

~~Total revenues~~SG&A for International RAC decreased ~~$939~~$11 million in the ~~nine months~~first quarter of ~~2020~~2021 compared to ~~2019 due to lower volume and pricing. Transactions Days decreased 50% and Total RPD decreased 10%.~~2020. Excluding a $7$4 million fx impact, ~~revenues~~SG&A decreased ~~$933 million due to lower volume and pricing across all leisure and business categories driven by the impact of COVID-19.~~

Depreciation of revenue earning vehicles and lease charges for International RAC decreased $101 million in the nine months of 2020 compared to 2019. Excluding a $3 million fx impact, depreciation decreased $98 million. Average Vehicles for International RAC decreased 31% due to downsizing the fleet as a result of COVID-19. Depreciation Per Unit Per Month for International RAC increased to $202 in the nine months of 2020 compared to $198 in 2019.

~~DOE for International RAC decreased $421 million in the nine months of 2020 compared to 2019. Excluding a $6 million fx impact, DOE decreased $415~~$15 million due primarily to lower ~~volume driven by the impact~~facility and marketing costs resulting from ~~COVID-19 on total revenues for the nine months of 2020 described above and lower personnel costs due to government support across Europe related to COVID-19.~~

~~SG&A for International RAC decreased $26 million in the nine months of 2020 compared to 2019 due in part to lower marketing costs.~~

~~Vehicle interest expense for International RAC decreased 9% in the nine months of 2020 compared to 2019 due to downsizing the fleet as a result of COVID-19 market conditions.~~cost-reduction initiatives.

All Other Operations

The All Other Operations segment is primarily comprised of our Donlen business ~~and, as such, our discussion is limited to Donlen.~~which was sold on March 30, 2021. See Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Results of operations for this segment are as follows:


		Three Months Ended September 30,				Percent Increase/(Decrease)		Nine Months Ended September 30,									Percent Increase/(Decrease)		Three Months Ended March 31,								Percent Increase/(Decrease)
($ in millions)	($ in millions)	2020		2019			2020			2019				($ in millions)		2021				2020
Total revenues	Total revenues	$	149	$	172		(13)%			$	488			$	493				(1)		%	Total revenues	$	136		$		174	(22)%
Depreciation of revenue earning vehicles and lease charges	Depreciation of revenue earning vehicles and lease charges	$	106	$	121	(12)		$	352			$	346				2	Depreciation of revenue earning vehicles and lease charges	$	—				$	125		NM
Direct vehicle and operating expenses	Direct vehicle and operating expenses	$	7	$	7	(4)		$	19			$	20				(3)	Direct vehicle and operating expenses	$	7				$	7		3
Selling, general and administrative expenses	Selling, general and administrative expenses	$	6	$	8	(27)		$	13			$	22				(42)	Selling, general and administrative expenses	$	10				$	(4)		NM
Vehicle interest expense	Vehicle interest expense	$	12	$	14	(14)		$	34			$	39				(13)	Vehicle interest expense	$	12				$	11		13
Adjusted EBITDA	Adjusted EBITDA	$	24	$	24	(3)		$	71			$	70				2	Adjusted EBITDA	$	13				$	24		(46)
Average Vehicles - Donlen	Average Vehicles - Donlen	187,876		216,925		(13)		195,086				205,809					(5)	Average Vehicles - Donlen	182,362					201,364			(9)

NM - Not meaningful

InDonlen's revenues and Adjusted EBITDA were unfavorable in the ~~third~~first quarter of ~~2020 as~~2021 compared to ~~2019, Donlen's results were flat~~2020 primarily due to lower leasing volume ~~partially offset by~~from the ~~associated reduction~~impact of COVID-19. The decrease in depreciation of revenue earning vehicles and ~~lease~~leasing charges ~~and reduced SG&A expenses. In the nine months of 2020 versus 2019, Donlen's results were slightly favorable primarily~~is due to ~~a decrease in SG&A due to gains on interest rate derivative financial instruments.~~

~~Table~~the suspension of ~~Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~depreciation for the Donlen business while classified as held for sale.

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

Footnotes to the Results of Operations and Selected Operating Data by Segment Tables

(a)Adjusted Corporate EBITDA is calculated as net income (loss) attributable to Hertz or Hertz Global, adjusted for income taxes, non-vehicle depreciation and amortization, non-vehicle debt interest, net, vehicle debt-related charges, restructuring and restructuring related charges, ~~goodwill, intangible and tangible asset impairments and write-downs, intercompany loan write-offs,~~ information technology and finance transformation costs, reorganization items, net, pre-reorganization items and non-debtor financing charges, gain from the sale of a business and certain other miscellaneous items. When evaluating our operating performance, investors should not consider Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance determined in accordance with U.S. GAAP. The reconciliations to the most comparable consolidated U.S. GAAP measure are presented below:

~~Hertz~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Net income (loss) attributable to Hertz $ (222) $ 170 $ (1,529) $ 65
Adjustments:
Income tax provision (benefit) (36) 75 (259) 79
Non-vehicle depreciation and amortization 58 51 168 151
Non-vehicle debt interest, net 17 68 116 209
Vehicle debt-related charges(1)
13 10 37 29
Restructuring and restructuring related charges(2)
7 1 54 11
Technology-related intangible and other asset impairment(3)
— — 193 —
Write-off of intercompany loan(4)
— — 133 —
Information technology and finance transformation costs(5)
8 17 34 77
Reorganization items, net(6)
78 — 101 —
Pre-reorganization and non-debtor financing charges(7)
44 — 89 —
Other items(8)
7 — 8 (26)
Adjusted Corporate EBITDA $ (26) $ 392 $ (855) $ 595

~~Hertz Global~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions) 2020 2019 2020 2019
Net income (loss) attributable to Hertz Global $ (222) $ 169 $ (1,425) $ 61
Adjustments:
Income tax provision (benefit) (36) 74 (232) 78
Non-vehicle depreciation and amortization 58 51 168 151
Non-vehicle debt interest, net 17 70 118 214
Vehicle debt-related charges(1)
13 10 37 29
Restructuring and restructuring related charges(2)
7 1 54 11
Technology-related intangible and other asset impairment(3)
— — 193 —
Information technology and finance transformation costs(5)
8 17 34 77
Reorganization items, net(6)
78 — 101 —
Pre-reorganization and non-debtor financing charges(7)
44 — 89 —
Other items(8)
7 — 8 (26)
Adjusted Corporate EBITDA $ (26) $ 392 $ (855) $ 595

~~(1)Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.~~

~~(2)~~Represents charges incurred under restructuring actions as defined in U.S. GAAP. See Note 8, "Restructuring" in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Hertz


	Three Months Ended March 31,
(In millions)	2021		2020
Net income (loss) attributable to Hertz	$	190	$	(355)
Adjustments:
Income tax provision (benefit)	79		(3)
Non-vehicle depreciation and amortization	54		53
Non-vehicle debt interest, net	44		55
Vehicle debt-related charges(1)	28		9
Restructuring and restructuring related charges(2)	12		7


Information technology and finance transformation costs(3)	6		17
Reorganization items, net(4)	42		—
Pre-reorganization and non-debtor financing charges(5)	23		—
Gain from the Donlen Sale(6)	(392)		—
Other items(7)	(84)		(26)
Adjusted Corporate EBITDA	$	2	$	(243)

~~(3)~~

Hertz Global


	Three Months Ended March 31,
(In millions)	2021		2020
Net income (loss) attributable to Hertz Global	$	190	$	(356)
Adjustments:
Income tax provision (benefit)	79		(4)
Non-vehicle depreciation and amortization	54		53
Non-vehicle debt interest, net	44		57
Vehicle debt-related charges(1)	28		9
Restructuring and restructuring related charges(2)	12		7

Information technology and finance transformation costs(3)	6		17
Reorganization items, net(4)	42		—
Pre-reorganization and non-debtor financing charges(5)	23		—
Gain from the Donlen Sale(6)	(392)		—
Other items(7)	(84)		(26)
Adjusted Corporate EBITDA	$	2	$	(243)

(1)Represents ~~the impairment of technology-related intangible assets and capitalized cloud computing implementation costs, as disclosed in Note 5, "Goodwill and Intangible Assets, Net," in the Notes~~vehicle debt-related charges relating to the ~~Condensed Consolidated Financial Statements~~amortization of deferred financing costs and debt discounts and premiums.

(2)Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. See Note 8, "Restructuring," in Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~10-Q for further information. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.

~~(4)~~Represents the write-off of the 2019 Master Loan between Hertz and Hertz Holdings, as disclosed in Note 14, "Related Party Transactions," in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~(5)~~(3)Represents costs associated with our information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize our systems and processes.

~~(6)~~(4)Represents charges incurred associated with the filing of the Chapter 11 Cases, as described in Note ~~17,~~16, "Reorganization Items, Net," ~~in the Notes to the Condensed Consolidated Financial Statements~~ in Part I, Item 1 of this Quarterly Report on Form 10-Q, including professional fees.

~~(7)~~(5)Represents charges incurred prior to the filing of the Chapter 11 Cases, as disclosed in Note 1, "Background," in ~~the second quarter~~Part I, Item 1 of ~~2020~~this Quarterly Report on Form 10-Q, which are comprised of preparation charges for the reorganization, such as professional fees. Also, includes certain non-debtor financing and professional fee charges.

~~(8)~~(6)Represents the gain from the sale of our Donlen business on March 30, 2021 as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report on Form 10-Q.

(7)Represents miscellaneous items, including non-cash stock-based compensation charges. In 2021, also includes $100 million due to the suspension of depreciation for the Donlen business while classified as held for sale, partially offset by charges for a multiemployer pension plan withdrawal liability. In 2020, also includes ~~$18 million for losses associated with certain vehicle damages, which were recorded in the second quarter, partially offset by~~ a $20 million gain on the sale of non-vehicle capital assets ~~which was recorded~~and $13 million in ~~the first quarter. In 2019, includes a $26 million gain~~unrealized gains on ~~marketable securities, of which $6 million was recorded in the third quarter, and a $15 million gain on the sale of non-vehicle capital assets, of which $3 million was recorded in the third quarter.~~derivative financial instruments.

Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

(b)Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.

(c)Average Vehicles are determined using a simple average of the number of vehicles at the beginning and end of a given period. Among other things, Average Vehicles is used to calculate our Vehicle Utilization which represents the portion of our vehicles that are being utilized to generate ~~revenues.~~revenue. Vehicle Utilization is calculated by dividing total Transaction Days by Available Car Days. The calculation of Vehicle Utilization is shown in the table below:

U.S. Rental Car International Rental Car
Three Months Ended September 30,
2020 2019 2020 2019
Transaction Days (in thousands) 17,971 41,399 6,194 15,631
Average Vehicles (in whole units) 376,443 566,229 104,045 213,294
Number of days in period (in whole units) 92 92 92 92
Available Car Days (in thousands) 34,633 52,093 9,572 19,623
Vehicle Utilization 52 % 79 % 65 % 80 %


		U.S. Rental Car				International Rental Car					U.S. Rental Car				International Rental Car
		Nine Months Ended September 30,									Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020		2021		2020
Transaction Days (in thousands)	Transaction Days (in thousands)	62,499		118,153		19,314		38,884		Transaction Days (in thousands)	19,776		31,564		4,872		8,863
Average Vehicles (in whole units)	Average Vehicles (in whole units)	465,929		540,930		127,216		184,307		Average Vehicles (in whole units)	292,154		518,580		75,446		147,987
Number of days in period (in whole units)	Number of days in period (in whole units)	274		273		274		273		Number of days in period (in whole units)	90		91		90		91
Available Car Days (in thousands)	Available Car Days (in thousands)	127,665		147,674		34,857		50,316		Available Car Days (in thousands)	26,294		47,191		6,790		13,467
Vehicle Utilization	Vehicle Utilization	49	%	80	%	55	%	77	%	Vehicle Utilization	75	%	67	%	72	%	66	%

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

(d)Total RPD is calculated as total revenues less ancillary retail vehicle sales revenues, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates ("Total Rental Revenues"), divided by the total number of Transaction Days. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Total RPD is shown below:

U.S. Rental Car International Rental Car
Three Months Ended September 30,
($ in millions, except as noted) 2020 2019 2020 2019
Total revenues $ 866 $ 1,962 $ 253 $ 702
Ancillary retail vehicle sales revenues (35) (30) — —
Foreign currency adjustment(1)
— — (7) 8
Total Rental Revenues $ 831 $ 1,932 $ 246 $ 710
Transaction Days (in thousands) 17,971 41,399 6,194 15,631
Total RPD (in whole dollars) $ 46.27 $ 46.67 $ 39.75 $ 45.44


		U.S. Rental Car				International Rental Car					U.S. Rental Car				International Rental Car
		Nine Months Ended September 30,									Three Months Ended March 31,
($ in millions, except as noted)	($ in millions, except as noted)	2020		2019		2020		2019		($ in millions, except as noted)	2021		2020		2021		2020
Total revenues	Total revenues	$	2,780	$	5,266	$	755	$	1,695	Total revenues	$	946	$	1,381	$	207	$	368
Ancillary retail vehicle sales revenues	Ancillary retail vehicle sales revenues	(105)		(92)		—		—		Ancillary retail vehicle sales revenues	(4)		(32)		—		—
Foreign currency adjustment(1)		—		—		5		4
Foreign currency adjustment(1)										Foreign currency adjustment(1)	—		—		—		36
Total Rental Revenues	Total Rental Revenues	$	2,675	$	5,174	$	760	$	1,699	Total Rental Revenues	$	942	$	1,349	$	207	$	404
Transaction Days (in thousands)	Transaction Days (in thousands)	62,499		118,153		19,314		38,884		Transaction Days (in thousands)	19,776		31,564		4,872		8,863
Total RPD (in whole dollars)	Total RPD (in whole dollars)	$	42.81	$	43.79	$	39.36	$	43.68	Total RPD (in whole dollars)	$	47.63	$	42.74	$	42.49	$	45.57

(1)Based on December 31, ~~2019~~2020 foreign currency exchange rates for all periods presented.

(e) Total RPU Per Month is calculated as Total Rental Revenues divided by the Average Vehicles in each period and then divided by the number of months in the period reported. The calculation of Total RPU Per Month is shown below:


		U.S. Rental Car				International Rental Car					U.S. Rental Car				International Rental Car
		Three Months Ended September 30,									Three Months Ended March 31,
($ in millions, except as noted)	($ in millions, except as noted)	2020		2019		2020		2019		($ in millions, except as noted)	2021		2020		2021		2020
Total Rental Revenues	Total Rental Revenues	$	831	$	1,932	$	246	$	710	Total Rental Revenues	$	942	$	1,349	$	207	$	404
Average Vehicles (in whole units)	Average Vehicles (in whole units)	376,443		566,229		104,045		213,294		Average Vehicles (in whole units)	292,154		518,580		75,446		147,987
Total revenue per unit (in whole dollars)	Total revenue per unit (in whole dollars)	$	2,208	$	3,412	$	2,364	$	3,329	Total revenue per unit (in whole dollars)	$	3,224	$	2,601	$	2,744	$	2,730
Number of months in period (in whole units)	Number of months in period (in whole units)	3		3		3		3		Number of months in period (in whole units)	3		3		3		3
Total RPU Per Month (in whole dollars)	Total RPU Per Month (in whole dollars)	$	736	$	1,137	$	789	$	1,110	Total RPU Per Month (in whole dollars)	$	1,075	$	867	$	915	$	910

U.S. Rental Car International Rental Car
Nine Months Ended September 30,
($ in millions, except as noted) 2020 2019 2020 2019
Total Rental Revenues $ 2,675 $ 5,174 $ 760 $ 1,699
Average Vehicles (in whole units)
465,929 540,930 127,216 184,307
Total revenue per unit (in whole dollars) $ 5,741 $ 9,565 $ 5,974 $ 9,218
Number of months in period (in whole units)
9 9 9 9
Total RPU Per Month (in whole dollars) $ 638 $ 1,063 $ 664 $ 1,024

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

(f) Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges per vehicle per month and is calculated as depreciation of revenue earning vehicles and lease charges, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates, divided by the Average Vehicles in each period and then dividing by the number of months in the period reported. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Depreciation Per Unit Per Month is shown below:

U.S. Rental Car International Rental Car
Three Months Ended September 30,
($ in millions, except as noted) 2020 2019 2020 2019
Depreciation of revenue earning vehicles and lease charges $ 182 $ 420 $ 59 $ 126
Foreign currency adjustment(1)
— — (2) 2
Adjusted depreciation of revenue earning vehicles and lease charges $ 182 $ 420 $ 57 $ 128
Average Vehicles (in whole units)
376,443 566,229 104,045 213,294
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars) $ 483 $ 742 $ 548 $ 600
Number of months in period (in whole units)
3 3 3 3
Depreciation Per Unit Per Month (in whole dollars) $ 161 $ 247 $ 183 $ 199


		U.S. Rental Car				International Rental Car					U.S. Rental Car				International Rental Car
		Nine Months Ended September 30,									Three Months Ended March 31,
($ in millions, except as noted)	($ in millions, except as noted)	2020		2019		2020		2019		($ in millions, except as noted)	2021		2020		2021		2020
Depreciation of revenue earning vehicles and lease charges	Depreciation of revenue earning vehicles and lease charges	$	1,054	$	1,217	$	228	$	329	Depreciation of revenue earning vehicles and lease charges	$	205	$	463	$	38	$	89
Foreign currency adjustment(1)	Foreign currency adjustment(1)	—		—		3		—		Foreign currency adjustment(1)	—		—		—		9
Adjusted depreciation of revenue earning vehicles and lease charges	Adjusted depreciation of revenue earning vehicles and lease charges	$	1,054	$	1,217	$	231	$	329	Adjusted depreciation of revenue earning vehicles and lease charges	$	205	$	463	$	38	$	98
Average Vehicles (in whole units)	Average Vehicles (in whole units)	465,929		540,930		127,216		184,307		Average Vehicles (in whole units)	292,154		518,580		75,446		147,987
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)	Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)	$	2,262	$	2,250	$	1,816	$	1,785	Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)	$	702	$	893	$	504	$	662
Number of months in period (in whole units)	Number of months in period (in whole units)	9		9		9		9		Number of months in period (in whole units)	3		3		3		3
Depreciation Per Unit Per Month (in whole dollars)	Depreciation Per Unit Per Month (in whole dollars)	$	251	$	250	$	202	$	198	Depreciation Per Unit Per Month (in whole dollars)	$	234	$	298	$	168	$	220

(1)Based on December 31, ~~2019~~2020 foreign currency exchange rates for all periods presented.

LIQUIDITY AND CAPITAL RESOURCES

Our U.S. and international operations are funded by cash provided by operating activities and by financing arrangements maintained by us in the U.S. and internationally.

As of ~~September 30, 2020,~~March 31, 2021, we had ~~approximately~~ $1.1 billion of unrestricted cash and unrestricted cash equivalents and ~~$717 million~~$1.3 billion of restricted cash and restricted cash equivalents. ~~Of these amounts, approximately $435~~As of March 31, 2021, $390 million of unrestricted cash and unrestricted cash equivalents and ~~$71~~$68 million of restricted cash and restricted cash equivalents were held by our subsidiaries outside of the U.S. As a result of ~~the impact of~~ COVID-19, ~~discussed above,~~ we ~~changed our indefinite investment assertion~~no longer assert permanent reinvestment with respect to our non-U.S. earnings, and if not in the form of loan repayments or subject to favorable tax treaties, repatriation of some of these funds under current regulatory and tax law for use in domestic operations could expose us to additional cash taxes.

~~Liquidity Considerations Related to~~Voluntary Petitions for Bankruptcy

The COVID-19

~~As discussed above, the outbreak of COVID-19 has~~ pandemic spread across the globe, resulting in a global economic slowdown and disruptions of travel and other industries, ~~all~~many of which ~~are continuing to~~ negatively ~~impact~~impacted our business and industry. In addition, COVID-19 ~~has~~ resulted in our employees, contractors, suppliers, customers and other business partners being prevented from conducting normal business activities ~~which in some cases is~~temporarily or for an indefinite period of time. This was largely caused by shutdowns that were initially requested or mandated by governmental authorities. Additionally, individuals voluntarily reduced travel in attempts to avoid the outbreak.

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

In response, we began aggressive actions to eliminate costs. However, we faced significant ongoing expenses.

Although we took aggressive action to eliminate costs, we faced significant ongoing monthly expenses, including monthly payments under our Operating Lease, pursuant to which Hertz leases vehicles which we use in our U.S. rental car operations. On April 27, 2020, Hertz did not make certain payments in accordance with its Operating Lease, and as a result, an amortization event was in effect as of May 5, 2020 for all series of notes issued by HVF II and a liquidation event was in effect with respect to the Series 2013-A Notes issued by HVF II. Refer to Part I, Item 1 of this Quarterly Report on Form 10-Q in Note 1, ~~"Background" for additional information on the Forbearance Agreement and Waiver Agreements which expired on May 22, 2020.~~

~~Voluntary Petitions for Bankruptcy~~

~~In connection with the expiration of the Forbearance Agreement and the Waiver Agreements described above and the continuing economic impact from COVID-19, on~~ May 22, 2020, the Debtors filed Petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Chapter 11 Cases are being jointly administered for procedural purposes only under the caption In re: ~~the~~The Hertz Corporation, et al., Case No. 20-11218 (MFW). Additional information about the Chapter 11 Cases, including access to documents filed with the Bankruptcy Court, is available online at https://restructuring.primeclerk.com/hertz, a website administered by Prime Clerk, a third party bankruptcy claims and noticing agent. The information on this ~~web site~~website is not incorporated by reference and does not constitute part of this Quarterly Report on Form 10-Q.

In May 2020, the Bankruptcy Court approved motions filed by the Debtors that were designed primarily to mitigate the impact of the Chapter 11 Cases on the Company’s operations, customers and employees. The Debtors are authorized to conduct their business activities in the ordinary course, and pursuant to orders entered by the Bankruptcy Court, the Debtors are authorized to, among other things and subject to the terms and conditions of such orders (i) pay employees’ wages and related obligations; (ii) pay certain taxes; (iii) pay critical vendors and certain fees to airport authorities and provide adequate protection; (iv) continue to maintain certain customer programs; (v) maintain their insurance program; (vi) use certain cash collateral on an interim basis; and (viii) continue their cash management system.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Borrowing Capacity and Availability

The filing of the Chapter 11 Cases constituted defaults, termination events and/or amortization events with respect to certain of ~~the Company's~~our existing debt obligations. As a result of the filing of the Chapter 11 Cases, the remaining capacity under ~~almost~~ all of our revolving credit facilities was terminated, as disclosed in Note 6, "Debt," in Part I, Item 1 of this Quarterly Report on Form ~~10-Q in Note 6, "Debt."~~10-Q. Consequently, the sales proceeds ~~of sales of~~from vehicles which serve as collateral for such vehicle finance facilities must be applied to the payment of the related indebtedness of the Non-Debtor Financing Subsidiaries and are not otherwise available to fund our operations. Additionally, we are precluded from accessing any of our subordinated investment in the vehicle collateral until the related defaults are waived or the ~~third party~~third-party funding under those facilities has been retired, either through the monetization of the underlying collateral or the refinancing of the related indebtedness. ~~Additionally, proceeds~~Proceeds from vehicle receivables, excluding manufacturer rebates, as of ~~September 30, 2020~~March 31, 2021 and ongoing vehicle sales must be applied to vehicle debt in amortization.

On January 27, 2021, Hertz subsidiary, TCL Funding Limited Partnership, entered into the Funding LP Series 2021-A Notes which provide for aggregate maximum borrowings of ~~at least 182,521 lease vehicles between~~CAD$350 million on a revolving basis, subject to availability. The initial draw of CAD$120 million was used, in part, to pay the outstanding obligations under the Funding LP Series 2015-A Notes, including any unpaid default interest, as disclosed in Note 6, "Debt," in Part I, Item 1 of this Quarterly Report on Form 10-Q.

As disclosed in Note 1, "Background," in Part I, Item 1 of this Quarterly Report on Form 10-Q, on April 21, 2021, the Bankruptcy Court approved the Debtors' Proposed Plan and Disclosure Statement, and as set forth in the associated Transaction Documents, events related to our debt are as follows. See Note 6, "Debt," in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

•Upon exit from Chapter 11, which is currently anticipated to occur in June ~~1, 2020~~2021, the Debtors anticipate eliminating approximately $5.0 billion of existing debt and ~~December 31, 2020, inclusive,~~eliminating the €725 million European Vehicle Notes where the holders' guaranty claims against the Debtors' U.S. entities will be unimpaired as the balance of their debt is expected to be paid by the issuer, Hertz Holdings Netherlands BV.

•We anticipate obtaining a new ABS Facility in an aggregate amount of $7.0 billion, comprised of a secured rental car asset-backed variable funding note in the aggregate amount of $3.0 billion and a secured rental car asset-backed bridge financing facility in an aggregate amount of up to $4.0 billion. Certain of the proceeds of the ~~dispositions, subject~~ABS Facility are expected to ~~certain exclusions set forth in the Interim Lease Order, will~~ be used to ~~make payments under~~repay outstanding vehicle financing facilities and to support our fleet financing needs for our U.S. rental car operations.

•We also anticipate obtaining Exit Credit Facilities in an aggregate amount of $2.8 billion comprised of a senior secured revolving credit facility in an aggregate committed amount of $1.5 billion plus a senior secured term loan facility in an aggregate principal amount of $1.3 billion. The Exit Credit Facilities will be secured by a first lien of substantially all assets owned as of the ~~Operating Lease; (iii) fund interest payments on~~date of execution of the ~~Operating Lease from draws on certain existing letters~~Exit Credit Facilities or acquired thereafter.

During the first quarter of ~~credit, which are reimbursable~~2021, 278 off airport and 26 airport locations with unexpired leases were authorized by the ~~Debtors; and (iv) suspend litigation relating to~~Bankruptcy Court for rejection in our U.S. RAC segment. These rejections did not materially change the ~~Operating Lease until January 15, 2021 with all parties reserving all rights with respect to future litigation~~minimum fixed obligations for operating leases as disclosed in Part II, Item 7, "Contractual Obligations," included in our 2020 Form 10-K.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~claims. For~~On April 23, 2021, Hertz International Limited entered into the ~~period from June 1, 2020 through September 30, 2020, we disposed~~HIL Credit Agreement which provides an aggregate maximum principal of ~~approximately 165,000 vehicles which are associated with~~€250 million to meet the ~~Interim Lease Order.~~

~~As a result~~liquidity requirements of ~~the Lease Rejection Orders approved by the Bankruptcy Court in September 2020, 257 off airport and 15 airport locations with unexpired leases were authorized for rejection in~~ our U.S. RAC segment. In October 2020, the Bankruptcy Court approved the October Lease Rejection Orders comprised of 29 airport and 24 off airport locations in our U.S. RAC segment. These rejections did not materially change the minimum fixed obligations for operating leasesEuropean business, as disclosed in Note 6, "Debt," in Part ~~II,~~I, Item ~~7, "Contractual Obligations" included in our 2019~~1 of this Quarterly Report on Form ~~10-K.~~10-Q.

We ~~currently have~~had waivers related to the filing of the Chapter 11 Cases under our European ~~Vehicle Notes,~~ABS and U.K. Financing Facility which, in April 2021, have been superseded by a comprehensive restructuring of each the European ABS and U.K. ~~Fleet~~ Financing ~~facility that expire on December 31, 2020,~~Facility, as disclosed in Note 6, "Debt," in Part I, Item 1 of this Quarterly Report on Form ~~10-Q in Note 6, "Debt."~~

As a result of our ongoing actions to eliminate costs in the third quarter of 2020, we have (i) negotiated rent concessions in the form of abatement and payment deferrals of fixed and variable rent payments for our airport and off airport locations in the amount of $84 million which represent amounts previously due in the period between July 1, 2020 and September 30, 2020; (ii) reduced our revenue earning vehicle expenditures by $2.4 billion, or 91%, in the third quarter of 2020 compared to 2019; (iii) reduced our non-vehicle capital asset expenditures by $35 million, or 67%,in the third quarter of 2020 compared to 2019 primarily due to a reduction in information technology and finance transformation program costs; and (iv) sold 56,000, or 72%, more vehicles in our U.S. RAC segment in the third quarter of 2020 compared to 2019 ~~due to the Interim Lease Order and strength in residual values. We are continuing to review our cost structure and fleet size to align with expected rental car volumes.~~10-Q.

Our inability to ~~access our Senior RCF facility or~~ retain any proceeds from the sale of vehicles under our U.S. ABS programs means that our ~~source~~sources of liquidity ~~is almost entirely~~are primarily our unrestricted cash and unrestricted cash equivalents on hand, cash generated from our operations and ~~other new financing opportunities~~up to ~~the extent available.~~$800 million from our DIP Credit Agreement. As of ~~September 30, 2020,~~March 31, 2021, we had ~~$1.1~~total liquidity of $1.7 billion comprised of $900 million of remaining, committed availability under the DIP Credit Agreement and $812 million of unrestricted cash and unrestricted cash equivalents, net of the $275 million minimum liquidity requirement under the DIP Credit Agreement, which we believe will be sufficient to fund our operations through approximately ~~December~~March 31, ~~2020,~~2022, assuming we do not experience any unforeseen liquidity needs before then, which could result in the utilization of the liquidity in advance of ~~December~~March 31, 2020. We believe, however, that if, among other things, (i) we cannot successfully extend the international vehicle debt waivers that expire on December 31, 2020, as disclosed in Part I, Item 1 of this Quarterly Report on Form 10-Q in Note 6, "Debt," (ii) we cannot successfully implement a plan of reorganization, and (iii) there is not a significant recovery in the economic conditions in our major markets, our available cash and cash equivalents and cash generated by our operations will not be sufficient to fund operating requirements for the next twelve months. Consequently, the Debtors are seeking debtor-in-possession financing and pursuing vehicle financing for certain of their operations, either through waivers on existing facilities or entering into new arrangements to fund vehicles and vehicle leases, to supplement their sources of funding.

On October 29, 2020, the Bankruptcy Court entered an order authorizing the Debtors to obtain certain debtor-in-possession financing. In accordance with the Bankruptcy Court’s order, on October 30, 2020, Hertz, as borrower, and Hertz Global and certain of its subsidiaries located in the United States and Canada, in each case that are debtors in these Chapter 11 Cases, as guarantors, entered into the DIP Credit Agreement. The DIP Credit Agreement provides for a superpriority secured debtor-in-possession credit facility comprised of delayed-draw term loans in an aggregate amount of up to $1.65 billion, of which (i) up to $1.0 billion can be used as equity for new interim fleet financing, giving the Debtors the ability to replenish their vehicle fleet in the future, and (ii) up to $800 million can be used for working capital and general corporate purposes. The DIP Loans are available in multiple draws of at least (i) $250 million each, or (ii) the remaining available commitments if such commitments are less than $250 million. The DIP Loans bear interest at a rate of LIBOR plus 7.25% (subject to a 1.00% floor), which

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

~~is reduced to LIBOR plus 6.75% upon a significant repayment of Pre-petition first lien debt.Refer to Part I, Item 1 of this Quarterly Report on Form 10-Q in Note 6, "Debt" for further details.~~

On November 5, 2020, Hertz Global issued a press release announcing that it secured commitments for fleet financing totaling $4 billion and has filed a motion for approval of Hertz entering into the documentation for the financing by the Bankruptcy Court. Upon approval, and together with the up to $1 billion of our debtor-in-possession financing that may be used for equity in our fleet financing subsidiary, we will have access to up to $5 billion in total funding to support its fleet financing needs.2022.

Cash Flows - Hertz

As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, Hertz had unrestricted cash and unrestricted cash equivalents of $1.1 billion and ~~$865 million,~~$1.1 billion, respectively, and restricted cash and restricted cash equivalents of ~~$717 million~~$1.3 billion and ~~$495~~$383 million, respectively. The following table summarizes the net change in cash, cash equivalents, restricted cash and restricted cash equivalents for the periods shown:


		Nine Months Ended September 30,							Three Months Ended March 31,
(In millions)	(In millions)	2020		2019		$ Change		(In millions)	2021		2020		$ Change
Cash provided by (used in):	Cash provided by (used in):							Cash provided by (used in):
Operating activities	Operating activities	$	931	$	2,238	$	(1,307)	Operating activities	$	200	$	450	$	(250)
Investing activities	Investing activities	3,622		(5,492)		9,114		Investing activities	(18)		(2,097)		2,079
Financing activities	Financing activities	(4,077)		2,546		(6,623)		Financing activities	692		1,700		(1,008)
Effect of exchange rate changes	Effect of exchange rate changes	18		(7)		25		Effect of exchange rate changes	(12)		(4)		(8)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	$	494	$	(715)	$	1,209	Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	$	862	$	49	$	813

During the ~~nine~~three months ~~of 2020,~~ended March 31, 2021, cash flows from operating activities decreased by ~~$1.3 billion~~$250 million period over period primarily due to the ~~$1.6 billion~~$190 million change in net ~~loss~~income (loss) attributable to Hertz, ~~driven by the impact of COVID-19 discussed above, partially offset by the associated reduction of $493 million in~~adjusted for non-cash and non-operating items. Cash flows from working capital ~~requirements.~~accounts decreased by $60 million due primarily to $58 million cash paid for reorganization items in 2021 with no comparable in the 2020 period.

Our primary investing activities relate to the acquisition and disposal of revenue earning vehicles. However, as a result of the Interim Lease Order, Hertz will dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020, where the proceeds from the dispositions will be used to make payments under the Operating Lease. During the ~~nine~~three months ~~of 2020,~~ended March 31, 2021, there was a ~~$9.1~~$2.1 billion decrease in the use of cash for investing activities period over ~~period. Cash~~period due primarily to a $1.3 billion net reduction in cash outflows for revenue earning vehicles ~~decreased $6.3 billion~~ as we reduced our ~~commitments to purchase vehicles, primarily in our U.S. RAC segment,~~vehicle purchases due to the ~~impact~~Chapter 11 Cases and $818 million net proceeds received from ~~COVID-19 and a $2.6 billion increase of cash proceeds from disposals of revenue earning vehicles as we accelerated~~ the ~~disposition of vehicles~~ ~~due to the Interim Lease Order and strength in residual values~~.Donlen Sale.

Net financing cash ~~outflows~~inflows were ~~$4.1 billion~~$692 million in the ~~nine~~three months ~~of 2020~~ended March 31, 2021 compared to cash inflows of ~~$2.5~~$1.7 billion in the ~~nine~~first three months of ~~2019,~~2020 due primarily ~~due~~ to a ~~$6.8 billion~~$973 million net reduction in vehicle debt borrowings in ~~2020~~the 2021 period compared to ~~2019~~2020 period as we reduced our ~~commitments~~vehicle purchases due to ~~purchase vehicles.~~the Chapter 11 Cases.

~~Cash Flows - Hertz Global~~

As of September 30, 2020 and December 31, 2019, Hertz Global had unrestricted cash and unrestricted cash equivalents of $1.1 billion and $865 million, respectively, and restricted cash and restricted cash equivalents of $745

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~million~~Cash Flows - Hertz Global

As of March 31, 2021 and ~~$495~~December 31, 2020, Hertz Global had unrestricted cash and unrestricted cash equivalents of $1.1 billion and $1.1 billion, respectively, and restricted cash and restricted cash equivalents of $1.4 billion and $411 million, respectively. The following table summarizes the net change in cash, cash equivalents, restricted cash and restricted cash equivalents for the periods shown:


		Nine Months Ended September 30,							Three Months Ended March 31,
(In millions)	(In millions)	2020		2019		$ Change		(In millions)	2021		2020		$ Change
Cash provided by (used in):	Cash provided by (used in):							Cash provided by (used in):
Operating activities	Operating activities	$	928	$	2,233	$	(1,305)	Operating activities	$	200	$	449	$	(249)
Investing activities	Investing activities	3,622		(5,492)		9,114		Investing activities	(18)		(2,097)		2,079
Financing activities	Financing activities	(4,046)		2,551		(6,597)		Financing activities	692		1,701		(1,009)
Effect of exchange rate changes	Effect of exchange rate changes	18		(7)		25		Effect of exchange rate changes	(12)		(4)		(8)
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	$	522	$	(715)	$	1,237	Net change in cash, cash equivalents, restricted cash and restricted cash equivalents	$	862	$	49	$	813

Fluctuations in operating, investing and financing cash flows from period to period are due to the same factors as those discussed for Hertz above, with the exception of any cash inflows or outflows related to the master loan agreement between Hertz and Hertz Global and proceeds from the issuance of stock under the ATM Program as disclosed in Note 10, "Earnings (Loss) Per Share - Hertz Global" to the Notes to our unaudited condensed consolidated financial statements included in this Report.Global.

Financing

Substantially all of our revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of our lenders under our various credit facilities, other secured financings and asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing II LP, HVF II GP Corp., Hertz Vehicle Interim Financing LLC, Hertz Vehicle Financing LLC, Rental Car Finance LLC ~~HFLF~~ and various international subsidiaries that facilitate ~~the Company's~~our international securitizations) will be available to satisfy the claims of unsecured creditors unless the secured creditors are paid in full. ~~For a discussion of additional risks associated with COVID-19, see~~

Refer to Note 6, "Debt," in Part ~~II,~~I, Item ~~1A, "Risk Factors"~~1 of this Quarterly Report on Form ~~10-Q.~~

~~Refer to Part I, Item 1, Note 6, "Debt," to the Notes to our unaudited condensed consolidated financial statements included in this Report~~10-Q for information on our outstanding debt obligations and our borrowing capacity and availability under our revolving credit facilities as of ~~September 30, 2020.~~March 31, 2021. Cash paid for interest during the ~~nine~~first three months of ~~2020~~2021 was ~~$78~~$30 million for interest on non-vehicle debt and ~~$275~~$69 million for interest on vehicle debt. Cash paid for interest during the ~~nine~~first three months of ~~2019~~2020 was ~~$182~~$26 million for interest on non-vehicle debt and ~~$331~~$103 million for interest on vehicle debt. The ~~$104~~$34 million reduction in ~~non-vehicle~~cash paid for vehicle debt interest is due primarily ~~due~~ to ~~suspending interest payments on certain~~lower debt ~~due to the filing of the Chapter 11 Cases.~~levels primarily in our U.S. RAC segment.

Our corporate liquidity, which excludes unused commitments under our vehicle debt, was as follows:


(In millions)	(In millions)	9/30/2020		12/31/2019		(In millions)	March 31, 2021		December 31, 2020
Cash and cash equivalents	Cash and cash equivalents	$	1,137	$	865	Cash and cash equivalents	$	1,087	$	1,096
Availability under the Senior RCF	Availability under the Senior RCF	—		526		Availability under the Senior RCF	—		—
Corporate liquidity	Corporate liquidity	$	1,137	$	1,391	Corporate liquidity	$	1,087	$	1,096

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Covenants

Prior to the filing of the Chapter 11 Cases, Hertz’s Leverage Ratio, as defined in the credit agreements governing the Senior RCF, the Letter of Credit Facility and the Alternative Letter of Credit Facility, contained a financial maintenance covenant applicable to such facilities. Such covenant provided that Hertz’s consolidated first lien net leverage ratio, as defined in the credit agreements governing such facilities, as of the last day of any fiscal quarter may not exceed a ratio of 3.00 to 1.00. As a result of the filing of the Chapter 11 Cases, ~~the Company is~~we are currently in default under ~~its~~our Senior RCF, the Letter of Credit Facility and the Alternative Letter of Credit ~~Facility.~~Facility, and we are in breach of the Leverage Ratio.

As defined in the DIP Credit Agreement, a liquidity maintenance test is required as of each month end period. As of March 31, 2021, we were in compliance with the liquidity maintenance test.

Summarized Financial Information -– Hertz

The following tables present the summarized financial information as combined for The Hertz Corporation, ("Parent”), and the Parent's subsidiaries that guarantee the Senior Notes issued by the Parent ("Guarantor Subsidiaries"). The Guarantor Subsidiaries are 100% owned by the Parent and all guarantees are full and unconditional and joint and several. Additionally, substantially all of the assets of the Guarantor Subsidiaries are pledged under the Senior Facilities and Senior Second Priority Secured Notes and the value of such assets will not be available to satisfy the claims of the unsecured creditors of Hertz until the claims of secured creditors are paid in full.

During the first quarter of 2020, we early adopted Rule 13-01 of the SEC's Regulation S-X that simplifies the existing disclosure requirements for the Guarantor Subsidiaries and allows for the simplified disclosure to be included within Part 1, Item II, "Management’s Discussion and Analysis of Financial Condition and Results of Operations." In lieu of providing separate unaudited financial statements for the Guarantor Subsidiaries, Hertz has included the accompanying summarized financial information based on Rule 13-01 of the SEC's Regulation S-X. Management of Hertz does not believe that separate financial statements of the Guarantor Subsidiaries are material to Hertz's investors; therefore, separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented.

(In millions) September 30,
2020 December 31,
2019
Due from affiliates $ 66,742 $ 3,562
Total assets 67,146 25,964
Due to affiliates(1)
53,847 8,188
Total liabilities 63,080 16,982

Summarized financial information for the Guarantor Subsidiaries is as follows:


(In millions)	March 31, 2021		December 31, 2020
Due from affiliates	$	67,513	$	67,023
Total assets	67,381		67,056
Due to affiliates(1)	53,335		54,100
Total liabilities	63,136		63,282

(1) Due to affiliates of $53.5 billion is classified as liabilities subject to compromise as of ~~September 30, 2020.~~March 31, 2021 and December 31, 2020, respectively.


~~(In millions)~~	~~Nine Months Ended September 30,~~
	~~2020~~
~~Total revenues~~	$	~~2,701~~







~~Income (loss) before income taxes and equity in earnings (losses) of subsidiaries(1)~~	~~(3,083)~~


~~Net income (loss)~~	~~(1,529)~~

~~Net income (loss) attributable to Hertz~~	~~(1,529)~~


(In millions)	Three Months Ended March 31,
	2021		2020

Total revenues	$	932	$	1,313







Income (loss) before income taxes and equity in earnings (losses) of subsidiaries(1)	144		(1,522)


Net income (loss)	144		(309)

Net income (loss) attributable to Hertz	190		(309)

(1)Includes ~~$2.5~~$324 million and $1.6 billion of intercompany vehicle lease charges from non-guarantor ~~subsidiaries.~~subsidiaries for the three months ended March 31, 2021 and 2020, respectively.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Capital Expenditures

Revenue Earning Vehicles Expenditures and Disposals

The table below sets forth our revenue earning vehicles expenditures and related disposal proceeds for the periods shown:

Cash inflow (cash outflow) Revenue Earning Vehicles
(In millions) Capital
Expenditures Disposal
Proceeds Net Capital
Expenditures
2020
First Quarter $ (4,346) $ 2,212 $ (2,134)
Second Quarter (610) 2,793 2,183
Third Quarter (232) 3,765 3,533
Total $ (5,188) $ 8,770 $ 3,582
2019
First Quarter $ (3,973) $ 2,153 $ (1,820)
Second Quarter (4,974) 2,059 (2,915)
Third Quarter (2,589) 1,981 (608)
Total $ (11,536) $ 6,193 $ (5,343)


Cash inflow (cash outflow)	Revenue Earning Vehicles
(In millions)	Capital Expenditures		Disposal Proceeds		Net Capital Expenditures
2021
First Quarter	$	(1,517)	$	686	$	(831)




2020
First Quarter	$	(4,346)	$	2,212	$	(2,134)

The table below sets forth expenditures for revenue earning vehicles, net of disposal proceeds, by segment:


Cash inflow (cash outflow)	Cash inflow (cash outflow)	Nine Months Ended September 30,								Cash inflow (cash outflow)	Three Months Ended March 31,
($ in millions)	($ in millions)	2020		2019		$ Change		% Change		($ in millions)	2021		2020		$ Change		% Change
U.S. Rental Car	U.S. Rental Car	$	3,063	$	(3,473)	$	6,536	(188)	%	U.S. Rental Car	$	(819)	$	(2,051)	$	1,232	(60)	%
International Rental Car	International Rental Car	731		(1,291)		2,022		(157)		International Rental Car	72		79		(7)		(9)
All Other Operations	All Other Operations	(212)		(579)		367		(63)		All Other Operations	(84)		(162)		78		(48)
Total	Total	$	3,582	$	(5,343)	$	8,925	(167)		Total	$	(831)	$	(2,134)	$	1,303	(61)

~~We reduced our revenue~~Revenue earning vehicle expenditures decreased by ~~$2.4~~$2.8 billion, or ~~91%~~65%, for the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019.~~2020 due primarily to a reduction in vehicle purchases primarily in our U.S. RAC segment. Revenue earning vehicle proceeds decreased by $1.5 billion, or 69%, for the first quarter of 2021 compared to 2020 due primarily to fewer vehicle dispositions primarily in our U.S. RAC segment.

Non-Vehicle Capital Asset Expenditures and Disposals

The table below sets forth our non-vehicle capital asset expenditures and related disposal proceeds from non-vehicle capital assets disposed of or to be disposed of for the periods shown:

Cash inflow (cash outflow) Non-Vehicle Capital Assets
(In millions) Capital
Expenditures Disposal
Proceeds Net Capital
Expenditures
2020
First Quarter $ (59) $ 23 $ (36)
Second Quarter (13) 27 14
Third Quarter (17) 6 (11)
Total $ (89) $ 56 $ (33)
2019
First Quarter $ (54) $ 19 $ (35)
Second Quarter (64) 2 (62)
Third Quarter (52) — (52)
Total $ (170) $ 21 $ (149)


Cash inflow (cash outflow)	Non-Vehicle Capital Assets
(In millions)	Capital Expenditures		Disposal Proceeds		Net Capital Expenditures
2021
First Quarter	$	(9)	$	4	$	(5)




2020
First Quarter	$	(59)	$	23	$	(36)

Non-vehicle capital asset expenditures decreased by $50 million, or 85%, in the first quarter of 2021 compared to 2020 primarily due to a reduction in information technology and finance transformation program costs.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

As discussed above, we reduced our non-vehicle capital asset expenditures by $35 million, or 67%, in the third quarter of 2020 compared to 2019 primarily due to a reduction in information technology and finance transformation program costs.

The table below sets forth non-vehicle capital asset expenditures, net of disposal proceeds, by segment:


Cash inflow (cash outflow)	Cash inflow (cash outflow)	Nine Months Ended September 30,								Cash inflow (cash outflow)	Three Months Ended March 31,
($ in millions)	($ in millions)	2020		2019		$ Change		% Change		($ in millions)	2021		2020		$ Change		% Change
U.S. Rental Car	U.S. Rental Car	$	11	$	(44)	$	55	(125)	%	U.S. Rental Car	$	(2)	$	(4)	$	2	(50)	%
International Rental Car	International Rental Car	(9)		(12)		3		(25)		International Rental Car	(1)		(6)		5		(83)
All Other Operations	All Other Operations	(4)		(3)		(1)		33		All Other Operations	(1)		(1)		—		—
Corporate	Corporate	(31)		(90)		59		(66)		Corporate	(1)		(25)		24		(96)
Total	Total	$	(33)	$	(149)	$	116	(78)		Total	$	(5)	$	(36)	$	31	(86)

CONTRACTUAL OBLIGATIONS

~~In September 2020,~~During the first quarter of 2021, the Bankruptcy Court approved ~~the Lease Rejection Orders which authorized~~ the rejection of certain unexpired leases comprised of ~~257~~278 off airport and ~~15 airport locations in our U.S. RAC segment. In October 2020, the Bankruptcy Court approved the October Lease Rejection Orders comprised of 29 airport and 24 off~~26 airport locations in our U.S. RAC segment. These rejections did not materially change the minimum fixed obligations for operating leases as disclosed in our ~~2019~~2020 Form 10-K. Due to the impact of COVID-19 discussed above, we have reduced commitments to purchase vehicles with approximately a $4.0 billion reduction from original commitments in our U.S. RAC segment, where the majority of remaining 2020 commitments were incurred during the second quarter of 2020.

Additionally, as a result of filing the Chapter 11 Cases, as disclosed in Note 1, "Background," ~~to the Notes to our unaudited condensed consolidated financial statements included~~ in Part I, Item 1 of this Quarterly Report on Form 10-Q, certain financings are subject to change following the conclusion of such proceedings. Refer to Note 6, "Debt," ~~to the Notes to our unaudited condensed consolidated financial statements included~~ in Part I, Item 1 of this Quarterly Report on Form 10-Q for debt classified as liabilities subject to compromise as of ~~September 30, 2020~~March 31, 2021 and changes to our aggregate indebtedness.

Excluding the commitments previously discussed, there have been no material changes outside of the ordinary course of business to our known contractual obligations as set forth in the table included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of ~~Operations"~~Operations," included in our ~~2019~~2020 Form 10-K.

OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

Indemnification Obligations

There have been no significant changes to our indemnification obligations as compared to those disclosed in Note 14, "Contingencies and Off-Balance Sheet ~~Commitments" of the Notes to our consolidated financial statements included~~Commitments," in ~~our 2019 Form 10-K under the caption~~Part II, Item 8 ~~"Financial Statements and Supplementary Data."~~of our 2020 Form 10-K.

We regularly evaluate the probability of having to incur costs associated with these indemnification obligations and ~~will accrue~~have accrued for expected losses ~~when they~~that are probable and estimable.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements," in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements," to the Notes to our unaudited condensed consolidated financial statements included in this Report.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

Important factors that could affect our actual results and cause them to differ materially from those expressed in forward-looking statements include, among others, those that may be disclosed from time to time in subsequent reports filed with or furnished to the SEC, those described under ~~"Item 1A-Risk Factors"~~Item 1A, "Risk Factors," included in our ~~2019~~2020 Form 10-K and this Quarterly Report on Form 10-Q and the following, which were derived in part from the risks set forth in ~~"Item 1A-Risk Factors"~~Item 1A, "Risk Factors," of our ~~2019~~2020 Form 10-K and this Quarterly Report on Form 10-Q:

•our ability to navigate the Chapter 11 process, including obtaining Bankruptcy Court approval for certain ~~requirements,~~actions, complying with and operating under the requirements and constraints of the Bankruptcy Code, ~~negotiating and consummating a Chapter 11 plan,~~ developing, funding and executing our business plan and continuing as a going concern;

•the actions and decisions of creditors, regulators and other third parties that have an interest in the Chapter 11 cases;

•our ability to effectuate the Chapter 11 plan of reorganization described in the plan support agreement with certain of our creditors;

•the impact of our delisting from the New York Stock Exchange on our stockholders;

•the value of our common stock due to the Chapter 11 ~~process;~~process or its treatment under the Proposed Plan;

•our ability to make accurate assumptions, analyses and financial projections, which could affect successful implementation of the Proposed Plan;

•levels of travel demand, particularly with respect to business and leisure travel in the ~~United States~~U.S. and in global markets;

•the length and severity of ~~the~~ COVID-19 ~~pandemic~~ and the impact on our vehicle rental business as a result of travel restrictions and business closures or disruptions;

•the impact of ~~the~~ COVID-19 ~~pandemic~~ and actions taken in response to the pandemic on global and regional economies and economic factors;

•general economic uncertainty and the pace of economic recovery, including in key global markets, when ~~the~~ COVID-19 ~~pandemic~~ subsides;

•our ability to successfully restructure our substantial indebtedness or raise additional capital;

•our post-bankruptcy capital structure;

•our ability to remediate the material weaknesses in our internal controls over financial reporting;

•our ability to maintain an effective employee retention and talent management strategy and resulting changes in personnel and employee relations;

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

•the recoverability of our goodwill and indefinite-lived intangible assets when performing impairment analysis;

•our ability to dispose of vehicles in the used-vehicle market, use the proceeds of such sales to acquire new vehicles and to reduce exposure to residual risk;

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~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

•actions creditors may take with respect to the vehicles used in the rental car operations;

•significant changes in the competitive environment and the effect of competition in our markets on rental volume and ~~pricing, including on our pricing policies or use of incentives;~~pricing;

•occurrences that disrupt rental activity during our peak periods;

•our ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in our rental operations accordingly;

•our ability to retain customer loyalty and market share;

•increased vehicle costs due to declining value of our non-program vehicles;

•our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning vehicles and to refinance our existing indebtedness;

•risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt, the fact that substantially all of our consolidated assets secure certain of our outstanding indebtedness and increases in interest rates or in our borrowing margins;

•our ability to meet the financial and other covenants contained in our ~~senior credit facilities and letter of credit facilities, our outstanding unsecured senior notes, our outstanding senior second priority secured notes~~DIP Credit Agreement and certain asset-backed and asset-based arrangements;

•our ability to access financial markets, including the financing of our vehicle fleet through the issuance of asset-backed securities;

•fluctuations in interest rates, foreign currency exchange rates and commodity prices;

•our ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease);

•our ability to prevent the misuse or theft of information we possess, including as a result of cyber security breaches and other security threats;

•our ability to adequately respond to changes in technology, customer demands and market competition;

•our ability to successfully implement any strategic transactions;

•our ability to achieve anticipated cost savings from on-going strategic initiatives, which could have an effect on our business operations, results of operations and financial condition;

•our ability to purchase adequate supplies of competitively priced vehicles and risks relating to the availability and increases in the cost of the vehicles we ~~purchase;~~purchase as a result of the continuing chip manufacturing shortage;

•our recognition of previously deferred tax gains on the disposition of revenue earning vehicles;

•financial instability of the manufacturers of our vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs;

•an increase in our vehicle costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles;

•our ability to execute a business continuity plan;

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

•our access to third-party distribution channels and related prices, commission structures and transaction volumes;

•our ability to retain customer loyalty and market share;

•risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws and our ability to repatriate cash from non-U.S. affiliates without adverse tax consequences, our exposure to fluctuations in foreign currency exchange rates and our ability to effectively manage our international operations after the United Kingdom's withdrawal from the European Union;consequences;

•a major disruption in our communication or centralized information networks;

•a failure to maintain, upgrade and consolidate our information technology systems;

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~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)~~

•costs and risks associated with potential litigation and investigations or any failure or inability to comply with laws and regulations or any changes in the legal and regulatory ~~environment, including laws and regulations relating to environmental matters and consumer privacy and data security;~~environment;

•our ability to maintain our network of leases and vehicle rental concessions at airports in the U.S. and internationally;

•our ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy;

•changes in 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;

•risks relating to our deferred tax assets, including the risk of an "ownership change" under the Internal Revenue Code of 1986, as amended;

•our exposure to uninsured claims in excess of historical levels;

•risks relating to our participation in multiemployer pension plans;

•shortages of fuel and increases or volatility in fuel costs;

•our ability to manage our relationships with unions;

•changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results; and

•other risks and uncertainties described from time to time in periodic and current reports that we file with the SEC.

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date ~~made,~~of this Quarterly Report on Form 10-Q, and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of market risks, including the effects of changes in interest rates (including credit spreads), foreign currency exchange rates and fluctuations in fuel prices. We manage our exposure to these market risks through our regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure to counterparty nonperformance on such instruments.

As a result of our declining credit profile from the ~~COVID-19~~ impact ~~disclosed in Note 1, "Background,"~~from COVID-19, we are no longer able to enter into certain derivative financial instruments or renew existing derivative financial instruments in order to mitigate market risks arising from the effects of changes in foreign currency exchange rates and interest rates (including credit spreads). As a result, we have exposure to foreign currency exchange rate fluctuations on cross currency obligations, primarily intercompany loans. Assuming a hypothetical change of one percentage point to the foreign currency exchange rates on our intercompany loan balance as of ~~September 30, 2020,~~March 31, 2021, our pre-tax operating results would increase (decrease) by approximately $3 million.

Additionally, we were party to various interest rate caps (the "Interest Rate Caps") and an interest rate swap which have been unwound or terminated. The Interest Rate Caps were used to mitigate the cost at inception of purchased caps (the "Purchased Caps") on our variable rate HVF II U.S. ABS program debt. The Purchased Caps remain in place and provide protection against increases in rates on our variable rate HVF II U.S. ABS debt. As a result of terminating the Interest Rate Caps, we are no longer exposed to their associated market risk.

We were also party to an (receive fixed-pay floating) interest rate swap (the "Interest Rate Swap") to better match the mix of fixed and floating rate on our Donlen U.S. ABS program debt to the mix of fixed and floating rate assets (i.e. vehicle leases in our All Other Operations segment). The termination of the Interest Rate Swap may result in decreased earnings from variable rate leases in a declining rate environment, and as such, variable rate vehicle leases are now supported by a fixed rate cost of debt. We estimate the impact on our operations in our All Other Operations segment to be approximately a $2 million increase to interest expense in the fourth quarter of 2020.

Current year to date dispositions of Hertz Global's common stock by certain significant shareholders, as disclosed in Part I, Item 1 of this Quarterly Report on Form 10-Q in Note 14, "Related Party Transactions", likely resulted in an "ownership change" as that term is defined in Internal Revenue Code (“IRC”) Section 382. IRC Section 382 can limit the utilization of the federal and state net operating loss ("NOL") and tax credit carryforwards. We currently believe that this "ownership change" will not significantly impact our ability to utilize these U.S. tax attributes. However, there are numerous factors that are considered in the calculation of the IRC Section 382 limitation and, if one or several of these factors should be revised in the future, our ability to utilize our tax attributes could change.

We expect to receive notification from the German and U.S. tax authorities within ninety (90) days from the filing date of this Quarterly Report on Form 10-Q that they have agreed on a resolution of a transfer pricing matter covering the 2005-2010 tax years. Upon receipt of such notification, we will reassess and, if appropriate, adjust our uncertain tax benefit related to the matter.

Except for the effects described above and the impact from COVID-19 on the global economy, there have been no other material changes to the information reported under Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," ~~included~~ in our ~~2019~~2020 Form 10-K.

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ITEM 4. CONTROLS AND PROCEDURES

HERTZ GLOBAL

Evaluation of Disclosure Controls and Procedures

Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of ~~September 30,~~March 31, 2021, due to the identification of a material weakness in our internal control over financial reporting, as further described in Item 9A of our 2020 ~~our~~Form 10-K, the Company’s disclosure controls and procedures were ~~effective.~~not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

~~There were no changes in our internal control over financial reporting that occurred during~~During the three months ended ~~September 30, 2020 that~~March 31, 2021, we have taken, and continue to take, the actions described below to remediate our existing information technology general controls (“ITGCs”) material weakness, which have materially affected, or are reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

Our remediation efforts to address the material weakness associated with ITGCs, as further described in Item 9A of our 2020 Form 10-K, are ongoing. Management performed the following remediation actions during the three months ended March 31, 2021:

•Clarified and communicated roles for ITGC control owners and SOX project management team through confirming the identification of each control owner, reinforcing requirements and creating a culture of accountability to enforce the compliance of ITGCs.

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ITEM 4. CONTROLS AND PROCEDURES (CONTINUED)

•Began administering enhanced re-trainings for ITGC control owners regarding risks, controls and maintaining adequate evidence.

•Enhanced monitoring of ITGC design and operational effectiveness through implementing monthly remediation progress status dashboards with the Chief Information Officer and Chief Financial Officer, which is summarized quarterly to the Audit Committee of the Board of Directors.

Our remediation efforts were ongoing during the three months ended March 31, 2021. To remediate our existing material weakness, we require additional time to complete the implementation of our remediation plans and demonstrate the effectiveness of our remediation efforts. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

HERTZ

Evaluation of Disclosure Controls and Procedures

Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of ~~September 30,~~March 31, 2021, due to the identification of a material weakness in our internal control over financial reporting, as further described in Item 9A of our 2020 ~~our~~Form 10-K, the Company’s disclosure controls and procedures were ~~effective.~~not effective to provide reasonable assurance that the information required to be disclosed by us int eh reports that we file or submit under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

•Began administering enhanced re-trainings for ITGC control owners regarding risks, controls and maintaining adequate evidence.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information related to the Chapter 11 Cases that were filed on May 22, 2020 is included in Note 1, "Background," in Part 1, Item 1 ~~Note 1, "Background," to the Notes to our unaudited condensed consolidated financial statements included in~~of this ~~Report.~~Quarterly Report on Form 10-Q.

For a description of certain pending legal proceedings see ~~Part I, Item 1,~~ Note ~~13,~~12, "Contingencies and Off-Balance Sheet Commitments," ~~to the Notes to our unaudited condensed consolidated financial statements included~~ in Part I, Item 1 of this ~~Report.~~Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

~~We are in the process of Chapter 11 reorganization cases under the Bankruptcy Code, which may cause our common stock to decrease in value or may render our common stock worthless.~~

On May 22, 2020, we filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, thereby commencing the Chapter 11 Cases for certain debtors, including Hertz Global. The pricePart I, Item 1A,“Risk Factors,” of our ~~common stock has been volatile following~~2020 Form 10-K for the commencement of the Chapter 11 Cases and may decrease in value or become worthless. Accordingly, any trading in our common stock during the pendency of our Chapter 11 Cases is highly speculative and poses substantial risks to purchasers of our common stock. In addition, on October 29,year ended December 31, 2020, ~~Hertz Global received notification from the NYSE~~includes certain risk factors that Hertz Global's common stock is no longer suitable for listing on the NYSE and that the NYSE suspended trading in Hertz Global's common stock after the market close on October 29, 2020. Delisting our common stock may adversely impact our liquidity, impair our stockholders' ability to buy and sell our common stock, impair our ability to raise capital, and the market price of our common stock could ~~decrease. Recoveries in the Chapter 11 Cases for holders of common stock, if any, will depend upon our ability to negotiate and confirm a plan, the terms of such plan, the recovery of~~materially affect our business, from the COVID-19 pandemic, if any, and the value of our assets. Although we cannot predict how our common stock will be treated under a plan, we expect that common stock holders would not receive a recovery through any plan unless the holders of more senior claims and interests, suchfinancial condition, or future results. There have been no material changes in those risk factors, except as secured and unsecured indebtedness, are paid in full, which would require a significant and rapid and currently unanticipated improvement in business conditions to pre-COVID-19 or close to pre-COVID-19 levels. We also expect our stockholders’ equity to decrease as we use cash on hand to support our operations in bankruptcy. Consequently, there is a significant risk that the holders of our common stock will receive no recovery under the Chapter 11 Cases and that our common stock will be worthless.listed below:

As a result of the Chapter 11 Cases, we are subject to the risks and uncertainties associated with Chapter 11 Cases and operating under Chapter 11 may restrict our ability to pursue strategic and operational initiatives.

For the duration of the Chapter 11 Cases, our operations and our ability to execute our business strategy will be subject to the risks and uncertainties associated with bankruptcy. These risks include:

•our ability to obtain Bankruptcy Court approval with respect to motions filed in the Chapter 11 Cases from time to time;

•our ability to comply with and operate under the requirements and constraints of the Bankruptcy Code and under any cash management, cash collateral, adequate protection, or other orders entered by the Bankruptcy Court from time to time;

•our ability to engage in intercompany transactions and to fund operations from cash on hand or from financings and, in the event of such financings, our ability to comply with the terms of such financings;

•our ability to ~~negotiate~~receive Bankruptcy Court approval of the Proposed Plan and our ability to consummate ~~a Chapter 11 plan;~~the Proposed Plan, each on an acceptable timeline;

•our ability to develop, fund, and execute our business plan; and

•our ability to continue as a going concern.

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~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 1A. RISK FACTORS (CONTINUED)~~

These risks and uncertainties could affect our business and operations in various ways. For example, negative events or publicity associated with the Chapter 11 Cases could adversely affect our relationships with our suppliers, customers and employees. In particular, critical vendors, suppliers, and/or customers may determine not to do business with us due to the Chapter 11 Cases and we may not be successful in securing alternative sources. Also, transactions outside the ordinary course of business are subject to the prior approval of the Bankruptcy Court, which may limit our ability to respond timely to certain events or take advantage of opportunities. Additionally, uncertainty with respect to intercompany transactions may negatively impact our captive insurance companies’ ability to meet insurance regulatory requirements. Because of the risks and uncertainties associated with the Chapter 11 Cases, we cannot predict or quantify the ultimate impact that events occurring during the Chapter 11 process may have on our business, financial condition and results of operations, and there is no certainty as to our ability to continue as a going concern.

~~Our common stock has been delisted from trading on the New York Stock Exchange (“NYSE”), which may negatively impact the trading price of our common stock and our stockholders.~~

On October 29, 2020, Hertz Global received notification from the NYSE that Hertz Global's common stock is no longer suitable for listing on the NYSE and that the NYSE suspended trading in Hertz Global's common stock after the market close on October 29, 2020. On October 30, 2020, the NYSE applied to the Securities and Exchange Commission pursuant to Form 25 to remove the common stock of Hertz Global from listing and registration on the NYSE at the opening of business on November 10, 2020. Upon deregistration of Hertz Global's common stock under Section 12(b) of the Exchange Act, Hertz Global's common stock will remain registered under Section 12(g) of the Exchange Act. As a result of the suspension and expected delisting, Hertz Global's common stock began trading exclusively on the over-the-counter market on October 30, 2020 under the symbol HTZGQ. Delisting our common stock may adversely impact its liquidity, impair our stockholders’ ability to buy and sell our common stock, impair our ability to raise capital, and the market price of our common stock could decrease. Delisting our common stock could also adversely impact the perception of our financial condition and have additional negative ramifications, including further loss of confidence by our employees, the loss of institutional investor interest and fewer business opportunities.

We may not be able to ~~raise additional capital~~obtain Bankruptcy Court confirmation of the Proposed Plan or may have to ~~meet our liquidity needs, which could have a material adverse impact on~~modify the ~~Company.~~terms of the Proposed Plan.

~~In connection with the Chapter 11 Cases, the Company entered into a Senior Secured Superpriority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”),~~The Proposed Plan, which was approved by the Bankruptcy Court on October 29, 2020. For the duration of the Chapter 11 Cases, the Company expects that proceeds of the DIP Credit Agreement, together with cash on hand, cash flow from operations and payments received from special purpose subsidiaries and vehicle financings, if any, will be the Company’s primary source of capital to fund ongoing operations and other capital needs and that it will have limited, if any, access to additional corporate financing (which does not include vehicle financings). In the event that cash on hand, cash flow from operations, payments received from special purpose subsidiaries and vehicle financings, and availability under the DIP Credit Agreement are not sufficient to meet these liquidity needs, the Company may be required to seek additional financing, and can provide no assurance that additional financing would be available or, if available, offered on acceptable terms. The amount of any such additional financing also could be limited by negative covenants in the DIP Credit Agreement, which include restrictions on the Company’s ability to, among other things, incur additional indebtedness and create liens on assets. Further, the DIP Credit Agreement contains numerous events of default. If any event of default occurs and is continuing, subject to any applicable cure period set forth in the DIP Credit Agreement, the agent and/or lenders under the DIP Credit Agreement may seek to exercise rights and remedies, which could have a material adverse impact on the Company and its Chapter 11 Cases.

~~In addition, on November 5, 2020, Hertz Global issued a press release announcing that it secured commitments for fleet financing (the “Fleet Financing”) totaling $4 billion and the Company has~~we filed ~~a motion~~ with the Bankruptcy Court, ~~seeking~~is subject to approval ~~for~~by each class of holders of claims and interests entitled to vote. Even if they approve the ~~Company to enter into the documentation for the Fleet Financing. If approved by~~Proposed Plan, the Bankruptcy Court, ~~the Company expects to have access to up to $5 billion in total funding to support its fleet~~which, as a

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~~financing needs, comprised~~court of equity, may exercise substantial discretion, may choose not to confirm the Proposed Plan. Bankruptcy Code Section 1129 requires, among other things, a showing that confirmation of the ~~Fleet Financing, together with~~Proposed Plan will not be followed by liquidation or the upneed for further financial reorganization for us, and that the value of distributions to ~~$1 billion~~dissenting holders of claims and interests will not be less than the value such holders would receive if we, the Debtors, liquidated under Chapter 7 of the ~~Company’s debtor-in-possession financing~~Bankruptcy Code. Although we believe that ~~may~~the Proposed Plan will satisfy such tests, there can be ~~used for equity in the fleet financing subsidiary. In the event~~no assurance that the Bankruptcy Court ~~does~~will reach the same conclusion or that modifications to the Proposed Plan will not ~~approve the Fleet Financing motion, the Company may~~ be required ~~to seek additional financing to meet its fleet financing needs, and can provide no assurance~~for confirmation or that ~~additional financing~~such modifications would ~~be available or, if available, offered on acceptable terms.~~

~~Prosecution~~not necessitate re-solicitation of the Chapter 11 Cases has consumed and will continue to consume a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.

While the Chapter 11 Cases continue, our management will be required to spend a significant amount of time and effort focusing on the cases. This diversion of attention may materially adversely affect the conduct of our business, and, as a result, our financial condition and results of operations, particularly if the Chapter 11 Cases are protracted. During the Chapter 11 Cases, our employees will face considerable distraction and uncertainty and we experienced increased levels of employee attrition. In 2020, we were unable to obtain approval for an incentive plan to incentivize our senior management team, which may continue to cause us to lose senior personnel. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations. The failure to retain or attract members of our management team and other key personnel could impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations.

If we are unable to negotiate and confirm a Chapter 11 plan of reorganization, we could be required to liquidate under chapter 7 (“Chapter 7”) of the Bankruptcy Code in which case our common stock would likely be worthless.

We have not yet negotiated a plan of reorganization with our creditors. If we are unable to negotiate a plan of reorganization that will result in our remaining a going concern, upon a showing of cause, the Bankruptcy Court may convert the Chapter 11 Cases to cases under Chapter 7. In such event, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution to creditors in accordance with the priorities established by the Bankruptcy Code. Holders of our common stock would likely lose their entire investment in a Chapter 7 bankruptcy.votes.

Our post-bankruptcy capital structure is yet to be ~~determined,~~confirmed, and any changes to our capital structure may have a material adverse effect on existing debt and equity security holders.

Our post-bankruptcy capital structure has yet to be ~~determined~~confirmed and will be set pursuant to a plan that requires Bankruptcy Court approval. The reorganization of our capital structure may include exchanges of new debt or equity securities for our existing debt, equity securities, and claims against us. Such new debt may be issued at different interest rates, payment schedules and maturities than our existing debt securities. Existing equity securities are subject to a high risk of being cancelled. We have negotiated the Proposed Plan with our creditors and have selected a group of private equity sponsors to provide the equity capital to fund our exit from Chapter 11. Under the Proposed Plan and the terms of the sponsors’ proposed investment, our existing equity will be extinguished and cancelled, and holders of our existing common stock will be entitled to warrants exercisable for equity in the reorganized entity. The success of a reorganization through any such exchanges or modifications will depend on approval by the Bankruptcy Court and the willingness of existing debt and equity security holders to agree to the exchange or modification, subject to the provisions of the Bankruptcy Code, and there can be no guarantee of success. If such exchanges or modifications are successful, holders of our debt or of claims against us may find their holdings no longer have any value or are materially reduced in value, or they may be converted to equity and be diluted or may be modified or replaced by debt with a principal amount that is less than the outstanding principal amount, longer maturities and reduced interest rates. ~~Holders~~While holders of our existing common stock ~~may also find~~are expected to be entitled to certain rights pursuant to the Proposed Plan, there is no guarantee that ~~their holdings no longer have~~the plan will be approved or consummated and that any ~~value and face highly uncertain or no recoveries under a plan.~~equity recovery will be realized. There can be no assurance that any new debt or equity securities will maintain their value at the time of issuance.

If our existing ~~debt or equity holders are~~Plan Support Agreement is terminated, our ability to confirm and consummate the Proposed Plan could be materially and adversely ~~affected~~affected.

We have executed and entered into a Plan Support Agreement with our plan sponsors pursuant to which the parties thereto have agreed to take certain actions to support the prosecution and consummation of the Proposed Plan on the terms and conditions set forth in the Plan Support Agreement. The Plan Support Agreement contains a number of termination events, upon the occurrence of which certain parties to the Plan Support Agreement may terminate the agreement. If the Plan Support Agreement is terminated as to all parties thereto, each of the parties thereto will be released from its obligations in accordance with the terms of the Plan Support Agreement. Such termination may result in the loss of support for the Proposed Plan by ~~a reorganization, it may~~the parties to the Plan Support Agreement, which could adversely affect our ability to ~~issue new debt or equity in~~confirm and consummate the ~~future. Although we cannot predict how~~Proposed Plan. If the ~~claims and interests~~Proposed Plan is not consummated following termination of ~~stakeholders in~~the Plan Support Agreement, there can be no assurance that the Chapter 11 Cases ~~including~~would not be converted to Chapter 7 liquidation cases or that any new Chapter 11 plan would be as favorable to holders of ~~common stock, will ultimately be resolved, we expect that common stock holders will not receive a recovery through any plan unless~~claims against us as contemplated by the ~~holders of more senior claims and interests, such as secured and unsecured indebtedness (which is currently trading at a significant discount), are paid in full.~~

~~Table of Contents~~Plan Support Agreement.

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 1A. RISK FACTORS (CONTINUED)~~

~~Consequently, there~~The Proposed Plan is ~~a significant risk that the holders of our common stock would receive no recovery under the Chapter 11 Cases and that our common stock will be worthless.~~

~~Any Chapter 11 plan that we may implement will likely be~~ based in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, or adverse market conditions persist or worsen, ~~our plan~~the Proposed Plan may be unsuccessful in its execution.

~~Any Chapter 11 plan that we may implement will affect both our capital structure and the ownership, structure and operation of our remaining businesses and will likely reflect~~The Proposed Plan reflects assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we consider appropriate under the circumstances. Whether actual future results and developments will be consistent with our expectations and

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assumptions depends on a number of factors, including but not limited to ~~(i) our ability to substantially change our capital structure; and (ii)~~ the overall strength and stability of general economic conditions, both in the U.S. and in global markets. The failure of any of these factors could materially adversely affect the successful reorganization of our businesses.

In addition, ~~any plan of reorganization will likely rely~~the Proposed Plan relies upon financial ~~projections, including with respect to revenues, consolidated adjusted EBITDA, capital expenditures, debt service and cash flow.~~projections. Financial forecasts are necessarily speculative, and it is likely that one or more of the assumptions and estimates that are the basis of these financial forecasts will not be accurate. In our case, the forecasts will be even more speculative than normal, because they ~~may~~ involve fundamental changes in the nature of our capital structure. Additionally, the impact of the COVID-19 pandemic on the travel industry in general, and on us, make it even more challenging than usual to develop forecasts on business. Accordingly, we expect that our actual financial condition and results of operations will differ, perhaps materially, from what we have anticipated. Consequently, there can be no assurance that the results or developments contemplated by any plan of reorganization we may implement will occur or, even if they do occur, that they will have the anticipated effects on us and our subsidiaries or our businesses or operations. The failure of any such results or developments to materialize as anticipated could materially adversely affect the successful implementation of ~~any plan~~the Proposed Plan.

The continuing semiconductor microchip manufacturing shortage may be disruptive to our vehicle rental business and may adversely affect our business, results of ~~reorganization.~~operations and financial condition.

Increased demand for semiconductor microchips ("Chips") in 2020, due in part to COVID-19 and an increased use of electronic equipment that use these Chips, has resulted in a severe shortage of Chips in early 2021. These same Chips and microprocessors are used in a variety of automobile parts, including in the control of engines and transmissions. As a result, various automotive manufacturers have been forced to delay or stall new vehicle production. If efforts to address the shortage of Chips by the industry and government entities are unsuccessful, there may be further delays in new vehicle production. Consequently, there is no guarantee that we can purchase a sufficient number of new vehicles at competitive prices and on competitive terms and conditions. If we are unable to obtain a sufficient supply of new vehicles, or if we obtain less favorable pricing and other terms during the acquisition of vehicles and are unable to recover from the increased costs then our results of operations, financial condition, liquidity and cash flows may be materially adversely affected. If we are unable to purchase new vehicles at competitive prices, increased maintenance costs in relation to our existing fleet may put further pressure on our results of operations and financial condition.

The continued uncertainty about the duration of the negative impact from COVID-19 in our industry may disrupt our employee retention and talent management strategies and affect our business operations.

We ~~may be subject to claims~~develop and maintain a talent management strategy that ~~will not be discharged in the Chapter 11 cases, which could have a material adverse effect~~defines current and future talent requirements (e.g., experience, skills, location requirements, timing, etc.) based on our ~~financial condition~~strategic direction, coordinated recruiting and ~~results~~development plans across businesses and regions and considers employee mobility, centers of ~~operations.~~excellence and shared service concepts to optimize resource plans and leverage labor arbitrage.

COVID-19 has created uncertainty with respect to the return to the workforce which affects our employee retention and talent management strategies. We cannot predict with certainty how the post-COVID return to workforce measures will affect our employee retention and talent management strategies. The ~~Bankruptcy Code provides~~consequences that ~~the confirmation~~may result from continued disruptions or a failure of ~~a Chapter 11 plan~~our employee retention and talent management strategies can include inadequate staffing levels, inability to support bankruptcy and emergence strategy, lack of reorganization discharges a debtor from substantially all debts arising prior to confirmation. With few exceptions, all claims that arose prior to confirmation of the plan of reorganization (i) would be subject to compromise and/key talent, declining product quality and competitive differentiation, or ~~treatment under the plan of reorganization~~eroding employee morale and (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the plan of reorganization. Any claims not ultimately discharged through a Chapter 11 plan of reorganization could be asserted against the reorganized entities and may have an adverse effect on our financial condition and results of operations on a post-reorganization basis.productivity.

~~Operating in bankruptcy for a long period of time may harm~~We expect substantial cost savings from our ~~business.~~

~~A long period of operations in the Chapter 11 Cases under Bankruptcy Court protection~~ongoing strategic initiatives, and if we are unable to achieve these cost savings, or sustain our current cost structure, it could have a material adverse effect on our business ~~financial condition,~~operations, results of operations and liquidity. So long as the Chapter 11 Cases continue, senior management will be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on business operations. A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management and other key personnel necessary to the success of our business. In addition, the longer the Chapter 11 Cases continue, the more likely it is that customers and suppliers will lose confidence in our ability to reorganize our business successfully and will seek to establish alternative commercial relationships.financial condition.

~~So long as the Chapter 11 Cases continue, we will be required to incur substantial costs for professional fees and other expenses associated with the administration~~We have not yet realized all of the ~~Chapter 11 Cases,~~cost savings we expect to achieve from our ongoing strategic initiatives. A variety of risks could cause us not to realize the expected cost savings, including ~~potentially the cost of~~but not limited to, higher than expected

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ITEM 1A. RISK FACTORS (CONTINUED)

litigation. In general, litigation can be expensive and time consuming to bring or defend against. Such litigation could result in settlements or damages that could significantly affect our financial results. It is also possible that certain parties will commence litigation with respect to the treatment of their claims under a plan. It is not possible to predict the potential litigation that we may become party to, nor the final resolution of such litigation. The impact of any such litigation on our business and financial stability, however, could be material.

Should the Chapter 11 Cases be protracted, we may also need to seek new financing to fund operations. If we are unable to obtain such financing on favorable terms or at all, the chances of confirming a Chapter 11 plan may be seriously jeopardized and the likelihood that we will instead be required to liquidate our assets may increase.

~~There is no certainty as to amount of vehicle lease payments we will be required to make during the pendency of the bankruptcy case.~~

~~We leased the bulk of our vehicles used in our United States rental car operations under the Operating Lease. The Operating Lease requires material monthly rental payments~~severance costs; higher than expected retention costs for the use of the vehicles, and those rental payments may vary significantly under the terms of the Operating Lease. Prior to the filing of the Chapter 11 Cases, we failed to make the April 2020 rent payment under the Operating Lease, and the lessor has a Pre-petition claim for the unpaid April rent. In addition, under Section 365 of the Bankruptcy Code, we were not required to make, and did do not make, the May and June 2020 rent payments. Ultimately, the lessor will have the right to seek an administrative claim against us for an amount that the Bankruptcy Court determines to be equal to the actual and necessary benefit to us for the use of the vehicles during this period. We cannot predict the amount of such claim.

On June 11, 2020, we filed a motion with the Bankruptcy Court to reject the leases of approximately 144,000 cars under the Operating Lease (the “Rejection Motion”). On July 24, 2020, the Bankruptcy Court entered an order (the “Order”) that contained an interim settlement and agreement to suspend litigation relating to the Rejection Motion until January 15, 2021, as well as other issues related to the Operating Lease.

~~The Order provides that:~~

•THC in its capacity as servicer, shall dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020, inclusive. The proceeds of the dispositions, subject to certain exclusions set forthcontinuing employees; higher than expected stand-alone overhead expenses; delays in the ~~order, will be used to repay debt incurred under THC’s asset backed finance facility (the “ABS”);~~

•~~THC, in its capacity as lessee, will pay in cash a total~~anticipated timing of ~~$650 million of rent in equal monthly installments from July to December, which rent will result in additional principal payments on the ABS;~~

•~~Interest payments on the debt incurred under the ABS will be funded from draws on certain existing letters of credit, which are reimbursable by the Debtors;~~

•~~The Debtors will pay certain reasonable and documented fees and expenses of advisors to the ABS creditors (including the agent and trustee), as well as additional fees to the agent under the ABS; and~~

•~~Litigation relating to the Operating Lease pursuant to which the debtors lease vehicles under the ABS will be suspended and all parties reserve all rights with respect to future litigation claims.~~

There is no assurance that we will come to further agreement with the ABS lenders and, consequently, there is no certainty as to amount of vehicle lease payments we will be required to make during the pendency of the bankruptcy case.

~~Our ability to use certain of our tax assets may have been limited or may be limited in the future.~~

On May 26, 2020, entities affiliated with Carl Icahn filed a Schedule 13D/A indicating that they sold approximately 38.90% of our outstanding stock. Although we are still analyzing the impact of this sale, we believe that such sale resulted in an “ownership change” under Section 382 of the federal income tax rules. An “ownership change” could significantly limit our ability to utilize tax attributes, including net operating losses, capital loss carryovers, excess foreign tax carry forwards, and credit carryforwards, to offset future taxable income and tax liabilities. An entity that experiences an “ownership change” generally should be subject to an annual limitation on its pre-ownership change

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~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 1A. RISK FACTORS (CONTINUED)~~

tax loss carryforward equal to the equity value of the corporation immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the IRS (subject to certain adjustments). The annual limitation accumulates each year to the extent that there is any unused limitation from a prior year. The limitations under Section 382 should not limit our ability to use such tax attributes to offset future taxable income and tax liabilities. Nonetheless, our potential limitations on our ability to use such tax attributes is uncertain. If we experience a subsequent ownership change, however, it is possible that a significant portion of our tax attributes will expire before we would be able to use them to offset future taxable income. Many states adopt the federal Section 382 rules and therefore have similar limitations with respect to state tax attributes.

~~Our Chapter 11 Cases and financial condition may adversely impact our non-U.S. businesses and affiliates, which may themselves become subject to Chapter 11 Cases or other insolvency proceedings.~~

We have significant businesses and affiliates that are located outside of the United States. The filing of the Chapter 11 Cases may result in negative consequences to our businesses outside of the United States.

As previously disclosed, on May 22, 2020, and May 27, 2020, Hertz Netherlands and certain direct and indirect subsidiary companies located outside of the United States and Canada (the “International Subsidiaries”) entered into certain limited waiver agreements in respect of (i) the Issuer Facility Agreement, dated as of September 25, 2018, between, among others, International Fleet Financing No.2 B.V. as issuer, Hertz Europe Limited as issuer administrator, Credit Agricole Corporate and Investment Bank as administrative agent and BNP Paribas Trust Corporation UK Limited as issuer security trustee, as amended, restated or otherwise modified from time to time (the “European ABS Waiver”) and (ii) the Vehicle Funding Facilities Agreement dated February 7, 2013 (as amended and restated from time to time) between Hertz (U.K.) Limited, Hertz Vehicle Financing U.K. Limited and Lombard North Central Plc, (the “UK Vehicle Financing Wavier”, and together with the European ABS Waiver, the “Waivers”) pursuant to which the Waiving Parties (as defined therein) agreed to waive any default or event of default that could have resulted from the Chapter 11 cases. The Waivers were originally scheduled to expire on September 30, 2020 or, if sooner, the date on which Hertz Netherlands or certain other International Subsidiaries that are party to the Waivers failed to comply with certain agreements contained therein. Effective October 1, 2020 the Waivers were extended and are now scheduled to expire on December 31, 2020 or, if sooner, the date on which Hertz Netherlands or certain other International Subsidiaries that are party to the Waivers fail to comply with certain agreements contained therein, or do not reach agreement with their creditors as to the terms of a restructuring by October 30, 2020. The extension to the waivers was conditioned on the waiver on similar terms of the €225,000,000 aggregate principal amount outstanding of 4.125% Senior Notes due 2021 and the €500,000,000 aggregate principal amount outstanding of 5.500% Senior Notes due 2023, which was obtained on September 30, 2020 and is in effect and Hertz Netherlands and the International Subsidiaries continue not to be included in the Chapter 11 cases.

There can be no assurance that the International Subsidiaries will not in the future become or be deemed to be insolvent or otherwise need to reorganize their debt, either through the Chapter 11 proceedings or proceedings in other jurisdictions. Any such insolvency, reorganization or proceedings could have additional negative consequences with respect to our global operations and could materially and adversely affect the successful execution of any reorganization of us and our subsidiaries. Furthermore, even if additional waivers are granted or the International Subsidiaries do not otherwise file Chapter 11 or other insolvency, reorganization, or other proceedings, the Chapter 11 Cases may result in negative consequences to such businesses and affiliates.

The effects of the COVID-19 outbreak have been and continue to be disruptive to our vehicle rental business and will likely continue to adversely affect our business, results of operations and financial condition.

The global COVID-19 pandemic continues to rapidly evolve and we cannot anticipate with any certainty the length or severity of the effects of COVID-19. The extent to which COVID-19 continues to adversely impact our business will depend on future developments that are highly uncertain, such as the following: the ultimate severity of the disease; the duration of the outbreak or future outbreaks; travel restrictions imposed by governments or businesses

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~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 1A. RISK FACTORS (CONTINUED)~~

in the markets in which we operate; the duration and scope of business closures or business disruptions; changes in customer travel preferences and demand; the impact of increasing unemployment on discretionary spending; the length of time it takes for rental pricing and volume and normal economic conditions to return; technology disruptions; our relationships with vehicle manufacturers; our liquidity position; the development of effective vaccines or treatments; and the effectiveness of actions taken to contain the disease and future outbreaks. The impacts of COVID-19 could include those areas described below:

•~~Changes in our revenues, profitability and customer demand~~: Our revenues and profitability have been negatively impacted during the first nine months of 2020 and we expect this to continue for the remainder of the 2020 fiscal year. We have experienced a high level of rental cancellations and a significant decline in forward bookings due to the decreased customer demand and other economic factors. Historically, we have generated a majority of our rental revenues from on-airport locations, which makes our rental car business sensitive to any decreases in air travel. Although we believe that renting a vehicle will continue to be a safe alternative and we have implemented certain procedures to mitigate the impact of COVID-19, we cannot predict when or if customer demand will return to levels before the COVID-19 pandemic.

•~~Changes to our liquidity:~~ We incur ongoing costs, which we cannot reduce in line with the significant reduction in revenues we have experienced from the COVID-19 outbreak. Such costs include our monthly fleet rental costs under our Operating Lease, facility rentals and concessions, debt service and labor costs. These costs require significant liquidity generated by operations or access to additional financing. If COVID-19 continues to have a significant negative impact on our cash flow from operations and we cannot access the capital markets, we may not be able to generate sufficient liquidity to cover our costs.

•~~Our peak season:~~ The second and third quarters of the year have historically been the strongest quarters for our vehicle rental business due to increased levels of leisure travel. COVID-19 has disrupted our business in the second and third quarters and we expect that it will continue to disrupt our business. These disruptions have significantly impacted our results of operations, financial condition, liquidity and cash flows.

•~~Our fleet:~~ In response to reduced demand due to COVID-19, we began adjusting fleet levels, leveraging our multiple used-vehicle channels, and negotiating with suppliers to reduce fleet commitments in the first nine months of 2020. We have initiated efforts to reduce our fleet size, and the related cost base, to be in line with our reduced operating results. We may also experience a decline in vehicle values which could increase the monthly payments under the Operating Lease.

•~~Our workforce:~~ The COVID-19 pandemic has caused us to furlough approximately 20,000 employees worldwide and we have terminated approximately 11,000 employees in our U.S. RAC segment and U.S. corporate operations, the majority of which were previously furloughed, in an effort to reduce our operating costs. This reduction in our operating costsactivities related to our ~~employees could create risks, including but not limited~~cost-savings plans; and other unexpected disruptions to our ability to manage the size of our workforce given uncertain future economic conditions and the ability to operate locations in affected jurisdictions. Additionally, we may incur additional costs as a result of workforce reductions or suffer from employee morale issues. We may also be unable to timely respond to a business recovery due to reductions in our workforce already enacted.business.

We do not expect our business to improve until customer demand increases and the global economy improves. To the extent that the COVID-19 outbreak continues to adversely affect our business, financial performance, liquidity and cash flows, it may also have the effect of heightening many of the other risks identified in this Quarterly Report on Form 10-Q and in the “Risk Factors” section of our 2019 Form 10-K.

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~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 1A. RISK FACTORS (CONTINUED)~~

If our business does not recover quickly and we are unable to successfully restructure our substantial indebtedness, obtain further waivers or forbearance or raise additional capital, there is substantial doubt that we will be able to continue as a going concern.

As a result of the adverse impact from COVID-19 and the uncertainty about the timing and strength of recovery in our markets, Hertz did not make certain payments in accordance with the Operating Lease, pursuant to which Hertz leases vehicles used in its U.S. rental car operations. As a result of the failure to make the full rent payments on April 27th, as of May 5, 2020 an amortization event was in effect for all series of notes issued by HVF II and a liquidation event was in effect with respect to the Series 2013-A Notes issued by HVF II. As a result of the amortization event, and notwithstanding the forbearance agreement described below, proceeds of the sales of vehicles that collateralize the notes issued by HVF II must be applied to the payment of principal and interest under those notes and will not be available to finance new vehicle acquisitions for Hertz. A liquidation event means that, unless the affected noteholders otherwise agree, the affected noteholders can direct the liquidation of vehicles serving as collateral for their notes.

On May 4, 2020, prior to the occurrence of the liquidation event with respect to the Series 2013-A Notes, Hertz, HVF, HVF II and DTG Operations, Inc. entered into the Forbearance Agreement with the VFN Noteholders. Pursuant to the Forbearance Agreement that is effective against all VFN Noteholders, the VFN Noteholders agreed to forbear from exercising their liquidation remedies. The agreement with the VFN Noteholders expired on May 22, 2020. Concurrently with entering into the Forbearance Agreement, on May 4, 2020, Hertz entered into the Waiver Agreements with certain of the Lenders under its Facilities. Pursuant to the Waiver Agreements, the Lenders agreed to waive any default or event of default that could have resulted from the above referenced missed payment under the Operating Lease, waive certain defaults or events of default and extend the grace period to cure a default with respect to Hertz’s obligation to reimburse drawings that occurred under certain letters of credit during the waiver period. The Waiver Agreements expired on May 22, 2020.

In connection with the expiration of the Forbearance Agreement and the Waiver Agreements and the continuing economic impact from COVID-19, on the Petition Date, the Debtors filed voluntary Petitions under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court. The Bankruptcy Court approved motions filed by the Debtors that were designed primarily to mitigate the impact of the Chapter 11 Cases on the Company’s operations, customers and employees. The Debtors are authorized to conduct their business activities in the ordinary course, and pursuant to orders entered by the Bankruptcy Court, the Debtors are authorized to, among other things and subject to the terms and conditions of such orders, (i) pay employees’ wages and related obligations; (ii) pay certain taxes; (iii) pay critical vendors and certain fees to airport authorities; (iv) continue to maintain certain customer programs; (v) maintain their insurance program; (vi) use cash collateral on an interim basis; and (vii) continue their cash management system.

As part of its bankruptcy restructuring, Hertz has been and expects to be in discussions with key stakeholders and advisors to develop a financing strategy and structure that better reflects the economic impact of the COVID-19 global pandemic and Hertz’s ongoing operating and financing requirements. However, there can be no assurances that Hertz will be able to successfully restructure its substantial indebtedness.

Although the Order from the Bankruptcy Court was helpful to us, if our business does not recover and we cannot reach agreement to restructure our indebtedness, we may not be able to meet our obligations under our debt facilities and may not have sufficient cash flows from operations or liquidity to sustain our operations. In such circumstances, we may not be able to continue as a going concern.

~~An impairment of our goodwill and other indefinite-lived intangible assets could have a material impact to our results of operations.~~

On an annual basis as of October 1, and at interim periods when circumstances require as a result of a triggering event, we test the recoverability of our goodwill and indefinite-lived intangible assets by performing an impairment analysis. An impairment is deemed to exist if the carrying value of goodwill or indefinite-lived intangible assets

~~Table of Contents~~

~~HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES~~

~~THE HERTZ CORPORATION AND SUBSIDIARIES~~

~~(DEBTORS-IN-POSSESSION)~~

~~ITEM 1A. RISK FACTORS (CONTINUED)~~

exceed their fair value as determined using level 3 inputs under the GAAP fair value hierarchy. The reviews of fair value involve judgment and estimates, including projected revenues, royalty rates and discount rates. A significant decline in either projected revenues, projected cash flows or the weighted average cost of capital used to determine fair value could result in a material impairment charge.

~~We have experienced an amortization event under our vehicle debt financing instruments.~~

As a result of the amortization event, proceeds of the sales of vehicles that collateralize the HVF II U.S. ABS Program and the medium term notes must be applied to the payment of principal and interest under the HVF II U.S. ABS Program and will not be available to finance new vehicle acquisitions. Currently, we cannot use any cash in the HVF II U.S. ABS Program to purchase new vehicles for our fleet. Although we anticipate that, because of the COVID-19 pandemic, we will not need to acquire additional fleet through the remainder of 2020, if our business recovers, we will ultimately need to finance new vehicle acquisitions, but we may not be able to utilize the HVF II U.S. ABS Program for that purpose and would need to finance such new vehicle acquisitions through alternative means.

Other than the items listed above, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A “Risk Factors” of our Form 10-K for the fiscal year ended December 31, 2020 and Part II, Item 1A "Risk Factors" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a)Exhibits:

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

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.


Date:	~~November 9, 2020~~May 7, 2021	HERTZ GLOBAL HOLDINGS, INC. THE HERTZ CORPORATION (Registrants)
		By:	/s/ KENNY CHEUNG
			Kenny Cheung Executive Vice President and Chief Financial Officer

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Table of Contents

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

EXHIBIT INDEX


Exhibit Number		Description










2210.1	Hertz Holdings Hertz	~~List~~Plan Support Agreement, dated as of ~~Guarantor Subsidiaries~~April 3, 2021 (Incorporated by reference to Exhibit 2210.1 to the ~~Quarterly~~Current Report on Form ~~10-Q~~8-K of Hertz Global Holdings, Inc. (File No. 001-37665) ~~and The Hertz Corporation (File No. 001-07541)~~, as filed on ~~May 11, 2020)~~April 7, 2021).
10.2	Hertz Holdings Hertz	Equity Purchase and Commitment Agreement, dated as of April 3, 2021 (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. (File No. 001-37665), as filed on April 7, 2021).
10.3	Hertz Holdings Hertz	Joinder Agreement, dated as of April 14, 2021(Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. (File No. 001-37665), as filed on April 19, 2021).
22	Hertz Holdings	List of Guarantor Subsidiaries *
31.1	Hertz Holdings	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*
31.2	Hertz Holdings	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*
31.3	Hertz	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*
31.4	Hertz	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*
32.1	Hertz Holdings	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.**
32.2	Hertz Holdings	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.**
32.3	Hertz	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.**
32.4	Hertz	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.**
101.INS	Hertz Holdings Hertz	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Hertz Holdings Hertz	XBRL Taxonomy Extension Schema Document*
101.CAL	Hertz Holdings Hertz	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	Hertz Holdings Hertz	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	Hertz Holdings Hertz	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	Hertz Holdings Hertz	XBRL Taxonomy Extension Presentation Linkbase Document*
104	Hertz Holdings Hertz	Cover Page Interactive Data File (Embedded within the Inline XBRL document)

*Filed herewith

**Furnished herewith

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.

8873



		Page
PART I. FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	1
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	5041
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	7866
ITEM 4.	Controls and Procedures	7966
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	8068
ITEM 1A.	Risk Factors	8068
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8871
ITEM 3.	Defaults Upon Senior Securities	8871
ITEM 5.	Other Information	8871
ITEM 6.	Exhibits	8871
SIGNATURE		8972
EXHIBIT INDEX		9073


Facility	Weighted-Average Interest Rate as of September 30, 2020	Fixed or Floating Interest Rate	Maturity	September 30, 2020		December 31, 2019
Non-Vehicle Debt
Senior Term Loan(1)		Floating	6/2023	$	0	$	660
Senior RCF(1)		Floating	6/2021	0		0
Senior Notes(1)(2)		Fixed	10/2022-1/2028	0		2,700
Senior Second Priority Secured Notes(1)		Fixed	6/2022	0		350
Promissory Notes(1)		Fixed	1/2028	0		27
Alternative Letter of Credit Facility(1)		Floating	11/2023	0		0
Senior RCF Letter of Credit Facility(1)		Floating	6/2021	0		0
Other Non-Vehicle Debt	7.26%	Fixed	Various	18		18
Unamortized Debt Issuance Costs and Net (Discount) Premium				0		(34)
Total Non-Vehicle Debt Not Subject to Compromise				18		3,721
Non-Vehicle Debt Subject to Compromise
Senior Term Loan	3.50%	Floating	6/2023	656		0
Senior RCF	3.41%	Floating	6/2021	615		0
Senior Notes(2)	6.11%	Fixed	10/2022-1/2028	2,700		0
Senior Second Priority Secured Notes	7.63%	Fixed	6/2022	350		0
Promissory Notes	7.00%	Fixed	1/2028	27		0
Alternative Letter of Credit Facility(6)	5.25%	Floating	11/2023	82		0
Senior RCF Letter of Credit Facility	5.50%	Floating	6/2021	11		0
Unamortized Debt Issuance Costs and Net (Discount) Premium				(37)		0
Total Non-Vehicle Debt Subject to Compromise				4,404		0


	U.S. Plan
	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019

Interest cost	$	3	$	5	$	12	$	16
Expected return on plan assets	(5)		(6)		(15)		(17)
Net amortizations	0		2		1		5
Settlement loss(1)	1		1		5		1
Net pension expense (benefit)	$	(1)	$	2	$	3	$	5


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Total revenues	$	864	$	2,737
Expenses:
Direct vehicle and operating	660		2,214
Depreciation of revenue earning vehicles and lease charges	403		2,767
Selling, general and administrative	90		387
Interest (income) expense, net	8		96
Technology-related intangible and other asset impairments	0		193
Other (income) expense, net	0		(18)
Reorganization items, net	78		101
Total expenses	1,239		5,740
Income (loss) before income taxes and equity in earnings (losses) of non-debtor entities	(375)		(3,003)
Income tax (provision) benefit	63		590
Equity in earnings (losses) of non-debtor entities	90		988
Net income (loss)	(222)		(1,425)


Total other comprehensive income (loss), net of tax	5		(27)
Comprehensive income (loss) attributable to the Debtors	$	(217)	$	(1,452)