Hertz 10K/A 2005 Annual report (amended)

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

FORM 10-K/A
(Amendment No. 2)

ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-7541

THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		13-1938568 (I.R.S. Employer Identification Number)
225 Brae Boulevard Park Ridge, New Jersey 07656-0713 (201) 307-2000 (Address, including ZIP Code, and telephone number, including area code, of registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ý No o

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. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero

Accelerated filero

Non-accelerated filerý

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

As of July 14, 2006, all of the common stock of the registrant is owned by its affiliate, Hertz Investors, Inc. As of July 14, 2006, 100 shares of the registrant's common stock (par value $0.01) were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:
None

TABLE OF CONTENTS

EXPLANATORY NOTE			1
PART II
	ITEM 6.	SELECTED FINANCIAL DATA	4
	ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	6
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	30
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	31
	ITEM 9A.	CONTROLS AND PROCEDURES	90
PART IV
	ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	92
EXHIBIT INDEX			92
SIGNATURES			103

EXPLANATORY NOTE

Unless the context otherwise requires, in this Amendment No. 2 on Form 10-K/A, or the "Amendment," to Hertz's Annual Report on Form 10-K, as amended prior to the date hereof, (i) "we," "us" and "our" mean The Hertz Corporation and its consolidated subsidiaries, (ii) "Hertz," the "registrant," or the "Company" means The Hertz Corporation, (iii) "HERC" means Hertz Equipment Rental Corporation, our wholly owned subsidiary, and our various other wholly owned international subsidiaries that conduct our industrial, construction and material handling equipment rental business, (iv) "Hertz Holdings" means Hertz Global Holdings, Inc., our ultimate parent company (previously known as CCMG Holdings, Inc.), (v) "cars" means cars and light trucks (including sport utility vehicles and, outside North America, light commercial vehicles), (vi) "equipment" means industrial, construction and material handling equipment, (vii) "EBITDA" means earnings before interest, taxes, depreciation and amortization, and (viii) "Corporate EBITDA" means EBITDA after adjustment for, among other things, interest incurred in connection with our car rental fleet financing programs and depreciation related to our car rental fleet.

On December 21, 2005, or the "Closing Date," an indirect, wholly owned subsidiary of Hertz Holdings acquired all of Hertz's common stock from Ford Holdings LLC, or "Ford Holdings," pursuant to a Stock Purchase Agreement, dated as of September 12, 2005, among Ford Motor Company, or "Ford," Ford Holdings and Hertz Holdings. Investment funds associated with or designated by Clayton, Dubilier & Rice, Inc., The Carlyle Group and Merrill Lynch Global Private Equity, or, collectively, the "Sponsors," own all of the common stock of Hertz Holdings. Hertz Holdings is currently conducting an equity offering to approximately 350 of our executives and key employees. We refer to the acquisition of all of our common stock by Hertz Holdings as the "Acquisition." Following the Acquisition, CCMG Acquisition Corporation, a wholly owned subsidiary of Hertz Holdings and the initial issuer of the "Notes" (as defined herein), merged with and into Hertz, with Hertz as the surviving corporation, and Hertz assumed the obligations of CCMG Acquisition Corporation as issuer under such Notes. We refer to the Acquisition, together with related transactions entered into to finance the cash consideration for the Acquisition, to refinance certain of our existing indebtedness and to pay related transaction fees and expenses, as the "Transactions." The "Successor period ended December 31, 2005," refers to the period from December 21, 2005 to December 31, 2005 and the "Predecessor period ended December 20, 2005" refers to the period from January 1, 2005 to December 20, 2005. The term "Successor" refers to The Hertz Corporation following the Acquisition. The term "Predecessor" refers to The Hertz Corporation prior to the change in control on December 21, 2005.

This Amendment is being filed in connection with Hertz's restatement of its previously issued consolidated statements of operations, stockholder's equity and cash flows for the Predecessor period ended December 20, 2005, or the "Restatement." The Restatement revises, in accordance with Accounting Principles Board Opinion No. 20, "Accounting Changes," Hertz's tax provision on repatriated foreign earnings.

Prior to the Acquisition, we and our domestic subsidiaries filed consolidated Federal income tax returns with Ford. During December 2005, in connection with Ford pre-sale activities and to obtain the benefit of favorable one-time tax treatment of distributions offered by the American Jobs Creation Act of 2004, dividends of $547.8 million were recognized, of which $216.9 million were cash dividends and $330.9 million were deemed dividends for tax purposes. The deemed dividends relate to undistributed foreign earnings which are no longer considered to be permanently reinvested. The provision for taxes on income for the Predecessor period ended December 20, 2005, as originally reported, included $54.1 million of tax expense associated with that repatriation, of which $50.3 million was offset by foreign tax credits, resulting in net tax expense of $3.8 million. All Federal income taxes associated with the repatriation are to be reported and paid by Ford as part of their consolidated income tax return. In June 2006, it was determined that there was an error in estimating the amount of Hertz's tax expense for the December 2005 repatriation, which is payable by Ford, and that it should be increased by

$27.5 million to $31.3 million. This change resulted from a detailed study recently completed by Ford for the purpose of preparing their 2005 tax return.

As Ford is responsible for the payment of this tax, we have determined that this error has no impact subsequent to the Acquisition. Because the liability for this tax rests with Ford, there is no effect on our liquidity in either the Predecessor period ended December 20, 2005 or the Successor period ended December 31, 2005. A summary of the effects of the Restatement on the previously issued consolidated statement of operations for the Predecessor period ended December 20, 2005 is as follows (in thousands of dollars):

	Predecessor
	January 1, 2005
	to December 20, 2005
	As Reported			As Restated
Provision for taxes on income	$	(163,832	)	$	(191,332	)
Net income		398,823			371,323

The effect of the Restatement on the previously issued consolidated statement of cash flows for the Predecessor period ended December 20, 2005, is to decrease net income by $27.5 million and to increase the change in accrued taxes by $27.5 million.

In addition, we revised our consolidated statements of cash flows for the Predecessor period ended December 20, 2005 and the Predecessor year ended December 31, 2004 with respect to the presentation of the change in restricted cash, which resulted in increases in net cash used in investing activities and net cash provided by financing activities of $12.7 million and $2.9 million, respectively. We also revised our consolidated statement of cash flows for the Successor period ended December 31, 2005 with respect to the presentation of the change in restricted cash of $0.3 billion and the purchase of predecessor company stock of $4.4 billion, which resulted in increases in net cash used in investing activities and net cash provided by financing activities of $4.7 billion. Additionally, in the Successor period ended December 31, 2005, we decreased the amount shown as the effect of foreign exchange rate changes on cash by $26.1 million and increased the change in other assets and net cash flows used in operating activities.

The following items have been amended as a result of the Restatement:

•: Part II—Item 6—Selected Financial Data;
•: Part II—Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations;
•: Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk;
•: Part II—Item 8—Financial Statements and Supplementary Data;
•: Part II—Item 9A—Controls and Procedures; and
•: Part IV—Item 15—Exhibits and Financial Statement Schedules.

In addition, this Amendment includes the filing of a related Consent of Independent Registered Public Accounting Firm. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this Amendment, the certifications required pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 are included as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto, and the above-mentioned Consent has been included as Exhibit 23.1 hereto. Except as described above, this Amendment does not modify or update disclosures in, or exhibits to, the Annual Report on Form 10-K, as amended prior to the date hereof. Furthermore, except in connection with the Restatement as

described above, this Amendment does not change any previously reported financial results, nor does it reflect events occurring after the date of the original filing of the Annual Report on Form 10-K.

Additional detail regarding the Restatement is included in Note 1A of the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this Amendment under "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations" including, without limitation, those concerning our liquidity and capital resources, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning our operations; economic performance; financial condition; management forecasts; efficiencies, cost savings and opportunities to increase productivity and profitability; income and margins; liquidity; anticipated growth; economies of scale; the economy; future economic performance; our ability to maintain profitability during adverse economic cycles and unfavorable external events; future acquisitions and dispositions; litigation; potential and contingent liabilities; management's plans; taxes; and refinancing of existing debt. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These statements may be preceded by, followed by or include the words "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions.

Forward-looking statements are not guarantees of performance and by their nature are subject to inherent risks and uncertainties. We caution you therefore that you should not rely on these forward-looking statements. You should understand the risks and uncertainties discussed in "Item 1A—Risk Factors" elsewhere in our Annual Report on Form 10-K as originally filed on April 5, 2006, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements.

Any forward-looking information contained in this Amendment speaks only as of the date of this Amendment. Factors or events may emerge from time to time and it is not possible for us to predict all of them. Hertz undertakes no obligation to update or revise any forward-looking statements to reflect new information, changed circumstances or unanticipated events.

PART II

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected consolidated financial information and other data for our business. The selected consolidated statement of operations data presented below for the Predecessor period ended December 20, 2005 has been restated. For a discussion of the Restatement, see note (a) below and Note 1A to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data." The selected consolidated statement of operations data for each of the Successor period ended December 31, 2005, the Predecessor period ended December 20, 2005 (as restated) and the years ended December 31, 2004 and December 31, 2003 and the consolidated balance sheet data as of December 31, 2005 and 2004 presented below were derived from our audited annual consolidated financial statements and the related notes thereto included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

You should read the following information in conjunction with the section of this Amendment entitled "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited annual consolidated financial statements and related notes included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

In connection with the Acquisition, CCMG Acquisition Corporation merged with and into Hertz and Hertz was the surviving corporation. The term "Successor" refers to Hertz following the

Acquisition. The term "Predecessor" refers to Hertz prior to the Acquisition. CCMG Acquisition Corporation had no operations prior to the Acquisition.

			Successor			Predecessor			Predecessor
			For the periods from						Years ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated(a)			2004			2003			2002			2001
			(In millions of dollars)
Statement of Operations Data
Revenues:
	Car rental		$	129.4		$	5,820.5		$	5,430.8		$	4,819.3		$	4,537.6		$	4,366.6
	Equipment rental			22.5			1,392.4			1,162.0			1,037.8			1,018.7			1,128.7
	Other(b)			2.6			101.8			83.2			76.6			82.1			101.6

		Total revenues		154.5			7,314.7			6,676.0			5,933.7			5,638.4			5,596.9

Expenses:
	Direct operating			103.0			4,086.3			3,734.4			3,316.1			3,093.0			3,248.0
	Depreciation of revenue earning equipment(c)			43.8			1,555.9			1,463.3			1,523.4			1,499.5			1,462.3
	Selling, general and administrative			15.1			623.4			591.3			501.7			463.1			479.2
	Interest, net of interest income(d)			25.8			474.2			384.4			355.0			366.4			404.7

		Total expenses		187.7			6,739.8			6,173.4			5,696.2			5,422.0			5,594.2

Income (loss) before income taxes and minority interest				(33.2	)		574.9			502.6			237.5			216.4			2.7
(Provision) benefit for taxes on income(e)				12.2			(191.3	)		(133.9	)		(78.9	)		(72.4	)		20.6
Minority interest				(0.3	)		(12.3	)		(3.2	)		—			—			—

Income (loss) before cumulative effect of change in accounting principle				(21.3	)		371.3			365.5			158.6			144.0			23.3
Cumulative effect of change in accounting principle(f)				—			—			—			—			(294.0	)		—

Net income (loss)			$	(21.3	)	$	371.3		$	365.5		$	158.6		$	(150.0	)	$	23.3

Other Financial Data
Net non-fleet capital expenditures			$	7.3		$	261.9		$	227.1		$	172.1		$	189.2		$	230.9
Ratio of earnings to fixed charges(g)							1.9			1.9			1.5			1.4			1.0

		Successor		Predecessor
		Year ended, or as of December 31,		Years ended, or as of December 31,
		2005		2004		2003		2002		2001
Balance Sheet Data
Cash and equivalents and short-term investments		$	843.9	$	1,235.0	$	1,110.1	$	601.3	$	214.0
Total assets			18,580.9		14,096.4		12,579.0		11,128.9		10,158.4
Total debt			12,515.0		8,428.0		7,627.9		7,043.2		6,314.0
Total stockholder's equity(h)			2,266.2		2,670.2		2,225.4		1,921.9		1,984.4
Selected Car Rental Operating Data
	Average number of owned cars operated during year		436,700		412,900		373,500		369,500		373,800
	Transaction days (in thousands)		122,102		115,246		102,281		99,240		104,015
	Revenue earning equipment, net	$	7,399.5	$	7,597.2	$	6,462.0	$	5,998.3	$	5,220.4
Selected Equipment Rental Operating Data
	Average acquisition cost of rental equipment operated during year	$	2,588.0	$	2,305.7	$	2,281.8	$	2,327.6	$	2,381.4
	Revenue earning equipment, net		2,075.5		1,525.7		1,331.3		1,427.6		1,631.3

(a): We have restated our previously issued consolidated statement of operations for the Predecessor period ended December 20, 2005. An explanation of the Restatement appears in Note 1A to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data." The Restatement resulted in the previously reported provision for taxes on income to be increased by $27.5 million and net

income to be decreased by $27.5 million due to the recording of additional non-cash tax expense relating to dividends repatriated prior to the Acquisition.

(b): Includes fees and certain cost reimbursements from licensees and revenues from car leasing operations, telecommunications services through 2001 and third-party claim management services.
(c): For the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005, depreciation of revenue earning equipment was reduced by $1.2 million and $33.8 million, respectively, resulting from the effects of changing depreciation rates to reflect changes in the estimated residual value of revenue earning equipment. For the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004, 2003, 2002 and 2001, depreciation of revenue earning equipment includes net gains of $2.1 million, $68.3 million, $57.2 million, a net loss of $0.8 million, a net gain of $10.8 million and a net loss of $1.6 million, respectively, from the disposal of revenue earning equipment.
(d): For the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004, 2003, 2002 and 2001 interest income was $1.1 million, $36.1 million, $23.7 million, $17.9 million, $10.3 million, and $9.0 million, respectively.
(e): Includes the reversal of a valuation allowance on foreign tax credit carryforwards of $35.0 million (established in 2004) and favorable foreign tax adjustments of $5.3 million, partly offset by a $31.3 million provision relating to the repatriation of foreign earnings. for the Predecessor period ended December 20, 2005, benefits of $46.6 million for the year ended December 31, 2004 relating to net adjustments to federal and foreign tax accruals and benefits of $30.2 million for the year ended December 31, 2001 from certain foreign tax credits.
(f): Cumulative effect of change in accounting principle represents a non-cash charge for the year ended December 31, 2002, related to impairment of goodwill in our equipment rental business, recognized in accordance with the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."
(g): Earnings have been calculated by adding interest expense and the portion of rent estimated to represent the interest factor implicit in our operating leases to income before income taxes and minority interest. Fixed charges include interest charges (including capitalized interest) and the portion of rent estimated to represent the interest factor implicit in our operating leases. Earnings for the Successor period ended December 31, 2005 were inadequate to cover fixed charges for the period by $33.3 million.
(h): Includes equity contributions totaling $2,295 million from investment funds associated with or designated by the Sponsors as of December 31, 2005.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations and financial condition primarily covers periods prior to the consummation of the Transactions. Accordingly, the discussion and analysis of historical periods does not reflect the significant impact that the Transactions will have on us, including significantly increased leverage and liquidity requirements. The statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Item 1A—Risk Factors." Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the sections entitled "Item 1A—Risk Factors," "Cautionary Note Regarding Forward-Looking Statements," "Item 6—Selected Financial Data" and our audited annual consolidated financial statements and related notes included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

Overview

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

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

•: Car rental revenues (revenues from all company-operated car 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 the sale of loss or collision damage waivers, liability insurance coverage and other products);
•: Equipment rental revenues (revenues from all company-operated equipment rental operations, including amounts charged to customers for the fueling and delivery of equipment and sale of loss damage waivers); and
•: Other revenues (fees and certain cost reimbursements from our licensees and revenues from our claim management services).

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

Our expenses primarily consist of:

•: Direct operating expenses (primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservations costs; the cost of new equipment and consumables purchased for resale; and other costs relating to the operation and rental of revenue earning equipment, such as damage, maintenance and fuel costs);
•: Depreciation expense relating to revenue earning equipment (including net gains or losses on the disposal of such equipment). Revenue earning equipment includes cars and equipment;
•: Selling, general and administrative expenses (including advertising); and
•: Interest expense.

The car and equipment rental industries are significantly influenced by general economic conditions. The car rental industry is also significantly influenced by developments in the travel industry, and, particularly, in airline passenger traffic. Our profitability is primarily a function of the volume and pricing of rental transactions and the utilization of cars and equipment. Significant changes in the purchase price of cars and equipment or interest rates can also have a significant effect on our profitability depending on our ability to adjust pricing for these changes. We expect increases in car costs and modest increases in equipment costs in the near term. Increases in per-unit car costs for the 2006 model year program cars in the United States of approximately 17% have adversely affected our results of operations beginning in the fourth quarter of 2005 and we do not expect sufficient rental price increases in the near term to offset these car cost increases. Our business requires significant expenditures for cars and equipment, and consequently we require substantial liquidity to finance such expenditures.

Car rental and equipment rental operations are seasonal businesses, with decreased levels of business in the winter months and heightened activity during the spring and summer. To accommodate increased demand, we increase our available fleet and staff during the second and third quarters. As business demand declines, fleet and staff are decreased accordingly. However, certain operating expenses, including minimum concession fees, rent, insurance, and administrative overhead, remain fixed and cannot be adjusted for seasonal demand.

In the United States, industry revenues from airport rentals have only in 2005 returned to levels seen before the 2001 recession and the September 11, 2001 terrorist attacks. During the year ended December 31, 2005, we believe car rental pricing among the major U.S. car rental brands declined slightly, as measured by rental rates charged. During the latter part of the fourth quarter of 2005, based on publicly available information, some U.S. car rental providers experienced revenue per day increases

compared to the prior year. It is not certain whether these increases will continue in 2006. Also, we believe most European car rental companies' pricing moved downward in 2005. During the year ended December 31, 2005, we experienced strong transaction day growth in our European operations, but our car rental pricing was below the pricing during the year ended December 31, 2004.

In the two years ended December 31, 2005, we increased the number of our staffed off-airport rental locations in the United States by approximately 44% to approximately 1,200 locations. In 2006 and subsequent years our strategy may include selected openings of new off-airport locations, the disciplined evaluation of existing locations and the pursuit of same-store sales growth. When we open a new off-airport location, we incur a number of costs, including those relating to site selection, lease negotiation, recruitment of employees, selection and development of managers, initial sales activities and integration of our systems with those of the companies who will reimburse the location's replacement renters for their rentals. A new off-airport location, once opened, takes time to generate its full potential revenues, and as a result revenues at new locations do not initially cover their start-up costs and often do not, for some time, cover the costs of their ongoing operation.

From 2001 to 2003, the equipment rental industry experienced downward pricing, measured by the rental rates charged by rental companies. For the years ended December 31, 2004 and 2005, we believe industry pricing, measured in the same way, improved in North America but only started to improve towards the end of 2005 in France and Spain. HERC also experienced higher equipment rental volumes worldwide for the year ended December 31, 2005. HERC slightly contracted its North American network of equipment rental locations during the 2001 to 2003 downturn in construction activities. HERC added six new locations in each of 2004 and 2005. We expect HERC to add 18 locations in 2006. In this expansion, we expect HERC will incur non-fleet start-up costs of approximately $600,000 per location and additional fleet acquisition costs over an initial twelve-month period of approximately $4.9 million per location.

The 2005 hurricanes in Florida and other Gulf Coast states did not have a material effect on our results for the year ended December 31, 2005.

The following discussion and analysis provides information that management believes to be relevant to understanding our consolidated financial condition and results of operations. This discussion should be read in conjunction with the financial statements and the related notes thereto contained in our audited annual consolidated financial statements included in this Amendment the caption "Item 8—Financial Statements and Supplementary Data."

Restatement of Predecessor Financial Statements

We are restating our previously issued consolidated statements of operations, stockholder's equity and cash flows for the Predecessor period ended December 20, 2005. The Restatement revises, in accordance with Accounting Principles Board Opinion No. 20, "Accounting Changes," our tax provision on repatriated foreign earnings.

for the December 2005 repatriation, which is payable by Ford, and that it should be increased by $27.5 million to $31.3 million. This change resulted from a detailed study recently completed by Ford for the purpose of preparing their 2005 tax return.

As Ford is responsible for the payment of this tax, we have determined that this error has no impact subsequent to the Acquisition. Because the liability for this tax rests with Ford, there is no effect on our liquidity in either the Predecessor period ended December 20, 2005 or the Successor period ended December 31, 2005. A summary of the effects of the Restatement on the previously issued consolidated statement of operations for the Predecessor ended December 20, 2005 period is as follows (in thousands of dollars):

	Predecessor
	January 1, 2005 to December 20, 2005
	As Reported			As Restated
Provision for taxes on income	$	(163,832	)	$	(191,332	)
Net income		398,823			371,323

The effect of the Restatement on the previously issued consolidated statement of cash flows for the Predecessor period ended December 20, 2005 is to decrease net income by $27.5 million and to increase the change in accrued taxes by $27.5 million.

In addition, we revised our consolidated statement of cash flows for the Predecessor period ended December 20, 2005 and the Predecessor year ended December 31, 2004 with respect to the presentation of the change in restricted cash, which resulted in increases in net cash used in investing activities and net cash provided by financing activities of $12.7 million and $2.9 million, respectively. We also revised our consolidated statement of cash flows for the Successor period ended December 31, 2005 with respect to the presentation of the change in restricted cash of $0.3 billion and the purchase of predecessor company stock of $4.4 billion, which resulted in increases in net cash used in investing activities and net cash provided by financing activities of $4.7 billion. Additionally, in the Successor period ended December 31, 2005, we decreased the amount shown as the effect of foreign exchange rate changes on cash by $26.1 million and increased the change in other assets and net cash flows used in operating activities.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our audited annual consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles, or "GAAP." The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements and changes in these judgments and estimates may impact future results of operations and financial condition. For additional discussion of our accounting policies, see Note 1 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

Revenue Earning Equipment

Our principal assets are revenue earning equipment, which represented 51% of total assets as of December 31, 2005. Revenue earning equipment consists of vehicles utilized in car rental operations and equipment utilized in equipment rental operations. For the year ended December 31, 2005, 77% of the vehicles purchased for our U.S. and international car rental fleet were subject to repurchase by

automobile manufacturers under contractual guaranteed repurchase programs, subject to certain manufacturers' car condition and mileage requirements, at a specific price during a specified time period. These programs limit our residual risk with respect to vehicles purchased under the programs. For all other vehicles, as well as equipment acquired by our equipment rental business, we use historical experience and monitor market conditions to set depreciation rates. When revenue earning equipment is acquired, we estimate the period that we will hold the asset. Depreciation is recorded on a straight-line basis over the estimated holding period, with the objective of minimizing gain or loss on the disposition of the revenue earning equipment. Upon disposal of the revenue earning equipment, depreciation expense is adjusted for the difference between the net proceeds received and the remaining book value. As market conditions change, we adjust our depreciation rates prospectively, over the remaining holding period, to reflect these changes in market conditions.

Public Liability and Property Damage

The obligation for public liability and property damage, or "PL/PD," on self-insured U.S. and international vehicles and equipment represents an estimate for both reported accident claims not yet paid, and claims incurred but not yet reported. The related liabilities are recorded on a non-discounted basis. Reserve requirements are based on actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. The adequacy of the liability is regularly monitored based on evolving accident claim history. If our estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.

Pensions

Our employee pension costs and obligations are dependent on our assumptions used by actuaries in calculating such amounts. These assumptions include discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense and recorded obligation in such future periods. While we believe that the assumptions used are appropriate, significant differences in actual experience or significant changes in assumptions would affect our pension costs and obligations. See Note 6 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

Goodwill and Other Intangible Assets

We review goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable, and also review goodwill annually in accordance with Statement of Financial Accounting Standards, or "SFAS," No. 142, "Goodwill and Other Intangible Assets." Our annual review is conducted in the second quarter of each year. Under SFAS No. 142, goodwill impairment is deemed to exist if the carrying value of goodwill exceeds its fair value. In addition, SFAS No. 142 requires that goodwill be tested at least annually using a two-step process. The first step is to identify any potential impairment by comparing the carrying value of the reporting unit to its fair value. If a potential impairment is identified, the second step is to compare the implied fair value of goodwill with its carrying amount to measure the impairment loss. We estimate the fair value of our reporting units using a discounted cash flow methodology. A significant decline in the projected cash flows used to determine fair value could result in a goodwill impairment charge.

The Acquisition was recorded by allocating the cost of the assets acquired, including intangible assets and liabilities assumed, based on their estimated fair values at the Acquisition date. Consequently, as a result of the Acquisition, we have recognized significant intangible assets. In accordance with SFAS No. 142, we reevaluate the estimated useful lives of our intangible assets annually or as circumstances

change. Those intangible assets considered to have indefinite useful lives are evaluated for impairment on an annual basis, by comparing the fair value of the intangible asset to its carrying value. In addition, whenever events or changes in circumstances indicate that the carrying value of intangible assets might not be recoverable, we will perform an impairment review. We estimate the fair value of our intangible assets using a discounted cash flow methodology. Intangible assets with finite useful lives are amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets."

Our estimates are based upon historical trends, management's knowledge and experience and overall economic factors. While we believe our estimates are reasonable, different assumptions regarding items such as future cash flows and volatility in the markets we serve could affect our evaluations and result in an impairment charge to the carrying amount of our goodwill and our intangible assets.

See Note 2 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

Results of Operations

In the following discussion, comparisons are made between the year ended December 31, 2005 (combined, as restated) and December 31, 2004, notwithstanding the presentation in our consolidated statements of operations for the year ended December 31, 2005 of the periods from December 21, 2005 to December 31, 2005 (Successor) and January 1, 2005 to December 20, 2005 (Predecessor, as restated). We do not believe a discussion of the separate periods presented for the year ended December 31, 2005 in our consolidated statements of operations would be meaningful and, accordingly, we have prepared the discussion of our results of operations by comparing the year ended December 31, 2005 (combined, as restated) with the year ended December 31, 2004 without regard to the differentiation between Predecessor and Successor results of operations for the Predecessor period ended December 20, 2005 (as restated) and the Successor period ended December 31, 2005.

			Combined			Successor			Predecessor			Predecessor
			Year ended			For the periods from						Years ended
			December 31, 2005 Restated			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
			(In thousands of dollars)
Revenues:
	Car rental		$	5,949,921		$	129,448		$	5,820,473		$	5,430,805		$	4,819,255
	Equipment rental			1,414,891			22,430			1,392,461			1,161,955			1,037,754
	Other			104,402			2,591			101,811			83,192			76,661

		Total revenues		7,469,214			154,469			7,314,745			6,675,952			5,933,670

Expenses:
	Direct operating			4,189,302			102,958			4,086,344			3,734,361			3,316,101
	Depreciation of revenue earning equipment			1,599,689			43,827			1,555,862			1,463,258			1,523,391
	Selling, general and administrative			638,553			15,167			623,386			591,317			501,643
	Interest, net of interest income			499,982			25,735			474,247			384,464			355,043

		Total expenses		6,927,526			187,687			6,739,839			6,173,400			5,696,178

Income (loss) before income taxes and minority interest				541,688			(33,218	)		574,906			502,552			237,492
(Provision) benefit for taxes on income				(179,089	)		12,243			(191,332	)		(133,870	)		(78,877	)
Minority interest				(12,622	)		(371	)		(12,251	)		(3,211	)		—

Net income (loss)			$	349,977		$	(21,346	)	$	371,323		$	365,471		$	158,615

The following table sets forth for each of the periods indicated, the percentage of total revenues represented by certain items in our consolidated statements of operations:

			Combined		Successor		Predecessor		Predecessor
			Year ended		For the periods from				Years ended
			December 31, 2005 Restated		December 21, 2005 to December 31, 2005		January 1, 2005 to December 20, 2005 Restated		2004		2003
Revenues:
	Car rental		79.7	%	83.8	%	79.6	%	81.3	%	81.2	%
	Equipment rental		18.9		14.5		19.0		17.4		17.5
	Other		1.4		1.7		1.4		1.3		1.3

		Total revenues	100.0		100.0		100.0		100.0		100.0

Expenses:
	Direct operating		56.1		66.6		55.9		55.9		55.9
	Depreciation of revenue earning equipment		21.4		28.4		21.3		21.9		25.7
	Selling, general and administrative		8.5		9.8		8.5		8.9		8.4
	Interest, net of interest income		6.7		16.7		6.4		5.8		6.0

		Total expenses	92.7		121.5		92.1		92.5		96.0

Income (loss) before income taxes and minority interest			7.3		(21.5	)	7.9		7.5		4.0
(Provision) benefit for taxes on income			(2.4	)	7.9		(2.6	)	(2.0	)	(1.3	)
Minority interest			(0.2	)	(0.2	)	(0.2	)	—		—

Net income (loss)			4.7	%	(13.8	)%	5.1	%	5.5	%	2.7	%

Year Ended December 31, 2005 Combined (as Restated) Compared with Year Ended December 31, 2004

Revenues

Total revenues of $7,469.2 million for the year ended December 31, 2005 increased by 11.9% from $6,676.0 million for the year ended December 31, 2004.

Revenues from car rental operations of $5,949.9 million for the year ended December 31, 2005 increased by $519.1 million, or 9.6%, from $5,430.8 million for the year ended December 31, 2004. The increase was primarily the result of a 4.1% increase in car rental volume worldwide, a 0.2% increase in rental rate revenue per day worldwide, an increase in airport concession recovery and refueling fees and the effects of foreign currency translation of approximately $23.1 million.

Revenues from equipment rental operations of $1,414.9 million for the year ended December 31, 2005 increased by $252.9 million, or 21.8%, from $1,162.0 million for the year ended December 31, 2004. The increase was primarily due to higher rental volume and improved pricing in North America and the effects of foreign currency translation of approximately $12.3 million.

Revenues from all other sources of $104.4 million for the year ended December 31, 2005 increased by $21.2 million, or 25.5%, from $83.2 million for the year ended December 31, 2004, primarily due to the increase in car rental licensee revenue and the effects of foreign currency translation.

Expenses

Total expenses of $6,927.5 million for the year ended December 31, 2005 increased by 12.2% from $6,173.4 million for the year ended December 31, 2004, principally due to the increase in revenues.

Total expenses as a percentage of revenues increased to 92.7% for the year ended December 31, 2005 compared with 92.5% for the year ended December 31, 2004.

Direct operating expenses of $4,189.3 million for the year ended December 31, 2005 increased by 12.2% from $3,734.4 million for the year ended December 31, 2004. The increase was primarily the result of increases in wages and benefits, commission fees, facility expenses, gasoline costs, concession fees in car rental operations and the effects of foreign currency translation, and further reflects the fact that during the year ended December 31, 2004, we received $7.0 million for claims made by us on our insurance policies for business interruption losses resulting from the terrorist attacks of September 11, 2001 and a final gain of $7.5 million from the condemnation of a car rental and support facility in Florida.

Depreciation of revenue earning equipment for car rental operations of $1,381.5 million for the year ended December 31, 2005 increased by 12.4% from $1,228.6 million for the year ended December 31, 2004. The increase was primarily due to the increase in the average number of vehicles worldwide, higher cost of vehicles in the U.S., lower net proceeds received in excess of book value on the disposal of vehicles and the effects of foreign currency translation. This increase was partly offset by a $21.8 million net reduction in depreciation for domestic car rental operations resulting from a decrease in depreciation rates to reflect changes in the estimated residual values of vehicles. Depreciation of revenue earning equipment for equipment rental operations of $218.2 million for the year ended December 31, 2005 decreased by 7.0% from $234.7 million for the year ended December 31, 2004 due to higher net proceeds received in excess of book value on the disposal of used equipment in the United States, and a $13.2 million net reduction in depreciation resulting from the effects of changes in depreciation rates of equipment in the U.S. and Canada, partly offset by an increase in the quantity of equipment operated.

Selling, general and administrative expenses of $638.5 million for the year ended December 31, 2005 increased by 8.0% from $591.3 million for the year ended December 31, 2004. The increase was primarily due to increases in administrative and sales promotion expenses and the effects of foreign currency translation. The increases in administrative and sales promotion expenses were primarily due to increases in salaries, commissions and benefits relating to the improvement in earnings for the year ended December 31, 2005.

Interest expense, net of interest income, of $500.0 million for the year ended December 31, 2005 increased by 30.0% from $384.4 million for the year ended December 31, 2004, primarily due to increases in the weighted average debt outstanding, the weighted average interest rate and $35.6 million of interest expense on the $1,185.0 million Intercompany Note payable to Ford Holdings LLC relating to the dividend declared and paid on June 10, 2005. The increase was partly offset by an increase in interest income.

The provision for taxes on income of $179.1 million for the year ended December 31, 2005 (restated) increased by 33.8% from $133.9 million for the year ended December 31, 2004, primarily due to an increase in income before income taxes and minority interest and a $31.3 million provision relating to the repatriation of foreign earnings for the year ended December 31, 2005, and net favorable tax adjustments in 2004 totaling $46.6 million, principally relating to the evaluation of certain federal and foreign tax accruals and foreign tax credits. The increase was partly offset by the reversal of a valuation allowance on foreign tax credit carryforwards of $35.0 million and favorable foreign tax adjustments of $5.3 million. The effective tax rate for the year ended December 31, 2005 (restated) was 33.1% as compared to 26.6% for the year ended December 31, 2004. See Notes 1, 1A and 9 to the Notes to our audited annual consolidated financial statements included in this Amendment under the heading "Item 8—Financial Statements and Supplementary Data."

Minority interest of $12.6 million for the year ended December 31, 2005 increased $9.4 million from $3.2 million for the year ended December 31, 2004. The increase was due to only two quarters of

earnings being included in 2004 as we increased our ownership interest in Navigation Solutions, L.L.C., or "Navigation Solutions," beginning in July 2004. See Note 5 to the Notes to our audited annual consolidated financial statements included in this Amendment under the heading "Item 8—Financial Statements and Supplementary Data."

Net Income

We had net income of $350.0 million for the year ended December 31, 2005 (restated), representing a decrease of $15.5 million, or 4.2%, from $365.5 million for the year ended December 31, 2004. The decrease in net income was primarily due to the one-time $31.3 million tax provision relating to the repatriation of foreign earnings, as well as the net effect of other contributing factors noted above. The impact of changes in exchange rates on net income was mitigated by the fact that not only foreign revenues but also most foreign expenses were incurred in local currencies.

Effects of Acquisition

The loss for the Successor period ended December 31, 2005 relates to lower rental demand due to the seasonality of the business and costs associated with the Transactions. Increased interest expense resulting from our higher debt levels and increased depreciation and amortization expense resulting from the revaluation of our assets and the recognition of certain identified intangible assets, all in connection with the Acquisition, are expected to have a significant adverse impact on full year 2006 income before taxes and minority interest.

Year Ended December 31, 2004 Compared with Year Ended December 31, 2003

Revenues

Total revenues of $6,676.0 million for the year ended December 31, 2004 increased by 12.5% from $5,933.7 million for the year ended December 31, 2003.

Revenues from car rental operations of $5,430.8 million for the year ended December 31, 2004 increased by 12.7% from $4,819.3 million for the year ended December 31, 2003. This increase of $611.5 million was primarily the result of higher car rental volumes worldwide and the effects of foreign currency translation of approximately $143.6 million, partly offset by a 2.6% decrease in time and mileage rates worldwide. The impact of changes in exchange rates on net income was mitigated by the fact that not only foreign revenues but also most foreign expenses were incurred in local currencies.

Revenues from equipment rental operations of $1,162.0 million for the year ended December 31, 2004 increased by 12.0% from $1,037.8 million for the year ended December 31, 2003. This $124.2 million increase was principally due to improved pricing in the United States, higher equipment rental volumes worldwide and the effects of foreign currency translation of approximately $22.1 million.

Revenues from all other sources of $83.2 million for the year ended December 31, 2004 increased by 8.5% from $76.6 million for the year ended December 31, 2003, due to an increase in licensee revenues.

Expenses

Total expenses of $6,173.4 million for the year ended December 31, 2004 increased by 8.4% from $5,696.2 million for the year ended December 31, 2003, principally due to the increase in revenues and total expenses as a percentage of revenues decreased to 92.5% for the year ended December 31, 2004 compared to 96.0% for the year ended December 31, 2003.

Direct operating expenses of $3,734.4 million for the year ended December 31, 2004 increased by 12.6% from $3,316.1 million for the year ended December 31, 2003. The increase was primarily the

result of the effects of foreign currency translation, increases in wages and benefits, commissions, concession fees, facility expense, vehicle damage expense and gasoline costs in car rental operations. The increase was partly offset by favorable credit and collection and PL/PD claims experience. Current period expenses were further reduced by $7.0 million received for the year ended December 31, 2004 for claims made by us on our insurance policies for business interruption losses resulting from the terrorist attacks of September 11, 2001 and a final gain of $7.5 million for the year ended December 31, 2004 from the condemnation of a car rental and support facility in Florida. (An initial gain of $8.0 million related to the condemnation was recorded for the year ended December 31, 2003.)

Depreciation of revenue earning equipment for car rental operations of $1,228.6 million for the year ended December 31, 2004 decreased by 2.4% from $1,258.3 million for the year ended December 31, 2003. The decrease was primarily due to the decrease in the United States average cost per vehicle and higher net proceeds received in excess of book value on the disposal of used vehicles worldwide, partly offset by the effects of foreign currency translation, an increase in the average number of vehicles operated worldwide and a one-time refund of $7.8 million for the year ended December 31, 2003. The refund resulted from a special transitional credit for car rental companies instituted by the Australian Taxation Office for Goods and Services Tax. Taxes paid were previously included in the capitalized cost of the vehicles in our Australian car rental fleet. Depreciation of revenue earning equipment for equipment rental operations of $234.7 million for the year ended December 31, 2004 decreased by 11.5% from $265.1 million for the year ended December 31, 2003, primarily due to higher net proceeds received in excess of book value on the disposal of used equipment in the United States.

Selling, general and administrative expenses of $591.3 million for the year ended December 31, 2004 increased by 17.9% from $501.7 million for the year ended December 31, 2003. The increase was principally due to the effects of foreign currency translation and increases in administrative and advertising expenses. The increase in administrative expenses was attributable to increases in salaries and in incentive compensation expense relating to the improvement in earnings for the year ended December 31, 2004. The increase in advertising was due to expanded media advertising, primarily in television.

Interest expense, net of interest income, of $384.4 million for the year ended December 31, 2004 increased 8.3% from $355.0 million for the year ended December 31, 2003, primarily due to an increase in average debt outstanding and foreign currency translation, partly offset by a decrease in the weighted average interest rate and higher interest income.

The provision for taxes on income of $133.9 million for the year ended December 31, 2004 increased 69.7% from $78.9 million for the year ended December 31, 2003. The increase in the provision for taxes on income was primarily the result of an increase in income before income taxes for the year ended December 31, 2004, partly offset by net favorable tax adjustments totaling $46.6 million, principally relating to the evaluation of certain federal and foreign tax accruals and foreign tax credits. The effect of the net tax adjustments caused a decrease in the effective tax rate from 35.9% to 26.6% as compared to 33.2% for the year ended December 31, 2003. See Notes 1 and 9 to the Notes to our audited annual consolidated financial statements included in this Amendment under the heading "Item 8—Financial Statements and Supplementary Data."

On July 1, 2004, we increased our joint venture ownership interest in Navigation Solutions from 40% to 65%. Minority interest of $3.2 million for the year ended December 31, 2004 represents the minority interest's share (35%) of Navigation Solutions' net income for the period July 1, 2004 through December 31, 2004. See Note 5 to the Notes to our audited annual consolidated financial statements included in this Amendment under the heading "Item 8—Financial Statements and Supplementary Data."

Net Income

We had net income of $365.5 million for the year ended December 31, 2004, representing an increase of $206.9 million from $158.6 million for the year ended December 31, 2003. The increase reflects higher rental volume in our worldwide car and equipment rental businesses, lower fleet costs, higher proceeds received in excess of book value on the disposal of used vehicles and equipment and net favorable tax adjustments, partly offset by lower pricing in our worldwide car rental business, as well as the net effect of other contributing factors noted above.

Liquidity and Capital Resources

As of December 31, 2005, we had cash and equivalents of $843.9 million, an increase of $165.9 million from December 31, 2004. As of December 31, 2005, we had $289.2 million of restricted cash to be used for the purchase of revenue earning vehicles, the repayment of outstanding indebtedness primarily under our ABS Program and to satisfy certain of our self-insurance reserve requirements. In addition, prior to the Acquisition, we historically made short-term investments with a related party investment fund that pools and invests excess cash balances of certain Ford subsidiaries to maximize returns. These short-term investments were liquidated in November 2005.

Our domestic and foreign operations are funded by cash provided by operating activities and by extensive financing arrangements maintained by us in the United States, Europe, Australia, New Zealand, Canada and Brazil. Net cash provided by operating activities during the year ended December 31, 2005 was $1,452.8 million, a decrease of $798.6 million from the year ended December 31, 2004. This decrease was primarily due to timing differences in the receipts and payments of receivables and deferred income taxes, partly offset by an increase in accrued taxes.

Our primary use of cash in investing activities is for the acquisition of revenue earning equipment, which consists of cars and equipment. Net cash used in investing activities during the year ended December 31, 2005 was $6,492.9 million, an increase of $3,647.0 million from the year ended December 31, 2004. The increase is due to the purchase of the predecessor company stock and an increase in revenue earning equipment expenditures, partly offset by the net increase in the proceeds from the disposal of revenue earning equipment and proceeds from the sale of short-term investments. For the year ended December 31, 2005, our expenditures for revenue earning equipment were $12,421.0 million, partially offset by proceeds from the disposal of such equipment of $10,306.0 million. These assets are purchased by us in accordance with the terms of programs negotiated with car and equipment manufacturers.

For the year ended December 31, 2005, our capital expenditures for property and non-revenue earning equipment were $343.0 million. For the year ending December 31, 2005, we experienced a slightly decreased level of net expenditures for revenue earning equipment and property and equipment compared to the year 2004. For the year 2006, we expect a comparable level of net expenditures for revenue earning equipment and property and equipment. See "—Capital Expenditures" below.

Car rental and equipment rental operations are seasonal businesses with decreased levels of business in the winter months and heightened activity during the spring and summer. This is particularly true of our airport car rental operations and equipment rental operations. To accommodate increased demand, we maintain a larger fleet by holding vehicles and equipment and purchasing additional fleet which increases our financing requirements in the second and third quarters. These seasonal financing needs are funded by increasing the utilization of our bank credit facilities and, in past years, our commercial paper program. As business demand moderates during the winter, we reduce our fleet accordingly and dispose of vehicles and equipment. The disposal proceeds are used to reduce short-term debt.

We are highly leveraged and a substantial portion of our liquidity needs arise from debt service on indebtedness incurred in connection with the Transactions and from the funding of our costs of operations, working capital and capital expenditures.

As of December 31, 2005, we had outstanding approximately $12,515.0 million of total indebtedness. Cash paid for interest during the year ended December 31, 2005, was $540.4 million, net of amounts capitalized.

We rely significantly on asset-backed financing to purchase cars for our domestic and international car rental fleets. For further information concerning our asset-backed financing programs, see "—U.S. Fleet Debt" and "—International Fleet Debt" below. For a discussion of risks related to our reliance on asset-backed financing to purchase cars, see "Item 1A—Risk Factors—Risks Related to Our Business—Our reliance on asset-backed financing to purchase cars will subject us to a number of risks, many of which are beyond our control."

Also, substantially all of our revenue earning equipment and certain related assets are owned by special purpose entities, or are subject to liens in favor of the lenders, under the Senior ABL Facility, the ABS Program (including the U.S. Fleet Debt) or the International Fleet Debt. Substantially all our other assets in the United States are also subject to liens under the Senior Credit Facilities, and substantially all our other assets outside the United States are (with certain limited exceptions) subject to liens under the International Fleet Debt or (in the case of our Canadian HERC business) the Senior ABL Facility. None of such assets will be available to satisfy the claims of our general creditors.

We believe that cash generated from operations, together with amounts available under the Senior Credit Facilities, asset-backed financing and other available financing arrangements will be adequate to permit us to meet our debt service obligations, ongoing costs of operations, working capital needs and capital expenditure requirements for the foreseeable future. Our future financial and operating performance, ability to service or refinance our debt and ability to comply with covenants and restrictions contained in our debt agreements will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. See "Item 1A—Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements."

Indebtedness Following the Acquisition

In order to finance the cash consideration for the Acquisition, refinance certain of our existing indebtedness and to pay related transaction fees and expenses, we (i) repurchased a significant portion of our existing senior notes and Euro medium term notes, (ii) borrowed under a new Senior Term Facility and Senior ABL Facility, (iii) used proceeds from a private placement of Senior Dollar Notes, Senior Subordinated Notes and Senior Euro Notes, (iv) offered asset-backed securities backed by our U.S. car rental fleet (U.S. Fleet Debt), and (v) used borrowings by our subsidiaries organized outside the U.S. under our International Fleet Debt. The detail of each of these transactions follows.

Senior Credit Facilities

amount of $1,707 million in borrowings outstanding under this facility. The term loan facility and synthetic letter of credit facility will mature on December 21, 2012. The term loan will amortize in nominal quarterly installments (not exceeding one percent of the aggregate principal amount thereof per annum) until the maturity date. At the borrower's election, the interest rates per annum applicable to the loans under the Senior Term Facility will be based on a fluctuating rate of interest measured by reference to either (1) an adjusted London inter-bank offered rate, or "LIBOR," plus a borrowing margin or (2) an alternate base rate plus a borrowing margin. In addition, the borrower pays fees on the unused term loan commitments of the lenders, letter of credit participation fees on the full amount of the synthetic letter of credit facility plus fronting fees for the letter of credit issuing banks and other customary fees in respect of the Senior Term Facility.

Hertz, HERC and certain other subsidiaries of Hertz also entered into a credit agreement with respect to the Senior ABL Facility with Deutsche Bank AG, New York Branch as administrative agent and collateral agent, Deutsche Bank AG, Canada Branch as Canadian Agent and Canadian collateral agent, Lehman Commercial Paper Inc. as syndication agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as documentation agent and the financial institutions party thereto from time to time. This facility provides (subject to availability under a borrowing base) for aggregate maximum borrowings of $1,600 million under a revolving loan facility providing for loans denominated in U.S. Dollars, Canadian Dollars, Euros and Pounds Sterling. Up to $200 million of the revolving loan facility will be available for the issuance of letters of credit. On the closing date, Hertz borrowed $206 million under this facility and Matthews Equipment Limited, one of Hertz's Canadian subsidiaries, borrowed CAN$225 million under this facility, in each case to finance a portion of the Transactions. Hertz and HERC are the U.S. borrowers under the Senior ABL Facility and Matthews Equipment Limited and its subsidiary Western Shut-Down (1995) Ltd. are the Canadian borrowers under the Senior ABL Facility. At December 31, 2005, Hertz and the Canadian borrowers had aggregate principal amounts of $306 million and the U.S. dollar equivalent of $193 million, respectively, in borrowings outstanding under this facility. The Senior ABL Facility will mature on December 21, 2010. At the borrower's election, the interest rates per annum applicable to the loans under the Senior ABL Facility will be based on a fluctuating rate of interest measured by reference to either (1) adjusted LIBOR plus a borrowing margin or (2) an alternate base rate plus a borrowing margin. The borrower will pay customary commitment and other fees in respect of the Senior ABL Facility.

Hertz's obligations under the Senior Term Facility and the Senior ABL Facility are guaranteed by its immediate parent and most of its direct and indirect domestic subsidiaries (subject to certain exceptions, including for subsidiaries involved in the U.S. Fleet Debt facility and similar special purpose financings), though HERC does not guarantee Hertz's obligations under the Senior ABL Facility because it is a borrower under that facility. In addition, the obligations of the Canadian borrowers under the Senior ABL Facility are guaranteed by their respective subsidiaries, if any, subject to limited exceptions. The lenders under each of the Senior Term Facility and the Senior ABL Facility have received a security interest in substantially all of the tangible and intangible assets of the borrowers and guarantors under those facilities, including pledges of the stock of certain of their respective subsidiaries, subject in each case to certain exceptions (including in respect of the U.S. Fleet Debt, the International Fleet Debt and, in the case of the Senior ABL Facility, other secured fleet financing.)

The Senior Credit Facilities contain a number of covenants that, among other things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make dividends and other restricted payments, create liens, make investments, make acquisitions, engage in mergers, change the nature of their business, make capital expenditures, or engage in certain transactions with affiliates. Under the Senior Term Facility, the borrower is required to comply with specified financial ratios and tests, including a minimum interest expense coverage ratio and a maximum leverage ratio. Under the Senior ABL Facility, upon excess availability falling below certain levels, specified financial ratios and

tests, including a minimum fixed charge coverage ratio and a maximum leverage ratio, will apply. The Senior Credit Facilities are subject to certain mandatory prepayment requirements and contain customary events of default.

Senior Notes and Senior Subordinated Notes

In connection with the Acquisition, CCMG Acquisition Corporation issued the Senior Notes and the Senior Subordinated Notes under separate indentures between CCMG Acquisition Corporation and Wells Fargo Bank, National Association, as trustee. Hertz and the guarantors entered into supplemental indentures, dated the closing date of the Acquisition, pursuant to which Hertz assumed the obligations of CCMG Acquisition Corporation under the Senior Notes, the Senior Subordinated Notes and the respective indentures, and the guarantors issued the related guarantees. At closing, CCMG Acquisition Corporation and Hertz utilized the proceeds of the offering of the Senior Notes and the Senior Subordinated Notes to finance a portion of the Transactions. CCMG Acquisition Corporation subsequently merged with and into Hertz, with Hertz being the surviving entity.

The Senior Notes will mature on January 1, 2014, and the Senior Subordinated Notes will mature on January 1, 2016. The Senior Dollar Notes bear interest at a rate per annum of 8.875%, the Senior Euro Notes bear interest at a rate per annum of 7.875% and the Senior Subordinated Notes bear interest at a rate per annum of 10.5%. Interest is payable on the Senior Notes and the Senior Subordinated Notes semiannually on January 1 and July 1 of each year, commencing July 1, 2006. Hertz's obligations under the indentures are guaranteed by each of its direct and indirect domestic subsidiaries that is a guarantor under the Senior Term Facility.

Both the senior indenture and the senior subordinated indenture contain covenants that, among other things, limit the ability of Hertz and its restricted subsidiaries, described in the respective indentures, to: incur more debt; pay dividends, redeem stock or make other distributions; make investments; create liens; transfer or sell assets; merge or consolidate; and enter into certain transactions with Hertz's affiliates. The senior subordinated indenture also contains subordination provisions and limitations on the types of liens that may be incurred. Each of the senior indenture and the senior subordinated indenture also contains certain mandatory and optional prepayment or redemption provisions, and customary events of default.

Fleet Financing

U.S. Fleet Debt. In connection with the Acquisition, Hertz Vehicle Financing LLC, or "HVF," a bankruptcy-remote special purpose entity wholly owned by Hertz, entered into an amended and restated base indenture, dated as of the closing date of the Acquisition, with BNY Midwest Trust Company as trustee, or the "ABS Indenture," and a number of related supplements to the ABS Indenture, each dated as of the closing date of the Acquisition, with BNY Midwest Trust Company as trustee and securities intermediary, or, collectively, the "ABS Supplement." On the closing date of the Acquisition, HVF, as issuer, issued approximately $4,300 million of new medium term asset-backed notes consisting of 11 classes of notes in two series under the ABS Supplement, the net proceeds of which were used to finance the purchase of vehicles from related entities and the repayment or cancellation of existing debt. HVF also issued approximately $1,500 million of variable funding notes in two series, none of which were funded at closing. At December 31, 2005, $4,300 million and $40 million in aggregate borrowings were outstanding in the form of these medium term notes and variable funding notes, respectively.

Each class of notes matures three, four or five years from the closing date of the Acquisition. The variable funding notes will be funded through the bank multi-seller commercial paper market. The assets of HVF, including the U.S. car rental fleet owned by HVF and the other assets that collateralize the U.S. Fleet Debt, will not be available to satisfy the claims of Hertz's general creditors. The

following is a brief description of the ABS Indenture, ABS Supplement and the U.S. Fleet Debt issued thereunder.

The various series of U.S. Fleet Debt have either fixed or floating rates of interest. The interest rate per annum applicable to any floating rate notes (other than any variable funding asset-backed debt) is based on a fluctuating rate of interest measured by reference to one-month LIBOR plus a spread. The interest rate per annum applicable to any variable funding asset-backed debt is either the blended average commercial paper rate, if funded through the commercial paper market, or if commercial paper is not being issued, the greater of the prime rate or the federal funds rate, or if requisite notice is provided, the Eurodollar rate plus a spread.

In connection with the Acquisition and the issuance of the $3,550.0 million of floating rate U.S. Fleet Debt, HVF and Hertz entered into certain interest rate swap agreements, or the "HVF Swaps," effective December 21, 2005. These agreements mature at various terms, in connection with the scheduled maturity of the associated debt obligations, through November 25, 2011. Under these agreements, we pay monthly interest at a fixed rate of 4.5% per annum in exchange for monthly amounts at one-month LIBOR, effectively transforming the floating rate U.S. Fleet Debt to fixed rate obligations.

The U.S. Fleet Debt issued on the closing date of the Acquisition has the benefit of financial guaranty insurance policies under which either MBIA Insurance Corporation or Ambac Assurance Corporation will guarantee the timely payment of interest on and ultimate payment of principal of such notes.

HVF is subject to numerous restrictive covenants under the ABS Indenture and the other agreements governing the U.S. Fleet Debt, including restrictive covenants with respect to liens, indebtedness, benefit plans, mergers, disposition of assets, acquisition of assets, dividends, officers compensation, investments, agreements, the types of business it may conduct and other customary covenants for a bankruptcy-remote special purpose entity. The U.S. Fleet Debt is subject to events of default and amortization events that are customary in nature for U.S. rental car asset backed securitizations of this type. The occurrence of an amortization event or event of default could result in the acceleration of principal of the notes and a liquidation of the U.S. car rental fleet.

International Fleet Debt. In connection with the Acquisition, Hertz International Ltd., or "HIL," a Delaware corporation organized as a foreign subsidiary holding company and a direct subsidiary of Hertz, and certain of its subsidiaries (all of which are organized outside the United States), together with certain bankruptcy-remote special purpose entities (whether organized as HIL's subsidiaries or as non-affiliated "orphan" companies), or "SPEs," entered into revolving bridge loan facilities providing commitments to lend, in various currencies an aggregate amount equivalent to approximately $2,930 million (as of December 31, 2005), subject to borrowing bases comprised of rental vehicles and related assets of certain of HIL's subsidiaries (all of which are organized outside of the United States) or one or more SPEs, as the case may be, and rental equipment and related assets of certain of HIL's subsidiaries organized outside North America or one or more SPEs, as the case may be. At closing, the U.S. dollar equivalent of $1,781 million of International Fleet Debt was issued under these facilities. At closing, we utilized the proceeds from these financings to finance a portion of the Transactions. At December 31, 2005, although borrowings under the facility did not change, the U.S. dollar equivalent of aggregate principal amount outstanding was $1,752 million. These facilities are referred to collectively as the "International Fleet Debt Facilities."

The International Fleet Debt Facilities consist of four revolving loan tranches (Tranches A1, A2, B and C), each subject to a borrowing base comprising the revenue earning equipment and related assets of each such borrower (or, in the case of a borrower that is a SPE on-lending loan proceeds to a fleet-owning SPE or subsidiary, as the case may be, the rental cars and related assets of such fleet-owning SPE or subsidiary). A portion of the Tranche C loan will be available for the issuance of letters of credit. The subsidiaries conducting the car rental business in certain European jurisdictions may, at their option, continue to engage in certain capital lease financings outside the International Fleet Debt Facilities.

The obligations of the borrowers under the International Fleet Debt Facilities are guaranteed by HIL, and by the other borrowers and certain related entities under the applicable tranche, in each case subject to certain legal, tax, cost and other structuring considerations. The obligations and the guarantees of the obligations of the Tranche A borrowers under the Tranche A2 loans are subordinated to the obligations and the guarantees of the obligations of such borrowers under the Tranche A1 loans. Subject to legal, tax, cost and other structuring considerations and to certain exceptions, the International Fleet Debt Facilities are secured by a material part of the assets of each borrower, certain related entities and each guarantor, including pledges of the capital stock of each borrower and certain related entities. The obligations of the Tranche A borrowers under the Tranche A2 loans and the guarantees thereof are secured on a junior second priority basis by any assets securing the obligations of the Tranche A borrowers under the Tranche A1 loans and the guarantees thereof. In addition, Hertz has guaranteed the obligations of its Brazilian subsidiary with respect to an aggregate principal amount of the Tranche B loan not exceeding $52 million (or such other principal amount as may be agreed to by the relevant lenders). That guarantee is secured equally and ratably with borrowings under the Senior Term Facility. The assets that collateralize the International Fleet Debt Facilities will not be available to satisfy the claims of Hertz's general creditors.

The loans under each of the tranches mature five years from the closing date of the Acquisition. Subject to certain exceptions, the loans are subject to mandatory prepayment and reduction in commitment amounts equal to the net proceeds of specified types of take-out financing transactions and asset sales.

The interest rates per annum applicable to loans under the International Fleet Debt Facilities are based on fluctuating rates of interest measured by reference to one-month LIBOR, EURIBOR or their equivalents for local currencies as appropriate (in the case of the Tranche A1 and A2 loans); relevant local currency base rates (in the case of Tranche B loans); or one-month EURIBOR (in the case of the Tranche C loans), in each case plus a borrowing margin. In addition, the borrowers under each of Tranche A1, Tranche A2, Tranche B and Tranche C of the International Fleet Debt Facilities will pay fees on the unused commitments of the lenders under the applicable tranche, and other customary fees and expenses in respect of such facilities, and the Tranche A1 and A2 borrowing margins are subject to increase if HIL does not repay borrowings thereunder within specified periods of time and upon the occurrence of other specified events.

international asset-based facilities, the specified excess cash flow amount will be zero. Thereafter, this specified excess cash flow amount will be between 50% and 100% of excess cash flow based on the percentage of the International Fleet Debt Facilities that have been replaced by permanent take-out financing.

The International Fleet Debt Facilities contain customary events of default.

Previously Existing Debt Obligations

As of December 31, 2005, Hertz had outstanding approximately $803.3 million in aggregate principal amount of senior debt securities issued under three separate indentures and approximately €7.6 million in aggregate principal amount of Euro MTNs issued by Hertz Finance Centre plc and guaranteed by Hertz under the Euro Medium Term Note Program. In connection with the Acquisition, Hertz sought and received the requisite consents of holders of the existing senior notes to eliminate the restrictive covenants and the cross-acceleration default set forth in the existing indentures. The existing senior notes have maturities ranging from 2006 to 2028. Funds sufficient to repay all obligations associated with the remaining €7.6 million of Euro Medium Term Notes at maturity have been placed in escrow for satisfaction of these obligations.

Hertz Vehicle Financing LLC issued $600 million of asset-backed medium term notes on March 31, 2004 under our U.S. Fleet Debt Program. Those notes, which mature between 2007 and 2009, remain outstanding.

As of December 31, 2005, substantially all of our assets are pledged under one or more of the facilities noted above.

Contractual Obligations

The following tables detail the contractual cash obligations for debt, operating leases and purchase obligations as of December 31, 2005:

				Payments Due by Period
		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
		(In millions of dollars)
Debt⁽¹⁾		$	12,657.9	$	2,774.9	$	1,064.7	$	4,099.6	$	4,718.7
Interest on debt⁽²⁾			4,232.4		673.6		1,275.1		1,081.7		1,202.0
Operating leases and concession agreements⁽³⁾			1,552.8		328.3		467.0		244.3		513.2
Purchase obligations⁽⁴⁾			6,984.4		6,845.9		137.9		0.6		—

	Total	$	25,427.5	$	10,622.7	$	2,944.7	$	5,426.2	$	6,433.9

⁽¹⁾: Amounts represent debt obligations included in "Debt" in our consolidated balance sheet and include $2,555.3 million of commercial paper, and other short-term borrowings, excluding obligations for interest and estimated payments under interest rate swap agreements. See Note 3 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."
⁽²⁾: Amounts represent the estimated interest payments based on the principal amounts, minimum non-cancelable maturity dates and applicable interest rates on the debt at December 31, 2005. The minimum non-cancelable obligations under the International Fleet Debt and Senior ABL Facility matured between January and March 2006. While there was no requirement to do so, these obligations were subsequently renewed.
⁽³⁾: Includes obligations under various concession agreements, which provide for payment of rents and a percentage of revenue with a guaranteed minimum, and lease agreements for real estate, revenue earning equipment and office and computer equipment. Such obligations are reflected to the extent of their minimum non-cancelable terms. See Note 10 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

⁽⁴⁾: Purchase obligations represent agreements to purchase goods or services that are legally binding on us and that specify all significant terms, including fixed or minimum quantities; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Only the minimum non-cancelable portion of purchase agreements and related cancellation penalties are included as obligations. In the case of contracts, which state minimum quantities of goods or services, amounts reflect only the stipulated minimums; all other contracts reflect estimated amounts. Of the total purchase obligations as of December 31, 2005, $6,687.3 million represent fleet purchases where contracts have been signed or are pending with committed orders under the terms of such arrangements. We do not regard our employment relationships with our employees as "agreements to purchase services" for these purposes.

Credit Facilities

At December 31, 2005, the following credit facilities were available for use:

The Senior Term Facility consists of a $2,000 million term loan facility providing for loans denominated in U.S. Dollars, including a delayed draw facility of $293 million that may be drawn until August 2007 to refinance certain existing debt and a synthetic letter of credit facility in an aggregate principal amount of $250 million. As of December 31, 2005, the $293 million delayed draw facility was available, while the remaining aggregate principal amount of $1,707 million, representing the term loan portion, was drawn on the Closing Date.

The Senior ABL Facility provides (subject to availability under a borrowing base) for aggregate maximum borrowings of $1,600 million under a revolving loan facility providing for loans denominated in U.S. Dollars, Canadian Dollars, Euros and Pounds Sterling. As of December 31, 2005, the U.S. dollar equivalent of approximately $1,100 million was unused; availability is subject to the borrowing base limitation.

The International Fleet Debt Facilities provide (subject to availability under the borrowing base) revolving bridge loan facilities to lend in various currencies an aggregate amount of approximately $2,930 million (at December 31, 2005). As of December 31, 2005, the U.S. dollar equivalent of approximately $1,178 million in aggregate principal amount was unused; availability is subject to a borrowing base limitation.

In connection with the issuance of $4,300 million of medium term asset-backed notes under the U.S. Fleet Debt Facility, approximately $1,500 million of variable funding notes in two series were also issued, but not funded on the closing date of the Acquisition. As of December 31, 2005, approximately $1,460 million of variable funding notes were unused; availability is subject to a borrowing base limitation.

Goodwill and Other Intangible Assets following the Acquisition

We have recognized a significant amount of goodwill and other intangible assets in connection with the Acquisition. We perform an impairment analysis with respect to our goodwill and indefinite-lived intangible assets at least annually, or more frequently if changes in circumstances indicate that the carrying amount of the goodwill or other intangible assets may not be recoverable. If we identify an impairment in goodwill or other intangible assets we may be required to take a charge that could negatively impact our future earnings.

Foreign Currency

Historically, provisions have not been made for U.S. income taxes on undistributed earnings of foreign subsidiaries that have been or are intended to be indefinitely reinvested outside the United States or are expected to be remitted free of taxes. Our decision to withdraw earnings or investments from foreign countries is, in some cases, influenced by exchange controls and the utilization of foreign tax credits, and may also be affected by fluctuations in exchange rates for foreign currencies and by revaluation of such currencies in relation to the U.S. Dollar by the governments involved. Foreign operations have been financed to a substantial extent through loans from local lending sources in the

currency of the countries in which such operations are conducted. Car rental operations in foreign countries are, from time to time, subject to governmental regulations imposing varying degrees of currency restrictions. Currency restrictions and other regulations historically have not had a material impact on our operations as a whole.

Capital Expenditures

The table below shows revenue earning equipment and property and equipment capital expenditures and related disposal proceeds received by quarter for 2005, 2004 and 2003.

			Revenue Earning Equipment								Property and Equipment
			Capital Expenditures		Disposal Proceeds			Net Capital Expenditures (Proceeds)			Capital Expenditures		Disposal Proceeds			Net Capital Expenditures
			(In millions of dollars)
2005
Predecessor
	First Quarter		$	3,600.2	$	(2,307.4	)	$	1,292.8		$	81.3	$	(9.0	)	$	72.3
	Second Quarter			4,040.4		(2,304.3	)		1,736.1			105.5		(21.3	)		84.2
	Third Quarter			2,377.5		(2,579.5	)		(202.0	)		92.9		(19.0	)		73.9
	Fourth Quarter (Oct. 1-Dec. 20, 2005)			2,168.1		(2,915.1	)		(747.0	)		54.8		(23.3	)		31.5
Successor
	Fourth Quarter (Dec. 21-Dec. 31, 2005)			234.8		(199.7	)		35.1			8.5		(1.2	)		7.3

		Total Year	$	12,421.0	$	(10,306.0	)	$	2,115.0		$	343.0	$	(73.8	)	$	269.2

2004
Predecessor
	First Quarter		$	2,916.1	$	(1,860.7	)	$	1,055.4		$	61.2	$	(11.7	)	$	49.5
	Second Quarter			3,804.1		(1,921.2	)		1,882.9			82.8		(20.9	)		61.9
	Third Quarter			2,179.0		(2,321.8	)		(142.8	)		74.6		(19.4	)		55.2
	Fourth Quarter			2,410.9		(2,637.2	)		(226.3	)		67.8		(7.3	)		60.5

		Total Year	$	11,310.1	$	(8,740.9	)	$	2,569.2		$	286.4	$	(59.3	)	$	227.1

2003
Predecessor
	First Quarter		$	2,951.4	$	(2,557.3	)	$	394.1		$	51.3	$	(9.0	)	$	42.3
	Second Quarter			2,338.3		(1,153.7	)		1,184.6			56.6		(23.6	)		33.0
	Third Quarter			1,611.5		(1,656.2	)		(44.7	)		54.4		(13.1	)		41.3
	Fourth Quarter			2,535.4		(2,507.2	)		28.2			64.4		(8.9	)		55.5

		Total Year	$	9,436.6	$	(7,874.4	)	$	1,562.2		$	226.7	$	(54.6	)	$	172.1

Revenue earning equipment expenditures in our car rental operations were $11,493.9 million, $10,665.3 million and $9,100.5 million for the years ended December 31, 2005, 2004 and 2003, respectively. Revenue earning equipment expenditures in our equipment rental operations were $927.1 million, $644.7 million and $336.1 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Revenue earning equipment expenditures in our car rental and equipment rental operations for the year ended December 31, 2005 increased by 7.8% and 43.8%, respectively, compared to the year ended December 31, 2004. The increase in equipment rental revenue earning equipment expenditures is primarily the result of higher rental volume.

Property and equipment expenditures in our car rental operations were $271.1 million, $220.4 million and $191.6 million for the years ended December 31, 2005, 2004 and 2003, respectively. Property and equipment expenditures in our equipment rental operations were $69.0 million, $63.1 million and $32.2 million for the years ended December 31, 2005, 2004 and 2003, respectively. Property and equipment expenditures in our "corporate and other" activities were $2.9 million, $3.0 million and $2.9 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Property and equipment expenditures in our car rental, equipment rental and "corporate and other" operations for the year ended December 31, 2005 increased by 23.0%, 9.4% and decreased by 3.3%, respectively, compared to the year ended December 31, 2004.

For the year ending December 31, 2005, we experienced a level of net expenditures for revenue earning equipment and property and equipment slightly lower than our net expenditures in 2004. The capital expenditures decrease was due to increased disposals partly offset by increases in the prices of 2006 model year vehicles acquired beginning in the fourth quarter of 2005, together with capital expenditures relating to the expansion of off-airport and HERC locations.

Off-Balance Sheet Commitments

As of December 31, 2005 and 2004, the following guarantees were issued and outstanding:

Indemnifications

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

Sponsor

On the closing date of the Acquisition, Hertz entered into indemnification agreements with Hertz Holdings, the Sponsors and Hertz Holdings stockholders affiliated with the Sponsors, pursuant to which Hertz Holdings and Hertz will indemnify the Sponsors, the Hertz Holdings stockholders affiliated with the Sponsors and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings.

Environmental

We have indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which we may be held responsible could be substantial. The probable losses that we expect to incur for such matters have been accrued, and those losses are reflected in our consolidated financial statements. As of December 31, 2005 and December 31, 2004, the aggregate amounts accrued for environmental liabilities, including liability for environmental indemnities, reflected in our consolidated balance sheet in "Other accrued liabilities" were $3.9 million and $5.4 million, respectively. The accrual generally represents the estimated cost to study potential environmental issues at sites deemed to require

investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required. Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the site. For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).

Tax

We provide various tax-related indemnifications as part of the transactions giving rise to the indemnification obligations. The indemnified party typically is protected from certain events that result in a tax treatment different from that originally anticipated. In some cases, a payment under a tax indemnification may be offset in whole or in part by refunds from the applicable governmental taxing authority. We are party to a number of tax indemnifications, and many of these indemnities do not limit potential payment; therefore, we are unable to estimate a maximum amount of potential future payments that could result from claims made under these indemnities.

Risk Management

For a discussion of additional risks arising from our operations, including vehicle liability, general liability and property damage insurable risks, see "Item 1—Business—Risk Management."

Market Risks

We are exposed to a variety of market risks, including the effects of changes in interest rates and foreign currency exchange rates. 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 historically have not been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage our exposure to counterparty nonperformance on such instruments. For more information on these exposures see Note 14 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

Interest Rate Risk

agreements, we pay monthly interest at a fixed rate of 4.5% per annum in exchange for monthly amounts at one-month LIBOR, effectively transforming the floating rate U.S. Fleet Debt to fixed rate obligations.

In connection with the remaining €7.6 million untendered balance of our Euro Medium Term Notes, we entered into an interest rate swap agreement on December 21, 2005, effective January 16, 2006, and maturing on July 16, 2007. The purpose of this interest rate swap is to lock in the interest cash outflows on the variable rate Euro Medium Term Notes.

See Notes 3 and 14 to the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data."

We have a significant amount of debt (including under our U.S. and International Fleet Debt and Senior ABL Facility) with variable rates of interest based generally on LIBOR, EURIBOR or their equivalents for local currencies plus an applicable margin. Increases in interest rates could therefore significantly increase the associated interest payments that we are required to make on this debt.

We have assessed our exposure to changes in interest rates by analyzing the sensitivity to our earnings assuming various changes in market interest rates. Assuming a hypothetical increase of one percentage point in interest rates on our debt portfolio as of December 31, 2005, our net interest expense would increase by an estimated $16.6 million over a twelve-month period.

Pursuant to the terms of the agreements governing the respective debt obligations, we may hedge a portion of the floating rate interest exposure under the Senior Credit Facilities and the U.S. and International Fleet Debt to provide protection in respect of such exposure.

Foreign Currency Risk

We manage our foreign currency risk primarily by incurring, to the extent practicable, operating and financing expenses in the local currency in the countries in which we operate, including making fleet and equipment purchases and borrowing for working capital needs. Also, we have purchased foreign exchange options to manage exposure to fluctuations in foreign exchange rates for selected marketing programs. The effect of exchange rate changes on these financial instruments would not materially affect our consolidated financial position, results of operations or cash flows. Our risks with respect to currency option contracts are limited to the premium paid for the right to exercise the option and the future performance of the option's counterparty. Premiums paid for options outstanding as of December 31, 2005, were approximately $0.5 million, and we limit counterparties to financial institutions that have strong credit ratings.

We also manage exposure to fluctuations in currency risk on intercompany loans we make to certain of our subsidiaries by entering into foreign currency forward contracts at the time of the loans. The forward rate is reflected in the intercompany loan rate to the subsidiaries, and as a result, the forward contracts have no material impact on our earnings.

Like-Kind Exchange Program

In January 2006, we implemented a "like-kind exchange program" for our U.S. car rental business. Pursuant to the program, we dispose of vehicles and acquire replacement vehicles in a form intended to allow such dispositions and replacements to qualify as tax-deferred "like-kind exchanges" pursuant to section 1031 of the Internal Revenue Code. The program is expected to result in a material deferral of federal and state income taxes. We cannot, however, offer assurance that the expected tax deferral will be achieved or that the relevant law concerning the program will remain in its current form. A similar plan for HERC has been in place for several years.

Inflation

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

Employee Retirement Benefits

Pension

We sponsor defined benefit pension plans worldwide. Pension obligations give rise to significant expenses that are dependent on assumptions discussed in Note 6 of the Notes to our audited annual consolidated financial statements included in this Amendment under the caption "Item 8—Financial Statements and Supplementary Data." Our 2005 worldwide pre-tax pension expense was approximately $37.5 million, which is an increase of $6.8 million from 2004 primarily attributable to the decrease in the discount rate in the United States from 6.25% to 5.75% and in the United Kingdom from 5.50% to 5.25%, a pension settlement loss of $1.1 million relating to our Supplemental Executive Retirement Plan, as well as the effects of foreign currency translation.

The funded status (i.e., the amount by which the present value of projected benefit obligations exceeded the market value of pension plan assets) of our U.S. qualified plan, in which most domestic employees participate, declined as of December 31, 2005, compared with December 31, 2004. The primary factor that contributed to the change in the funded status was a decrease in the discount rate, partially offset by a discretionary contribution of $28.0 million.

We review our pension assumptions regularly and from time to time make contributions beyond those legally required. For example, discretionary contributions of $28.0 million, $48.0 million and $54.0 million were made to our U.S. qualified plan for the years ended December 31, 2005, 2004 and 2003, respectively. After giving effect to these contributions, based on current interest rates and on our return assumptions and assuming no additional contributions, we do not expect to be required to pay any variable-rate premiums to the Pension Benefit Guaranty Corporation before 2010.

We participate in various "multiemployer" pension plans administrated by labor unions representing some of our employees. We make periodic contributions to these plans to allow them to meet their pension benefit obligations to their participants. In the event that we withdrew from participation in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, and we would have to reflect that in expense and as a liability on our balance sheet. Our withdrawal liability for any multiemployer plan would depend on the extent of the plan's funding of vested benefits. We currently do not expect to incur any withdrawal liability in the near future. However, in the ordinary course of our renegotiation of collective bargaining agreements with labor unions that maintain these plans, we could decide to discontinue participation in a plan, and in that event we could face a withdrawal liability. Some multiemployer plans, including one in which we participate, are reported to have significant underfunded liabilities. Such underfunding could increase the size of our potential withdrawal liability.

Other Postretirement Benefits

We provide limited postretirement health care and life insurance for employees of our domestic operations with hire dates prior to January 1, 1990. There are no plan assets associated with this plan. We provide for these postretirement costs through monthly accruals. The net periodic postretirement benefit cost for the year ended December 31, 2005 was $1.6 million and the accumulated benefit obligation as of December 31, 2005 was $18.2 million compared to postretirement benefit cost of $1.6 million and an accumulated benefit obligation of $17.3 million as of December 31, 2004. The increase in the accumulated benefit obligation was primarily attributable to the decrease in the discount rate from 5.75% as of December 31, 2004 to 5.50% as of December 31, 2005.

Hertz Holdings Stock Incentive Plan

On February 15, 2006, our Board of Directors and that of Hertz Holdings jointly approved the Hertz Global Holdings, Inc. Stock Incentive Plan, or the "Stock Incentive Plan." The Stock Incentive Plan provides for the sale of shares of Hertz Holdings stock to our named executive officers, other key employees and directors as well as the grant of stock options to purchase shares of Hertz Holdings to those individuals. The Board of Directors of Hertz Holdings, or a committee designated by it, selects the officers, employees and directors eligible to participate in the Stock Incentive Plan and either the Board or the Compensation Committee of Hertz Holdings may determine the specific number of shares to be offered or options to be granted to an individual employee or director. A maximum of 25 million shares are reserved for issuance under the Stock Incentive Plan. The Stock Incentive Plan was approved by the shareholders of Hertz Holdings on March 8, 2006.

All option grants will be non-qualified options with a per-share exercise price no less than fair market value of one share of Hertz Holdings stock on the grant date. Any stock options granted will generally have a term of ten years, and unless otherwise determined by the Board or the Compensation Committee of Hertz Holdings, will vest in five equal annual installments. The Board or Compensation Committee may accelerate the vesting of an option at any time. In addition, vesting of options will be accelerated if Hertz Holdings experiences a change in control (as defined in the Stock Incentive Plan) unless options with substantially equivalent terms and economic value are substituted for existing options in place of accelerated vesting. Vesting of options will also be accelerated in the event of an employee's death or disability (as defined in the Stock Incentive Plan). Upon a termination for cause (as defined in the Stock Incentive Plan), all options held by an employee are immediately cancelled. Following a termination without cause, vested options will generally remain exercisable through the earliest of the expiration of their term or 60 days following termination of employment (180 days in the case of death, disability or retirement at normal retirement age.)

Unless sooner terminated by our Board of Directors, the Stock Incentive Plan will remain in effect until February 15, 2016.

Hertz Holdings is currently conducting an equity offering to approximately 350 of our executives and key employees. Any shares sold or options granted to our employees in connection with this equity offering will be subject to and governed by the terms of the Hertz Holdings Stock Incentive Plan. The offering is expected to close on or about April 28, 2006.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board, or "FASB," issued FASB Staff Position No. 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004," or "FSP 109-2." FSP 109-2 provides accounting guidance for non-U.S. earnings that are repatriated under the American Jobs Creation Act of 2004. SFAS No. 109, "Accounting for Income Taxes," requires a company to reflect in the period of enactment the effect of a new tax law. During December 2005, in connection with Ford pre-sale activities and to obtain the benefit of favorable one-time tax treatment of distributions offered by the American Jobs Creation Act of 2004, dividends of $547.8 million were recognized, of which $216.9 million were cash dividends and $330.9 million were deemed dividends for tax purposes. The deemed dividends relate to undistributed foreign earnings which are no longer considered to be permanently reinvested. These dividends generated $168.2 million of tax expense, of which $136.9 million was offset by foreign tax credits, resulting in a net tax expense of $31.3 million.

a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Changes in fair value during the requisite service period are to be recognized as compensation cost over that period. The provisions of the revised statement are effective for financial statements issued for the first annual reporting period beginning after June 15, 2005. In March 2005, the SEC issued Staff Accounting Bulletin No. 107, or "SAB No. 107," regarding the SEC Staff's interpretation of the revised statement. SAB No. 107 provides the Staff's views regarding interactions between the revised statement and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. We have accounted for our employee stock-based compensation awards in accordance with SFAS No. 123. Adoption of the revised statement is not expected to have a significant effect on our financial position, results of operations or cash flows.

In March 2005, the FASB issued Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations," or "FIN 47." FIN 47 clarifies that liabilities associated with asset retirement obligations whose timing or settlement method are conditional upon future events should be recognized at fair value as soon as fair value is reasonably estimable. FIN 47 also provides guidance on the information required to reasonably estimate the fair value of the liability. FIN 47 was effective no later than December 31, 2005, and did not have a material impact on our financial position, results of operations or cash flows.

In May 2005, FASB issued SFAS No. 154, "Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3." Previously, APB No. 20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements" required the inclusion of the cumulative effect of changes in accounting principle in net income of the period of the change. SFAS No. 154 requires companies to recognize changes in accounting principle, including changes required by a new accounting pronouncement when the pronouncement does not include specific transition provisions, retrospectively to prior periods' financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We are required to adopt the provisions of SFAS No. 154, as applicable, beginning in fiscal year 2006. We do not currently anticipate making any accounting changes which would be governed by this statement.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

See "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risks," which appears on pages 27 and 28 of this Amendment.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To The Board of Directors and
Shareholder of The Hertz Corporation:

We have completed an integrated audit of The Hertz Corporation's 2005 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005 in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audit, are presented below.

Consolidated financial statements and financial statement schedules

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of The Hertz Corporation and its subsidiaries (Successor Company) at December 31, 2005, and the results of their operations and their cash flows for the period from December 21, 2005 to December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management's assessment, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established inInternal Control—Integrated Framework issued by the COSO. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of

internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
April 4, 2006, except for Financial Statement Schedule I, as to which the date is April 28, 2006

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To The Board of Directors and
Shareholder of The Hertz Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of The Hertz Corporation and its subsidiaries (Predecessor Company) at December 31, 2004, and the results of their operations and their cash flows for the period from January 1, 2005 to December 20, 2005 and for each of the two years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1A to the consolidated financial statements, the Predecessor Company restated its financial statements for the period from January 1, 2005 to December 20, 2005.

/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
April 4, 2006, except for Financial Statement Schedule I, as to which the date is April 28, 2006, and Note 1A, as to which the date is July 14, 2006

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in Thousands of Dollars)

				Successor December 31, 2005			Predecessor December 31, 2004
ASSETS
Cash and equivalents				$	843,908		$	677,965
Restricted cash					289,201			2,901
Short-term investments					—			556,997
Receivables, less allowance for doubtful accounts of $460 and $30,447					1,823,188			1,282,290
Due from affiliates					—			445,235
Inventories, at lower of cost or market					105,532			83,287
Prepaid expenses and other assets					396,415			144,168
Revenue earning equipment, at cost:
	Cars				7,439,579			8,380,688
		Less accumulated depreciation			(40,114	)		(783,499	)
	Other equipment				2,083,299			2,378,673
		Less accumulated depreciation			(7,799	)		(852,947	)

			Total revenue earning equipment		9,474,965			9,122,915

Property and equipment, at cost:
	Land, buildings and leasehold improvements				921,421			1,296,196
	Service equipment				474,110			1,232,739

					1,395,531			2,528,935
	Less accumulated depreciation				(5,507	)		(1,292,764	)

			Total property and equipment		1,390,024			1,236,171

Other intangible assets, net					3,235,265			1,570
Goodwill					1,022,381			542,875

			Total assets	$	18,580,879		$	14,096,374

LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable				$	621,876		$	786,037
Accrued salaries and other compensation					433,636			348,594
Other accrued liabilities					446,292			487,086
Accrued taxes					115,462			130,062
Debt					12,515,005			8,428,031
Public liability and property damage					320,955			391,696
Deferred taxes on income					1,852,542			849,700

			Total liabilities		16,305,768			11,421,206

Commitments and contingencies
Minority interest					8,929			4,921
Stockholder's equity:
	Common Stock, $0.01 par value, 3,000 shares authorized, 100 shares issued				—			—
Additional capital paid-in					2,295,000			983,132
Retained earnings (deficit)					(21,346	)		1,479,217
Accumulated other comprehensive (loss) income					(7,472	)		207,898

			Total stockholder's equity		2,266,182			2,670,247

			Total liabilities and stockholder's equity	$	18,580,879		$	14,096,374

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

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in Thousands of Dollars)

				Successor			Predecessor			Predecessor
				For the periods from						Years ended December 31,
				December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
Revenues:
	Car rental			$	129,448		$	5,820,473		$	5,430,805		$	4,819,255
	Equipment rental				22,430			1,392,461			1,161,955			1,037,754
	Other				2,591			101,811			83,192			76,661

		Total revenues			154,469			7,314,745			6,675,952			5,933,670

Expenses:
	Direct operating				102,958			4,086,344			3,734,361			3,316,101
	Depreciation of revenue earning equipment				43,827			1,555,862			1,463,258			1,523,391
	Selling, general and administrative				15,167			623,386			591,317			501,643
	Interest, net of interest income of $1,077, $36,156, $23,707 and $17,881				25,735			474,247			384,464			355,043

			Total expenses		187,687			6,739,839			6,173,400			5,696,178

Income (loss) before income taxes and minority interest					(33,218	)		574,906			502,552			237,492
(Provision) benefit for taxes on income					12,243			(191,332	)		(133,870	)		(78,877	)
Minority interest					(371	)		(12,251	)		(3,211	)		—

Net income (loss)				$	(21,346	)	$	371,323		$	365,471		$	158,615

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

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(in Thousands of Dollars)

				Common Stock		Additional Capital Paid-In		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholder's Equity
Predecessor
Balance at:
DECEMBER 31, 2002				$	—	$	983,132	$	955,131		$	(16,376	)	$	1,921,887
		Net income							158,615						158,615
		Translation adjustment changes										149,037			149,037
		Unrealized holding losses on securities, net of tax of $61										(551	)		(551	)
		Minimum pension liability adjustment, net of tax of $1,748										(3,597	)		(3,597	)

			Total Comprehensive Income												303,504

DECEMBER 31, 2003					—		983,132		1,113,746			128,513			2,225,391
		Net income							365,471						365,471
		Translation adjustment changes										83,420			83,420
		Unrealized holding losses on securities, net of tax of $8										(82	)		(82	)
		Minimum pension liability adjustment, net of tax of $1,076										(3,953	)		(3,953	)

			Total Comprehensive Income												444,856

DECEMBER 31, 2004					—		983,132		1,479,217			207,898			2,670,247
		Net income (as restated)							371,323						371,323
		Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $281										424			424
		Translation adjustment changes										(123,893	)		(123,893	)
		Unrealized holding losses on securities, net of tax of $5										(37	)		(37	)
		Minimum pension liability adjustment, net of tax of $5,891										(12,076	)		(12,076	)

			Total Comprehensive Income												235,741
	Dividend to Ford Motor Company								(1,185,000	)					(1,185,000	)

DECEMBER 20, 2005, as restated					—		983,132		665,540			72,316			1,720,988

Successor
Balance at:
DECEMBER 21, 2005					—		—		—			—			—
	Capital contribution						2,295,000								2,295,000
		Net loss							(21,346	)					(21,346	)
		Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $2,704										(4,078	)		(4,078	)
		Translation adjustment changes										(3,394	)		(3,394	)

			Total Comprehensive Loss												(28,818	)

DECEMBER 31, 2005				$	—	$	2,295,000	$	(21,346	)	$	(7,472	)	$	2,266,182

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

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in Thousands of Dollars)

			Successor			Predecessor			Predecessor
			For the periods from
			For the periods from						Years ended December 31,
						January 1, 2005 to December 20, 2005 Restated			Years ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
Cash flows from operating activities:
	Net income (loss)		$	(21,346	)	$	371,323		$	365,471		$	158,615
	Non-cash expenses:
		Depreciation of revenue earning equipment		43,827			1,555,862			1,463,258			1,523,391
		Depreciation of property and equipment		5,511			182,363			177,597			151,706
		Amortization of other intangibles		2,075			749			607			1,024
		Amortization of deferred financing costs		1,304			5,299			4,960			4,046
		Amortization of debt discount		456			1,999			2,543			2,177
		Stock-based employee compensation		—			10,496			5,584			6,039
		Provision for public liability and property damage		1,918			158,050			153,139			178,292
		Provision for losses for doubtful accounts		462			11,447			14,133			23,053
		Minority interest		371			12,251			3,211			—
		Deferred income taxes		(12,243	)		(411,461	)		129,576			260,848
	Changes in assets and liabilities, net of effects of acquisition:
		Receivables		(121,497	)		(547,302	)		57,303			(95,527	)
		Due from affiliates		107,791			83,868			75,607			(269,543	)
		Inventories and prepaid expenses and other assets		(166,545	)		(134,052	)		(27,778	)		(10,204	)
		Accounts payable		(58,565	)		(41,290	)		(58,318	)		182,264
		Accrued liabilities		(52,157	)		51,364			50,831			(111,439	)
		Accrued taxes		1,881			572,452			12,315			49,825
Payments of public liability and property damage claims and expenses				(7,938	)		(155,904	)		(178,654	)		(155,241	)

Net cash flows provided by (used in) operating activities			$	(274,695	)	$	1,727,514		$	2,251,385		$	1,899,326

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

			Successor			Predecessor			Predecessor
			For the periods from
						January 1, 2005 to December 20, 2005 Restated
			December 21, 2005 to December 31, 2005						Years ended December 31,
			December 21, 2005 to December 31, 2005						2004			2003
Cash flows from investing activities:
	Net change in restricted cash		$	(273,640	)	$	(12,660	)	$	(2,901	)	$	—
	Purchase predecessor company stock			(4,379,374	)		—			—			—
	Proceeds from sales (purchases) of short-term investments, net			—			556,997			(56,889	)		(500,108	)
	Revenue earning equipment expenditures			(234,757	)		(12,186,205	)		(11,310,032	)		(9,436,581	)
	Proceeds from disposal of revenue earning equipment			199,711			10,106,260			8,740,920			7,874,414
	Property and equipment expenditures			(8,503	)		(334,543	)		(286,428	)		(226,747	)
	Proceeds from disposal of property and equipment			1,246			72,572			59,253			54,638
	Available-for-sale securities:
		Purchases		—			(243	)		(11,261	)		(12,114	)
		Sales		—			245			19,448			10,246
	Changes in investment in joint venture			—			—			2,000			5,640

		Net cash used in investing activities		(4,695,317	)		(1,797,577	)		(2,845,890	)		(2,230,612	)

Cash flows from financing activities:
	Issuance of an intercompany note			—			1,185,000			—			—
	Proceeds from issuance of long-term debt			8,641,068			27,162			1,985,981			510,853
	Repayment of long-term debt			(5,118,559	)		(619,402	)		(913,635	)		(712,057	)
	Short-term borrowings:
		Proceeds		10,333			3,208,085			1,382,587			1,094,152
		Repayments		(1,357,614	)		(2,263,346	)		(973,659	)		(721,333	)
		Ninety-day term or less, net		364,009			270,715			(846,780	)		130,294
	Dividends paid			—			(1,185,000	)		—			—
	Capital invested by parent			2,295,000			—			—			—
	Payment of financing costs			(192,419	)		—			—			—

		Net cash provided by financing activities		4,641,818			623,214			634,494			301,909

Effect of foreign exchange rate changes on cash				(1,894	)		(57,120	)		27,990			38,100

Net increase (decrease) in cash and equivalents during the period				(330,088	)		496,031			67,979			8,723
Cash and equivalents at beginning of period				1,173,996			677,965			609,986			601,263

Cash and equivalents at end of period			$	843,908		$	1,173,996		$	677,965		$	609,986

Supplemental disclosures of cash flow information:
	Cash paid (received) during the period for:
		Interest (net of amounts capitalized)	$	124,005		$	416,436		$	377,279		$	357,585
Income taxes				(379	)		29,883			(4,149	)		31,481
Non-cash transactions reclassified for cash flow presentation:
	Revaluation of net assets to fair market value, net of tax		$	2,145,563			—			—			—
	Non-cash settlement of outstanding balances with Ford			112,490			—			—			—

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

THE HERTZ CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Summary of Significant Accounting Policies

Background and Change in Ownership

The Hertz Corporation, together with its subsidiaries, are referred to herein as "we," "our" and "us." The Hertz Corporation is referred to herein as "Hertz."

Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the automobile and truck rental and leasing business since 1918. Ford Motor Company, or "Ford," first acquired an ownership interest in us in 1987. Previously, we had been a subsidiary of UAL Corporation (formerly Allegis Corporation), which had acquired our outstanding capital stock from RCA Corporation in 1985. We became a wholly owned subsidiary of Ford as a result of a series of transactions in 1993 and 1994. We continued as a wholly owned subsidiary of Ford until April 1997. In 1997, we completed a public offering of approximately 50.6% of our Class A Common Stock, or the "Class A Common Stock," which represented approximately 19.1% of our economic interest. In March 2001, Ford, through a subsidiary, acquired all of our outstanding Class A Common Stock that it did not already own for $35.50 per share, or approximately $735 million. As a result of that acquisition, our Class A Common Stock ceased to be traded on the New York Stock Exchange. However, because certain of our debt securities were sold through public offerings, we continued to file periodic reports under the Securities Exchange Act of 1934.

On December 21, 2005, or the "Closing Date," investment funds associated with or designated by Clayton, Dubilier & Rice, Inc., The Carlyle Group and Merrill Lynch Global Private Equity, or collectively the "Sponsors," through an indirect, wholly owned subsidiary of Hertz Global Holdings, Inc. or "Hertz Holdings," acquired all of our common stock from a subsidiary of Ford, or the "Acquisition," for aggregate consideration of $4,379 million in cash and debt refinanced or assumed of $10,116 million and estimated transaction fees and expenses of $439 million. To finance the cash consideration for the Acquisition, to refinance certain of our existing indebtedness and to pay related transaction fees and expenses, or the "Transactions," the Sponsors used:

•: equity contributions totaling $2,295 million from the investment funds associated with or designated by the Sponsors;
•: net proceeds from a private placement by CCMG Acquisition Corporation, a wholly owned subsidiary of Hertz Holdings, of $1,800 million aggregate principal amount of 8.875% Senior Notes due 2014, or the "Senior Dollar Notes," $600 million aggregate principal amount of 10.5% Senior Subordinated Notes due 2016, or the "Senior Subordinated Notes," and €225 million aggregate principal amount of 7.875% Senior Notes due 2014, or the "Senior Euro Notes." In connection with the Transactions, CCMG Acquisition Corporation merged with and into Hertz, with Hertz as the surviving corporation of the merger. We refer to the Senior Dollar Notes, the Senior Subordinated Notes and the Senior Euro Notes together as the "Notes.";
•: aggregate borrowings of approximately $1,707 million by us under a new senior term facility, or the "Senior Term Facility," which consists of (a) a maximum borrowing capacity of $2,000 million, including a delayed draw facility of $293 million that may be drawn until August 2007 to refinance certain existing debt and (b) a synthetic letter of credit facility in an aggregate principal amount of $250 million;
•: aggregate borrowings of approximately $400 million by Hertz and one of its Canadian subsidiaries under a new senior asset-based revolving loan facility, or the "Senior ABL Facility,"

with a maximum borrowing capacity of $1,600 million. We refer to the Senior Term Facility and the Senior ABL Facility together as the "Senior Credit Facilities.";

•: aggregate proceeds of offerings totaling approximately $4,300 million by a special purpose entity wholly owned by us of asset-backed securities backed by our U.S. car rental fleet, or the "U.S. Fleet Debt," all of which we issued under our existing asset-backed notes program, or the "ABS Program"; under which an additional $600 million of previously issued asset-backed medium term notes having maturities from 2007 to 2009 remain outstanding following the closing of the Transactions, and in connection with which approximately $1,500 million of variable funding notes in two series were also issued, but not funded, on the closing date of the Acquisition;
•: aggregate borrowings of the U.S. dollar equivalent of approximately $1,781 million by certain of our foreign subsidiaries under asset-based revolving loan facilities with aggregate commitments equivalent to approximately $2,930 million (calculated in each case at December 31, 2005), subject to borrowing bases comprised of rental vehicles, rental equipment, and related assets of certain of our foreign subsidiaries, (substantially all of which are organized outside of the United States) or one or more special purpose entities, as the case may be, and, rental equipment and related assets of certain of our subsidiaries organized outside North America or one or more special purpose entities, as the case may be, which facilities (together with certain capital lease obligations) are referred to collectively as the "International Fleet Debt"; and
•: our cash on hand.

At December 31, 2005, 100% of Hertz's outstanding capital stock is owned by CCMG Corporation, and 100% of CCMG Corporation's capital stock is owned by Hertz Holdings.

The term "Successor" refers to us following the Acquisition. The term "Predecessor" refers to us prior to the Acquisition. CCMG Acquisition Corporation had no operations prior to the Acquisition. The "Successor period ended December 31, 2005," refers to the period from December 21, 2005 to December 31, 2005 and the "Predecessor period ended December 20, 2005" refers to the period from January 1, 2005 to December 20, 2005.

The Acquisition was recorded by allocating the cost of the assets acquired, including intangible assets and liabilities assumed, based on their estimated fair values at the Acquisition date. Consequently, the excess of the cost of the Acquisition over the net of amounts assigned to the fair value of assets acquired and the liabilities assumed is recorded to goodwill.

The Acquisition has been accounted for as a purchase in accordance with SFAS No. 141, "Business Combinations," with intangible assets recorded in conformity with SFAS No. 142, "Goodwill and Other Intangible Assets," requiring an allocation of the purchase price to the tangible and intangible net assets acquired based on their relative fair values as of the date of acquisition. The preliminary allocation of purchase price is based on management's judgment after evaluating several factors, including actuarial estimates for pension liabilities, fair values of our indebtedness and other liabilities, and valuation assessments of our tangible and intangible assets prepared by a valuation specialist.

The following table summarizes the estimated fair values of the assets purchased and liabilities assumed in the Acquisition (in millions of dollars):

Cash, cash equivalents and restricted cash	$	1,184
Receivables		1,813
Inventories		104
Prepaid expenses and other assets		405
Revenue earning equipment, cars		7,415
Revenue earning equipment, other equipment		2,075
Property and equipment		1,390
Other intangible assets		3,237
Goodwill		1,022
Accounts payable and accrued liabilities		(1,662	)
Debt		(12,512	)
Public liability and property damage		(327	)
Deferred taxes on income		(1,840	)
Minority interest		(9	)

Total contributed capital	$	2,295

The following table summarizes the preliminary allocation of the Acquisition purchase price (in millions of dollars):

Purchase price allocation:
Purchase price				$	14,495
Estimated transaction fees and expenses					439

Total cash estimated purchase price					14,934
Less:
	Debt refinanced	$	8,346
	Assumption of remaining existing debt		1,770
	Fair value adjustment to tangible assets		247
	Other intangible assets acquired		3,237
	Deferred financing fees		312		13,912

Excess purchase price attributed to goodwill				$	1,022

The purchase price allocation reflected above is preliminary and subject to finalization. At the time of the Acquisition, no election was made under Section 338(h)(10) of the Internal Revenue Code. Such an election, which requires the consent of Ford, can be made on or prior to September 15, 2006 and may increase the purchase price. The effect of such an election for tax purposes, if made, would be to treat the Acquisition as the purchase of assets rather than stock, increasing the tax basis of certain assets held by the Hertz group. As a result, the deferred taxes related to the acquired intangible assets (other than goodwill, for which no deferred taxes are provided) would be eliminated and goodwill would be reduced to the extent of the elimination of the deferred tax liability. At this time, it is unclear whether any such election will be made.

Principles of Consolidation

The consolidated financial statements include the accounts of The Hertz Corporation and our domestic and foreign subsidiaries. All significant intercompany transactions have been eliminated.

Revenue Recognition

Rental and rental-related revenue (including cost reimbursements from customers where we consider ourself to be the principal versus an agent) are recognized over the period the revenue earning equipment is rented based on the terms of the rental or leasing contract.

Cash and Equivalents

We consider all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

Restricted cash includes cash and investments that are not readily available for our normal disbursements. Restricted cash and investments are restricted for the acquisition of vehicles and other specified uses under our asset backed notes program and to satisfy certain of our self insurance reserve requirements.

Depreciable Assets

The provisions for depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the respective assets, as follows:

Revenue Earning Equipment:
	Cars	6 to 16 months
	Other equipment	36 to 96 months
Buildings		20 to 50 years
Capitalized internal use software		1 to 10 years
Service cars and service equipment		3 to 25 years
Other intangible assets		5 to 10 years
Leasehold improvements		The shorter of their economic lives or the lease term.

We follow the practice of charging maintenance and repairs, including the cost of minor replacements, to maintenance expense accounts. Costs of major replacements of units of property are capitalized to property and equipment accounts and depreciated on the basis indicated above. Gains and losses on dispositions of property and equipment are included in income as realized. When revenue earning equipment is acquired, we estimate the period we will hold the asset. Depreciation is recorded on a straight-line basis over the estimated holding period, with the objective of minimizing gain or loss on the disposition of the revenue earning equipment. Upon disposal of the revenue earning equipment, depreciation expense is adjusted for the difference between the net proceeds received and the remaining book value. As market conditions change, we adjust our depreciation rates prospectively, over the remaining holding period, to reflect these changes in market conditions.

Environmental Liabilities

The use of automobiles and other vehicles is subject to various governmental controls designed to limit environmental damage, including that caused by emissions and noise. Generally, these controls are met by the manufacturer, except in the case of occasional equipment failure requiring repair by us. To comply with environmental regulations, measures are taken at certain locations to reduce the loss of vapor during the fueling process and to maintain, upgrade and replace underground fuel storage tanks. We also incur and provide for expenses for the cleanup of petroleum discharges and other alleged violations of environmental laws arising from the disposition of waste products. We do not believe that we will be required to make any material capital expenditures for environmental control facilities or to make any other material expenditures to meet the requirements of governmental authorities in this area. Liabilities for these expenditures are recorded at undiscounted amounts when it is probable that obligations have been incurred and the amounts can be reasonably estimated.

Public Liability and Property Damage

Provisions for public liability and property damage on self-insured domestic and international claims are made by charges to expense based upon evaluations of estimated ultimate liabilities on reported and unreported claims. The related liabilities are recorded on a non-discounted basis. Reserve requirements are based on actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. As of the Acquisition date, this liability was revalued on a discounted basis which approximated its fair value.

Pensions

Our employee pension costs and obligations are dependent on our assumptions used by actuaries in calculating such amounts. These assumptions include discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense and recorded obligation in such future periods. While we believe that the assumptions used are appropriate, significant differences in actual experience or significant changes in assumptions would affect our pension costs and obligations. Effective with the Acquisition, the assignment of the purchase price to individual assets acquired and liabilities assumed included a liability for the projected benefit obligation in excess of plan assets which eliminated any previously existing unrecognized net gain or loss, or unrecognized prior service cost.

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average rate of exchange prevailing during the year. The related translation adjustments are reflected in "Accumulated other comprehensive income (loss)" in the stockholder's equity section of the consolidated balance sheet. As of December 31, 2005 the accumulated foreign currency translation loss was $3.4 million and as of December 31, 2004 the accumulated foreign currency gain was of $223.0 million. On the Acquisition date, the existing accumulated foreign currency translation gains and losses were eliminated from "Accumulated other comprehensive income (loss)" on our consolidated balance sheet. Foreign currency gains and losses resulting from transactions are included in earnings.

Income Taxes

Prior to the Acquisition, we and our domestic subsidiaries filed consolidated Federal income tax returns with Ford. We provided for current and deferred taxes as if we filed a separate consolidated tax return with our domestic subsidiaries, except that under a tax sharing arrangement with Ford, our right to reimbursement for foreign tax credits was determined based on the usage of such foreign tax credits by the consolidated group. On December 21, 2005, in connection with the Acquisition, we terminated our tax sharing agreement with Ford. Prior to December 21, 2005, we repatriated $547.8 million of undistributed earnings. As of December 31, 2005, no provision has been made with respect to U.S. income taxes on $460.1 million in undistributed earnings of foreign subsidiaries that have been or are intended to be indefinitely reinvested outside the United States or are expected to be remitted free of taxes.

Advertising

Advertising and sales promotion costs are expensed as incurred.

Impairment of Long-Lived Assets and Intangibles

We evaluate the carrying value of goodwill for impairment at least annually in accordance with Financial Accounting Standards Board, or "FASB," Statement of Financial Accounting Standards, or "SFAS," No. 142 "Goodwill and Other Intangible Assets." See Note 2—Goodwill and Other Intangible Assets. Long-lived assets, other than goodwill, are reviewed for impairment in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Under SFAS No. 144, these assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amounts of long-lived assets may not be recoverable. The carrying amounts of the assets are based upon our estimates of the undiscounted cash flows that are expected to result from the use and eventual disposition of the assets. An impairment charge is recognized for the amount, if any, by which the carrying value of an asset exceeds its fair value.

Stock Options (Predecessor only)

Prior to the Acquisition, certain of our employees were granted options to purchase shares of Ford common stock under Ford's 1998 Long-Term Incentive Plan, or the "1998 Plan." Effective January 1, 2003, we adopted the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under the modified prospective method of adoption we selected under the provisions of SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure," stock-based employee compensation expense recognized in 2003 is the same as that which would have been recognized had the fair value recognition provisions of SFAS No. 123 been applied to all awards from its original effective date.

Effective with the Acquisition, all unvested options became vested and exercisable. The total stock-based compensation expense, net of related tax effects, was $6.8 million for the Predecessor period ended December 20, 2005, $3.6 million for the year ended December 31, 2004 and $3.9 million for the year ended December 31, 2003.

The fair values for these options were estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions used for grants in 2005, 2004 and 2003: risk-free interest rate of 4.4%, 3.4% and 3.7%, respectively; volatility factors of 42%, 42% and 39%, respectively; dividend yields of 3.2%, 3.0% and 5.3%, respectively; and an average expected life of the options of seven years for 2005, 2004 and 2003.

Use of Estimates and Assumptions

Use of estimates and assumptions as determined by management is required in the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates and assumptions.

Reclassifications

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

Recent Accounting Pronouncements

In December 2004, the FASB issued FASB Staff Position No. 109-2, "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004," or "FSP 109-2." FSP 109-2 provides accounting guidance for non-U.S. earnings that are repatriated under the American Jobs Creation Act of 2004. SFAS No. 109, "Accounting for Income Taxes," requires a company to reflect in the period of enactment the effect of a new tax law. During December 2005, in connection with Ford pre-sale activities and to obtain the benefit of favorable one-time tax treatment of distributions offered by the American Jobs Creation Act of 2004, dividends of $547.8 million were recognized, of which $216.9 million were cash dividends and $330.9 million were deemed dividends for tax purposes. The deemed dividends relate to undistributed foreign earnings which are no longer considered to be permanently reinvested. These dividends generated $168.2 million of tax expense, of which $136.9 million was offset by foreign tax credits, resulting in a net tax expense of $31.3 million.

In December 2004, the FASB revised its SFAS No. 123, with SFAS No. 123R, "Accounting for Stock-Based Compensation." The revision establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services, particularly transactions in which an entity obtains employee services in share-based payment transactions. The revised statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Changes in fair value during the requisite service period are to be recognized as compensation cost over that period. The provisions of the revised statement are effective for financial statements issued for the first annual reporting period beginning after June 15, 2005. In March 2005, the United States Securities and Exchange Commission, or the "SEC," issued Staff Accounting Bulletin No. 107, or "SAB No. 107," regarding the SEC Staff's interpretation of the revised statement. SAB No. 107 provides the Staff's views regarding interactions between the revised statement and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. We have accounted for our employee stock-based compensation awards in accordance with SFAS No. 123. Adoption of the revised statement is not expected to have a significant effect on our financial position, results of operations or cash flows.

than December 31, 2005, and did not have a material impact on our financial position, results of operations or cash flows.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3." Previously, APB No. 20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements" required the inclusion of the cumulative effect of changes in accounting principle in net income of the period of the change. SFAS No. 154 requires companies to recognize changes in accounting principle, including changes required by a new accounting pronouncement when the pronouncement does not include specific transition provisions, retrospectively to prior periods' financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We are required to adopt the provisions of SFAS No. 154, as applicable, beginning in fiscal year 2006. We do not currently anticipate making any accounting changes which would be governed by this statement.

Note 1A—Restatement of Predecessor Financial Statements

We are restating our previously issued consolidated statements of operations, stockholder's equity and cash flows for the Predecessor period ended December 20, 2005, or the "Restatement." The Restatement revises, in accordance with Accounting Principles Board Opinion No. 20, "Accounting Changes," our tax provision on repatriated foreign earnings.

	Predecessor
	January 1, 2005 To December 20, 2005
	As Reported			As Restated
Provision for taxes on income	$	(163,832	)	$	(191,332	)
Net income		398,823			371,323

Note 2—Goodwill and Other Intangible Assets

We account for our goodwill under SFAS No. 142 "Goodwill and Other Intangible Assets." Under SFAS No. 142, goodwill is no longer amortized, but instead must be tested for impairment at least annually. We conducted the required annual goodwill impairment test in the second quarter of 2005 and determined that there was no impairment. Certain other intangible assets are amortized over their estimated useful lives.

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

Predecessor		Car Rental			Equipment Rental			Total
Balance as of January 1, 2004		$	364,160		$	170,966		$	535,126
	Other changes⁽¹⁾		1,447			6,302			7,749

Balance as of December 31, 2004			365,607			177,268			542,875
	Other changes⁽¹⁾		(1,740	)		(6,441	)		(8,181	)

Balance as of December 20, 2005		$	363,867		$	170,827		$	534,694

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

The following summarizes the goodwill established as of the date of the Acquisition and a rollforward of goodwill to December 31, 2005 as reflected in the accompanying consolidated balance sheet (in thousands of dollars):

Successor		Car Rental			Equipment Rental		Total
Balance as of December 20, 2005		$	363,867		$	170,827	$	534,694
	Change as result of purchase accounting adjustments		29,555			458,112		487,667
	Other changes⁽¹⁾		(27	)		47		20

Balance as of December 31, 2005		$	393,395		$	628,986	$	1,022,381

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

Other intangible assets consisted of the following major classes as of December 31, 2005 (in thousands of dollars):

			Successor
			As of December 31, 2005
			Weighted-average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value
Amortized intangible assets:
	Customer-related		10 years	$	612,000	$	(1,844	)	$	610,156
	Other		various		1,209		(100	)		1,109

		Total			613,209		(1,944	)		611,265

Indefinite-lived intangible assets:
	Trade name				2,624,000					2,624,000

	Total other intangible assets			$	3,237,209	$	(1,944	)	$	3,235,265

A valuation study is being finalized by an independent third party in order to value the various intangible assets as of December 21, 2005. As noted previously, the purchase allocation is preliminary and subject to change.

Other intangible assets, net as of December 31, 2004 totaled $1.6 million and were primarily comprised of leaseholds, non-compete agreements and acquisitions of licensees.

Amortization of other intangible assets for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and December 31, 2003 was $2.1 million, $0.7 million, $0.6 million and $1.0 million, respectively. Future amortization expense of other intangible assets is expected to be approximately $61.2 million per year for each of the next five years.

Note 3—Debt

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

			Successor		Predecessor
			December 31,
			2005		2004
Senior term facility, average interest rate: 2005, 8.5% (effective average interest rate: 2005, 8.7%); net of unamortized discount: 2005, $44,806			$	1,662,194	$	—
Senior ABL facility, average interest rate: 2005, 6.5% (effective average interest rate: 2005, 6.9%); net of unamortized discount: 2005, $27,832				471,202		—
Senior notes, average interest rate: 2005, 8.7% (effective average interest rate: 2005, 8.7%);				2,066,083		—
Senior subordinated notes, average interest rate: 2005, 10.5% (effective average interest rate: 2005, 10.5%);				600,000		—
U.S. fleet debt, average interest rate: 2005, 4.4%; 2004, 2.8% (effective average interest rate: 2005, 4.4%; 2004, 2.8%); net of unamortized discount: 2005, $19,822; 2004, $90				4,920,178		599,910
International fleet debt in foreign currencies, average interest rate: 2005, 4.4% (effective average interest rate: 2005, 4.5%); net of unamortized discount: 2005, $16,063				1,736,143		—
Notes payable, including commercial paper, average interest rate: 2005, 4.3%; 2004, 2.4%				100,362		993,856
Promissory notes, average interest rate: 2005, 6.9%; 2004, 6.5% (effective average interest rate: 2005, 7.0%; 2004, 6.5%); net of unamortized discount: 2005, $4,875; 2004, $10,874; due 2006 to 2028				798,422		5,100,533
Foreign subsidiaries' debt in foreign currencies:
	Short-term borrowings:
		Banks, average interest rate: 2005, 4.7%; 2004, 3.5%		70,286		667,678
		Commercial paper, average interest rate: 2005, 2.8%; 2004, 2.5%		47,284		787,660
	Other borrowings, average interest rate: 2005, 3.6%; 2004, 3.3%			42,851		278,394

Total			$	12,515,005	$	8,428,031

The aggregate amounts of maturities of debt, in millions, are as follows: 2006, $2,774.9 (including $2,555.3 of commercial paper and other short-term borrowings); 2007, $377.9; 2008, $686.8; 2009, $1,050.5; 2010, $3,049.1; after 2010, $4,718.7.

During the year ended December 31, 2005, short-term borrowings, in millions, were as follows: maximum amounts outstanding of $2,052.7 of commercial paper and $3,113.7 of bank borrowings; monthly average amounts outstanding of $1,569.5 of commercial paper (weighted-average interest rate 3.1%) and $1,798.3 of bank borrowings (weighted-average interest rate 5.2%).

During the year ended December 31, 2004, short-term borrowings, in millions, were as follows: maximum amounts outstanding $2,851.8 of commercial paper and $755.3 of bank borrowings; monthly average amounts outstanding of $2,140.9 of commercial paper (weighted-average interest rate 2.0%) and $542.4 of bank borrowings (weighted-average interest rate 3.3%).

The net amortized discount charged to interest expense for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended

December 31, 2004 and 2003 relating to debt and other liabilities, in millions of dollars, was $6.4, $6.1, $2.3 and $2.1, respectively.

As of December 31, 2005, we had issued standby letters of credit totaling $215.1 million, primarily to support self-insurance programs (including insurance policies with respect to which we have indemnified the issuers for any losses) in the United States, Canada and in Europe and to support airport concession obligations in the United States and Canada. The full amount of these letters of credit was undrawn.

As of December 31, 2005, a total of $200.0 million in letters of credit had been issued under our Asset Backed Securitization program, or the "ABS program," the full amount of which was undrawn.

As of December 31, 2005, we had an aggregate principal amount of approximately $803.3 million outstanding in senior debt securities issued under three separate indentures and approximately €7.6 million in aggregate principal amount of Euro medium term notes (as discussed below). This remaining outstanding senior debt amount includes the untendered principal amounts on the 4.7% and 6.35% senior promissory notes and the $500.0 million of promissory notes discussed below. Hertz received tenders from holders of approximately $3,701.3 million of existing senior notes and approximately €192.4 million of the existing Euro medium term notes pursuant to tender offers, and purchased those tendered securities in connection with the Acquisition. Hertz also sought and received the requisite consents of holders of the senior notes to eliminate restrictive covenants and the cross-acceleration default set forth in the existing indentures. The existing senior notes have maturities ranging from 2006 to 2028. Funds sufficient to repay all obligations associated with the remaining €7.6 million of Euro medium term notes at maturity have been placed in escrow for satisfaction of these obligations.

Predecessor

On September 30, 2003, we issued $500 million of 4.7% Senior Promissory Notes, or the "4.7% Notes," due on October 2, 2006. On June 3, 2004, we issued $600 million of 6.35% Senior Promissory Notes, or the "6.35% Notes," due on June 15, 2010. Effective September 30, 2003 and June 3, 2004, we entered into interest rate swap agreements, or "swaps," relating to the 4.7% Notes and 6.35% Notes, respectively. Under these agreements, we pay interest at a variable rate in exchange for fixed rate receipts, effectively transforming these notes to floating rate obligations. These swaps were accounted for as fair value hedges under SFAS 133. Prior to the Acquisition, the swap transactions qualified for the short-cut method of recognition under SFAS 133; therefore, no portion of the swaps were treated as ineffective. As of December 31, 2004, the fair values of the interest rate swaps associated with the 4.7% Notes and the 6.35% Notes were $7.0 million and $11.5 million, respectively. The fair value relating to the swap on the 4.7% Notes was reflected in the consolidated balance sheet in "Other accrued liabilities" with an offsetting decrease in "Debt." The fair value related to the swap on the 6.35% Notes was reflected in the consolidated balance sheet in "Prepaid expenses and other assets" with a corresponding increase in "Debt." As a result of the Acquisition, a significant portion of the underlying fixed rate debt was tendered leaving an aggregate principal amount of $123.8 million outstanding at December 31, 2005, causing the interest rate swaps to be ineffective as of December 21, 2005. Consequently, as fair value hedge accounting must now be discontinued, any changes in the fair value of the derivatives are now recognized in earnings. As of December 31, 2005, the fair value adjustments relating to the swaps on the 4.7% Notes and the 6.35% Notes were $8.4 million and $8.7 million, respectively, which were reflected in the consolidated balance sheet in "Other accrued liabilities." Between December 21, 2005 (the date that hedge accounting was discontinued) and

December 31, 2005, the fair value adjustment related to these swaps was a gain of $2.7 million, which was recorded in earnings.

During 2002, we established the ABS program to reduce our borrowing costs and enhance financing resources for our domestic car rental fleet. All debt issued under the ABS program is collateralized by the assets of the special purpose entities consisting of revenue earning vehicles we use in our car rental business, restricted cash and certain receivables related to revenue earning vehicles. The ABS program provided for the initial issuance of asset backed commercial paper (up to $1.0 billion) and the subsequent issuance of asset backed medium term notes. These instruments are issued by wholly owned and consolidated special purpose entities and are included in "Debt" in the consolidated balance sheet. As a result of the Acquisition, the asset backed commercial paper program was discontinued and all outstanding debt amounts were repaid.

On March 31, 2004, we issued $600.0 million of asset backed medium term notes, or the "Medium Term Notes," under the ABS program. Of the $600.0 million of the Medium Term Notes, $500.0 million has fixed interest rates ranging from 2.4% to 3.2% and maturities ranging from 2007 to 2009 and the remaining $100.0 million has a variable interest rate based on the one-month LIBOR rate plus nine basis points (4.5% as of December 31, 2005) and matures in 2007. Payments of principal and interest relating to the Medium Term Notes are insured to the extent provided in a note guaranty insurance policy issued by MBIA Insurance Corporation. As of December 31, 2005, the aggregate principal amount of $600.0 million of asset backed Medium Term Notes were outstanding. The average interest rate as of December 31, 2005 was 3.1%. See "U.S. Fleet Debt" for a discussion of the collateralization of the Medium Term Notes.

On July 2, 2004, we established a Euro Medium Term Note Program under which Hertz and/or Hertz Finance Centre plc, or "HFC," a wholly owned subsidiary of ours, can issue up to €650.0 million in Medium Term Notes, or the "Euro Medium Term Notes." On July 16, 2004, HFC issued €200.0 million of Euro Medium Term Notes under this program. The Euro Medium Term Notes are fully guaranteed by us, mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. As a result of the Acquisition, a significant portion of the Euro Medium Term Notes was tendered to us, leaving the aggregate principal amount of €7.6 million outstanding at December 31, 2005. In connection with the remaining balance of the Euro Medium Term Notes, we entered into an interest rate swap agreement on December 21, 2005, effective January 16, 2006 and maturing on July 16, 2007. The purpose of this interest rate swap is to lock in the interest cash outflows on the variable rate Euro Medium Term Notes. As of December 31, 2005, the interest rate on the Euro Medium Term Notes was 3.28%.

On August 5, 2004, we issued $500.0 million of Promissory Notes consisting of $250.0 million of floating rate notes at the three-month LIBOR rate plus 120 basis points due on August 5, 2008, and $250.0 million of 6.90% fixed rate notes due on August 15, 2014. As of December 31, 2005, the interest rate on the $250 million floating rate notes was 5.49%. As a result of the Acquisition, a significant portion of this debt was tendered, leaving the aggregate principal amount of $9.0 million of the floating rate notes and $21.1 million of the fixed rate notes outstanding at December 31, 2005.

Successor

Senior Credit Facilities

In connection with the Acquisition, Hertz entered into a credit agreement with respect to its Senior Term Facility with Deutsche Bank AG, New York Branch as administrative agent and collateral agent, Lehman Commercial Paper Inc. as syndication agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as documentation agent, and the other financial institutions party thereto from time to time. The facility consists of a $2,000 million secured term loan facility providing for loans denominated in U.S. Dollars, including a delayed draw facility of $293 million that may be drawn until August 2007 to refinance certain existing debt. In addition, there is a pre-funded synthetic letter of credit facility in an aggregate principal amount of $250 million. The full amount of the Senior Term Facility was available at closing, at which time Hertz utilized $1,707.0 million of the Senior Term Facility to finance a portion of the Transactions. At December 31, 2005, we had $1,662.2 million in borrowings outstanding under this facility which amount is net of a discount of $44.8 million. The term loan facility and synthetic letter of credit facility will mature on December 21, 2012. The term loan will amortize in nominal quarterly installments (not exceeding one percent of the aggregate principal amount thereof per annum) until the maturity date. At the borrower's election, the interest rates per annum applicable to the loans under the Senior Term Facility will be based on a fluctuating rate of interest measured by reference to either (1) an adjusted London inter-bank offered rate, or "LIBOR," plus a borrowing margin or (2) an alternate base rate plus a borrowing margin. In addition, the borrower pays fees on the unused term loan commitments of the lenders, letter of credit participation fees on the full amount of the synthetic letter of credit facility plus fronting fees for the letter of credit issuing banks and other customary fees in respect of the Senior Term Facility.

Hertz, Hertz Equipment Rental Corporation and certain other subsidiaries of Hertz also entered into a credit agreement with respect to the Senior ABL Facility with Deutsche Bank AG, New York Branch as administrative agent and collateral agent, Deutsche Bank AG, Canada Branch as Canadian Agent and Canadian collateral agent, Lehman Commercial Paper Inc. as syndication agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated as documentation agent and the financial institutions party thereto from time to time. This facility provides (subject to availability under a borrowing base) for aggregate maximum borrowings of $1,600 million under a revolving loan facility providing for loans denominated in U.S. Dollars, Canadian Dollars, Euros and Pounds Sterling. Up to $200 million of the revolving loan facility will be available for the issuance of letters of credit. On the closing date, Hertz borrowed $206 million under this facility and Matthews Equipment Limited, one of Hertz's Canadian subsidiaries, borrowed CAN$225 million under this facility, in each case to finance a portion of the Transactions. Hertz and Hertz Equipment Rental Corporation are the U.S. borrowers under the Senior ABL Facility and Matthews Equipment Limited and its subsidiary Western Shut-Down (1995) Ltd. are the Canadian borrowers under the Senior ABL Facility. At December 31, 2005, before a discount of $28 million, Hertz and Matthews Equipment Limited had aggregate principal amounts of $306 million and the U.S. dollar equivalent of $193 million, respectively, in borrowings outstanding under this facility. The Senior ABL Facility will mature on December 21, 2010. At the borrower's election, the interest rates per annum applicable to the loans under the Senior ABL Facility will be based on a fluctuating rate of interest measured by reference to either (1) adjusted LIBOR plus a borrowing margin or (2) an alternate base rate plus a borrowing margin. The borrower will pay customary commitment and other fees in respect of the Senior ABL Facility.

purpose financings), though HERC does not guarantee Hertz's obligations under the Senior ABL Facility because it is a borrower under that facility. In addition, the obligations of Canadian borrowers under the Senior ABL Facility are guaranteed by their respective subsidiaries, if any, subject to limited exceptions. The lenders under each of the Senior Term Facility and the Senior ABL Facility have received a security interest in substantially all of the tangible and intangible assets of the borrowers and guarantors under those facilities, including pledges of the stock of certain of their respective subsidiaries, subject in each case to certain exceptions (including in respect of the U.S. Fleet Debt, the International Fleet Debt and, in the case of the Senior ABL Facility, other secured fleet financing.)

Senior Notes and Senior Subordinated Notes

At December 31, 2005, $2,066.1 million and $600.0 million in aggregate borrowings was outstanding under the Senior Notes and Senior Subordinated Notes, respectively. The Senior Notes will mature on January 1, 2014, and the Senior Subordinated Notes will mature on January 1, 2016. The Senior Dollar Notes bear interest at a rate per annum of 8.875%, the Senior Euro Notes bear interest at a rate per annum of 7.875% and the Senior Subordinated Notes bear interest at a rate per annum of 10.5%. Interest is payable on the Senior Notes and the Senior Subordinated Notes semiannually on January 1 and July 1 of each year, commencing July 1, 2006. Hertz's obligations under the indentures are guaranteed by each of its direct and indirect domestic subsidiaries that is a guarantor under the Senior Term Facility.

the senior subordinated indenture also contains certain mandatory and optional prepayment or redemption provisions, and customary events of default.

Fleet Financing

U.S. Fleet Debt. In connection with the Acquisition, Hertz Vehicle Financing LLC, or "HVF," a bankruptcy-remote special purpose entity wholly-owned by Hertz, entered into an amended and restated base indenture, dated as of the closing date of the Acquisition, with BNY Midwest Trust Company as trustee, or the "ABS Indenture," and a number of related supplements to the ABS Indenture, each dated as of the closing date of the Acquisition, with BNY Midwest Trust Company as trustee and securities intermediary, or, collectively, the "ABS Supplement." On the closing date of the Acquisition, HVF, as issuer, issued approximately $4,300 million of new medium term asset-backed notes consisting of 11 classes of notes in two series under the ABS Supplement, the net proceeds of which were used to finance the purchase of vehicles from related entities and the repayment or cancellation of existing debt. HVF also issued approximately $1,500 million of variable funding notes in two series, none of which were funded at closing. At December 31, 2005, $4,300 million and $40 million in aggregate borrowings were outstanding in the form of these medium term notes and variable funding notes, respectively.

Each class of notes matures three, four or five years from the closing date of the Acquisition. The variable funding notes will be funded through the bank multi-seller commercial paper market. The assets of HVF, including the U.S. car rental fleet owned by HVF and certain related assets, collateralize the U.S. Fleet Debt. Consequently, these assets will not be available to satisfy the claims of Hertz's general creditors. The following is a brief description of the ABS Indenture, ABS Supplement and the U.S. Fleet Debt issued thereunder.

The various series of U.S. Fleet Debt have either fixed or floating rates of interest. The interest rate per annum applicable to any floating rate notes (other than any variable funding asset-backed debt) is based on a fluctuating rate of interest measured by reference to one-month LIBOR plus a spread, although HVF intends to maintain hedging transactions so that it will not be required to pay a rate in excess of 4.87% per annum in order to receive the LIBOR amounts due from time to time on such floating rate notes. The interest rate per annum applicable to any variable funding asset-backed debt is either the blended average commercial paper rate, if funded through the commercial paper market, or if commercial paper is not being issued, the greater of the prime rate or the federal funds rate, or if requisite notice is provided, the Eurodollar rate plus a spread.

HVF is subject to numerous restrictive covenants under the ABS Indenture and the other agreements governing the U.S. Fleet Debt, including restrictive covenants with respect to liens,

indebtedness, benefit plans, mergers, disposition of assets, acquisition of assets, dividends, officers' compensation, investments, agreements, the types of business it may conduct and other customary covenants for a bankruptcy-remote special purpose entity. The U.S. Fleet Debt is subject to events of default and amortization events that are customary in nature for U.S. rental car asset backed securitizations of this type. The occurrence of an amortization event or event of default could result in the acceleration of principal of the notes and a liquidation of the U.S. car rental fleet.

International Fleet Debt. In connection with the Acquisition, Hertz International Ltd., or "HIL," a Delaware corporation organized as a foreign subsidiary holding company and a direct subsidiary of Hertz, and certain of its subsidiaries (all of which are organized outside the United States), together with certain bankruptcy-remote special purpose entities (whether organized as HIL's subsidiaries or as non-affiliated "orphan" companies), or "SPEs," entered into revolving bridge loan facilities providing commitments to lend, in various currencies an aggregate amount equivalent to approximately $2,930 million (as of December 31, 2005), subject to borrowing bases comprised of rental vehicles and related assets of certain of HIL's subsidiaries (all of which are organized outside the United States) or one or more SPEs, as the case may be, and rental equipment and related assets of certain of HIL's subsidiaries organized outside North America or one or more SPEs, as the case may be. At closing, the U.S. dollar equivalent of $1,781 million of International Fleet Debt was issued under these facilities. At closing, we utilized the proceeds from these financings to finance a portion of the Transactions. At December 31, 2005, the U.S. dollar equivalent of $1,736 million was outstanding under these facilities, net of a $16 million discount. These facilities are referred to collectively as the "International Fleet Debt Facilities."

The International Fleet Debt Facilities consist of four revolving loan tranches (Tranches A1, A2, B and C), each subject to borrowing bases comprising the revenue earning equipment and related assets of each such borrower (or, in the case of a borrower that is a SPE on-lending loan proceeds to a fleet-owning SPE or subsidiary, as the case may be, the rental cars and related assets of such fleet-owning SPE or subsidiary). A portion of the Tranche C loan will be available for the issuance of letters of credit. The subsidiaries conducting the car rental business in certain European jurisdictions may, at their option, continue to engage in certain capital lease financings outside the International Fleet Debt Facilities.

The International Fleet Debt Facilities contain a number of covenants (including, without limitation, covenants customary for transactions similar to the International Fleet Debt Facilities) that, among other things, limit or restrict the ability of HIL, the borrowers and the other subsidiaries of HIL to dispose of assets, incur additional indebtedness, incur guarantee obligations, create liens, make investments, make acquisitions, engage in mergers, make negative pledges, change the nature of their business or engage in certain transactions with affiliates. In addition, HIL is restricted from making dividends and other restricted payments (which may include payments of intercompany indebtedness) in an amount greater than €100 million plus a specified excess cash flow amount calculated by reference to excess cash flow in earlier periods. Subject to certain exceptions, until the later of one year from the Closing Date and such time as 50% of the commitments under the facilities relating to the International Fleet Debt at the closing of the Acquisition have been replaced by permanent take-out international asset-based facilities, the specified excess cash flow amount will be zero. Thereafter, this specified excess cash flow amount will be between 50% and 100% of cumulative excess cash flow based on the percentage of the International Fleet Debt Facilities that have been replaced by permanent take-out international asset-based facilities. As a result of the contractual restrictions on HIL's ability to pay dividends to Hertz, the restricted net assets of our consolidated subsidiaries exceeded 25% of our total consolidated net assets as of December 31, 2005.

The International Fleet Debt Facilities contain customary events of default.

As of December 31, 2005, substantially all of our assets are pledged under one or more of the facilities noted above.

Credit Facilities

At December 31, 2005, the following committed credit facilities were available for use:

The Senior Term Facility consists of a $2,000 million term loan facility providing for loans denominated in U.S. Dollars, including a delayed draw facility of $293 million that may be drawn until August 2007 to refinance certain existing debt, and a synthetic letter of credit facility in an aggregate amount of $250 million. As of December 31, 2005, the $293 million delayed draw facility was available, while the remaining aggregate principal amount of $1,707 million, representing the term loan portion, was drawn on the Closing Date.

The International Fleet Debt Facility provides (subject to availability under a borrowing base) revolving bridge loan facilities to lend in various currencies an aggregate amount of approximately $2,930 million. As of December 31, 2005, the U.S. dollar equivalent of approximately $1,178 million in aggregate principal amount was unused; availability is subject to a borrowing base limitation.

In connection with the issuance of $4,300 million of medium term asset-backed notes under the U.S. Fleet Debt Facility, approximately $1,500 million of variable funding notes in two series were also issued but not funded. As of December 31, 2005, approximately $1,460 million of aggregate variable funding notes were unused; availability is subject to a borrowing base limitation.

During 2005, in addition to those credit facilities in place at December 31, 2004 (as described below) the following borrowings and credit facilities were utilized:

•: On May 26, 2005, we entered into a Credit Agreement, or the "Interim Credit Facility," with an aggregate availability of up to $3.0 billion from external financial institutions. The Interim Credit Facility, as amended on July 5, 2005, provided a term facility of up to $1,650.0 million and a revolving credit facility of up to $700.0 million available to Hertz and a term facility of up to $350.0 million and a revolving credit facility of up to $300.0 million available to our Canadian subsidiary, Hertz Canada Limited, guaranteed by Hertz, with unutilized capacity under the Canadian tranches available to be borrowed by Hertz. Amounts under the term facilities were fully drawn. Amounts under the revolving facilities were available to be borrowed throughout the term of the Interim Credit Facility. Effective July 26, 2005, $1,825.0 million of the Interim Credit Facility commitments provided by the three initial external financial institutions were syndicated and allocated to eight additional external financial institutions. The Interim Credit Facility matured on November 23, 2005. On November 23, 2005, Hertz and our subsidiary Hertz Canada Limited entered into a Replacement Interim Credit Facility with an aggregate availability of up to $2,575.0 million in credit facilities from external financial institutions to replace and refinance in full the indebtedness under the Interim Credit Facility, to provide working capital and to use for general corporate purposes. The Replacement Interim Credit Facility had terms substantially similar to the terms of the Interim Credit Facility and was scheduled to mature on February 28, 2006. The Replacement Interim Credit Facility was repaid with proceeds from the issuance of new debt securities in connection with the Acquisition.
•: On June 10, 2005, we declared and paid a dividend of $1,185.0 million on our outstanding common stock to our previous sole shareholder, Ford Holdings LLC, in the form of an Intercompany Note, or the "Intercompany Note." The Intercompany Note was repaid in connection with the Acquisition.

At December 31, 2004, we had committed credit facilities totaling $2.8 billion.

At December 31, 2004, $1.3 billion of the committed credit facilities were represented by a combination of multi-year, 364-day global and other committed credit facilities provided by 23 participating banks. In addition to our direct borrowings, the multi-year and 364-day global facilities allowed certain subsidiaries of ours to borrow on the basis of a guarantee by us. The multi-year facilities were re-negotiated effective July 1, 2005 and totaled $953 million with expirations as follows:

$35 million on June 30, 2006, $108 million on June 30, 2007, $102 million on June 30, 2008, $81 million on June 30, 2009 and $627 million on June 30, 2010. The multi-year facilities that were to expire in 2010 had an evergreen feature, which provided for the automatic extension of the expiration date one year forward unless the bank provides timely notice. Effective June 16, 2005, the 364-day global committed credit facilities, which totaled $94 million, were renegotiated and were to expire on June 15, 2006. Under the terms of the 364-day facilities, we were permitted to convert any amount outstanding prior to expiration into a two-year loan. The other committed facilities totaled $156 million and expired at various times during 2005 and 2006. As a result of the Acquisition, all of these committed credit facilities were terminated.

Effective September 18, 2002, as part of the ABS program, we transferred $928 million of the 364-day global committed credit facilities to the ABS program. As part of the agreement to transfer these commitments, we waived the right to transfer them back to the 364-day global committed credit facilities without the consent of the participating banks. As of December 31, 2004, $814 million was available which was to expire in June 2006. During 2005, this credit facility was re-negotiated to expire in June 2007. In addition to the transfer of the 364-day commitments, we raised $215 million of committed credit support through an ABS letter of credit from banks that participate in our multi-year global committed credit facilities which was to expire in June 2007. In exchange for this credit support, we agreed to reduce the bank's multi-year facility commitment by one half of the amount of their ABS letter of credit participation. As a result of the Acquisition, this committed credit facility was terminated.

In addition to these bank credit facilities, in February 1997, Ford extended us a line of credit of $500 million, which was to expire on June 30, 2007. This line of credit had an evergreen feature that provided on an annual basis for automatic one-year extensions of the expiration date, unless notice was provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminated however, at any time Ford ceased to own, directly or indirectly, our capital stock having more than 50% of the total voting power of all our outstanding capital stock. Our obligations under this agreement would have ranked pari passu with our senior debt securities. A commitment fee of 0.2% per annum was payable on the unused available credit. On May 2, 2005, we borrowed $250 million under this line of credit, which was repaid on May 31, 2005 with borrowings under the Interim Credit Facility. This line of credit was terminated as a result of the Acquisition.

We maintained a Sales Agency Agreement with Ford Financial Services, Inc., or "FFS," a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acted as a dealer for our domestic commercial paper programs. We paid fees to FFS, which ranged from 0.03% to 0.05% per annum of commercial paper placed depending upon the monthly average dollar value of the notes outstanding in the portfolios. In 2005, we paid FFS $109,548 of such fees. FFS was under no obligation to purchase any of the notes for its own account. Through our subsidiary Hertz Australia Pty. Limited, we had a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford. These commercial paper arrangements terminated as a result of the Acquisition.

Borrowing for our international operations also consisted of loans obtained from local and international banks and commercial paper programs established in Ireland, Canada, the Netherlands, Belgium and Australia. We guaranteed only the commercial paper borrowings of our subsidiaries in Ireland, Canada, the Netherlands and Belgium, and guaranteed commercial paper and short-term bank loans of our subsidiary in Australia. All borrowings by international operations were either in the international operation's local currency or, if in non-local currency, hedged to minimize foreign exchange exposure. At December 31, 2004, total debt for the foreign operations was $1,734 million, of

which $1,455 million was short-term (original maturity of less than one year) and $279 million was long-term. At December 31, 2004 total amounts outstanding (in millions of U.S. dollars) under the commercial paper programs in Ireland, Canada, the Netherlands and Belgium were $385, $321, $54 and $28, respectively.

Note 4—Available-for-Sale Securities

As of December 31, 2005 and 2004, "Prepaid expenses and other assets" in our consolidated balance sheet includes available-for-sale securities at fair value. The fair value is calculated using information provided by independent quotation services as of December 31, 2005. These securities consisted solely of government debt obligations. For the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and the years ended December 31, 2004 and 2003, proceeds, in millions of dollars, of $0.0, $0.2, $19.4 and $10.3, respectively, were received from the sale of available-for-sale securities, and in thousands of dollars, gross realized gains of $0, $0, $196, and $413 and gross realized losses of $0, $10, $193 and $54, respectively, were included in earnings. Actual cost was used in computing the realized gain and loss on the sale. Prior to and subsequent to the Acquisition, unrealized gains and losses are included in "Accumulated other comprehensive income (loss)" in our consolidated balance sheet. On the Acquisition date, the existing unrealized gains and losses were eliminated during purchase accounting from "Accumulated other comprehensive income (loss)" on our consolidated balance sheet.

The following is a summary of available-for-sale securities at December 31, 2005 and December 31, 2004 (in thousands of dollars):

		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Successor
	December 31, 2005
	Government debt obligations	$	2,403	$	9	$	(55	)	$	2,357
Predecessor
	December 31, 2004
	Government debt obligations	$	2,795	$	19	$	(28	)	$	2,786

The cost and estimated fair value of available-for-sale securities at December 31, 2005 are as follows (in thousands of dollars):

		Cost		Estimated Fair Value
Due in one year or less		$	561	$	540
Due after one year through five years			1,451		1,430
Due after five years through ten years			391		387

	Total	$	2,403	$	2,357

Note 5—Purchases and Sales of Operations

In June 1999, Hertz entered into a Limited Liability Company Agreement, or "LLC Agreement," with a subsidiary of Orbital Sciences Corporation, or "Orbital," whereby Navigation Solutions, L.L.C., or "Navigation Solutions," a limited liability company, was formed to purchase NeverLost vehicle navigation systems from another subsidiary of Orbital for installation in selected vehicles in our North American fleet. In July 2001, Orbital's subsidiary sold our membership interest in the limited liability company to a subsidiary of Thales North America, Inc., or "Thales," which also acquired the Orbital subsidiary from whom the NeverLost vehicle navigation systems are purchased. During 2003 and 2004 (prior to July 1), we received distributions of $5.6 million and $2.0 million, respectively, under the LLC Agreement, which represents a 40% ownership interest. In January 2004, along with Thales, Hertz amended the LLC Agreement to provide for Hertz to increase its ownership interest to 65% and for the limited liability company to purchase additional NeverLost vehicle navigation systems. For those periods prior to July 1, 2004, the results of operations and investment in this joint venture had been reported using the equity method of accounting. On July 1, 2004, Hertz's ownership interest in Navigation Solutions increased from 40% to 65% as a result of an equity distribution by Navigation Solutions to the other member of Navigation Solutions, effectively reducing its ownership interest to 35%. Based upon this ownership change, we began consolidating 100% of Navigation Solutions' balance sheet and results of operations into our financial statements and deducting the minority interest share relating to the 35% member.

Note 6—Employee Retirement Benefits

Qualified U.S. employees, after completion of specified periods of service, are eligible to participate in The Hertz Corporation Account Balance Defined Benefit Pension Plan, or "Hertz Retirement Plan," a cash balance plan. Under this qualified Hertz Retirement Plan, we pay the entire cost and employees are not required to contribute.

Most of our foreign subsidiaries have defined benefit retirement plans or participate in various insured or multi-employer plans. In certain countries, when the subsidiaries make the required funding payments, they have no further obligations under such plans.

Company plans are generally funded, except for certain nonqualified U.S. defined benefit plans and in Germany, where unfunded liabilities are recorded.

We sponsor defined contribution plans for certain eligible U.S. and non-U.S. employees. We match contributions of participating employees on the basis specified in the plans.

We also sponsor postretirement health care and life insurance benefits for a limited number of employees with hire dates prior to January 1, 1990. The postretirement health care plan is contributory with participants' contributions adjusted annually. An unfunded liability is recorded.

We use a December 31 measurement date for the majority of our plans. Effective with the Acquisition, the assignment of the purchase price to individual assets acquired and liabilities assumed included a liability for the projected benefit obligation in excess of plan assets, which eliminated any previously existing unrecognized net gain or loss, or unrecognized prior service cost. The benefit obligations as of the Closing Date were not materially different from the benefit obligations disclosed as of December 31, 2005 in the following table for all pension and postretirement healthcare and life insurance plans. The assets for the U.S. pension plans were $309.5 million as of the Closing Date.

The following tables set forth the funded status and the net periodic pension cost of the Hertz Retirement Plan, other postretirement benefit plans for health care and life insurance covering domestic ("U.S.") employees and the retirement plans for foreign operations ("Non-U.S."), together with amounts included in our consolidated balance sheet and statement of operations (in millions of dollars):

			Pension Benefits
			Pension Benefits												Health Care & Life Insurance (U.S.)
			U.S. Plans						Non-U.S. Plans						Health Care & Life Insurance (U.S.)
			Successor			Predecessor			Successor			Predecessor			Successor			Predecessor
			2005			2004			2005			2004			2005			2004
Change in Benefit Obligation
	Benefit obligation at January 1		$	339.2		$	276.2		$	132.2		$	97.6		$	17.3		$	14.1
	Service cost			24.4			21.1			7.1			5.4			0.4			0.4
	Interest cost			19.6			17.7			6.3			5.4			1.0			1.0
	Employee contributions			—			—			1.4			1.2			0.1			0.1
	Benefits paid			(10.7	)		(6.6	)		(2.2	)		(2.2	)		(0.4	)		(0.4	)
	Foreign exchange translation			—			—			(17.8	)		9.0			—			—
	Actuarial loss			27.5			30.8			33.3			15.8			(0.2	)		2.1

	Benefit obligation at December 31		$	400.0		$	339.2		$	160.3		$	132.2		$	18.2		$	17.3

Change in Plan Assets
	Fair value of plan assets at January 1		$	270.5		$	200.5		$	83.9		$	63.8		$	—		$	—
	Actual return on plan assets			18.0			27.8			17.2			7.1			—			—
	Company contributions			32.4			49.4			5.6			8.2			0.3			0.3
	Employee contributions			—			—			1.4			1.2			0.1			0.1
	Benefits paid			(10.7	)		(6.6	)		(2.2	)		(2.2	)		(0.4	)		(0.4	)
	Foreign exchange translation			—			—			(10.5	)		5.8			—			—
	Other			—			(0.6	)		(0.3	)		—			—			—

	Fair value of plan assets at December 31		$	310.2		$	270.5		$	95.1		$	83.9		$	—		$	—

Funded Status of the Plan
	Plan assets less than benefit obligation		$	(89.8	)	$	(68.7	)	$	(65.2	)	$	(48.3	)	$	(18.2	)	$	(17.3	)
	Unamortized:
		Transition obligation		—			—			—			0.2			—			—
		Prior service cost		—			4.1			—			0.1			—			—
		Net losses and other		(0.7	)		41.7			—			39.5			—			4.5

	Net amount recognized		$	(90.5	)	$	(22.9	)	$	(65.2	)	$	(8.5	)	$	(18.2	)	$	(12.8	)

Amounts Recognized in the Balance Sheet Assets/(Liabilities)
	Intangible assets (including prepaid assets)		$	—		$	10.6		$	—		$	0.8		$	—		$	—
	Accrued liabilities			(90.5	)		(40.1	)		(65.2	)		(24.2	)		(18.2	)		(12.8	)
	Deferred Income Tax			—			2.3			—			4.1			—			—
	Accumulated other comprehensive loss, net of tax			—			4.3			—			10.8			—			—

	Net amount recognized		$	(90.5	)	$	(22.9	)	$	(65.2	)	$	(8.5	)	$	(18.2	)	$	(12.8	)

Pension Plans in Which Accumulated Benefit Obligation Exceeds Plan Assets at December 31
	Projected benefit obligation	$	64.2		$	53.3		$	155.0		$	127.4
	Accumulated benefit obligation		51.1			40.1			127.6			103.9
	Fair value of plan assets		—			—			90.8			80.3
Accumulated Benefit Obligation at December 31		$	330.1		$	277.6		$	131.3		$	107.2
Weighted-average assumptions as of December 31
	Discount rate		5.50	%		5.75	%		4.65	%		5.14	%	5.50	%	5.75	%
	Expected return on assets		8.75	%		8.75	%		6.88	%		6.90	%	N/A		N/A
	Average rate of increase in compensation		4.3	%		4.4	%		3.6	%		3.3	%	N/A		N/A
	Initial health care cost trend rate		—			—			—			—		10.0	%	11.0	%
	Ultimate health care cost trend rate		—			—			—			—		5.0	%	5.0	%
	Number of years to ultimate trend rate		—			—			—			—		8		9

			Pension Benefits
			Successor			Predecessor			Successor			Predecessor
			For the periods from						For the periods from						Predecessor
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			Years ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			2004						2003
			U.S.						Non-U.S.						U.S			Non-U.S			U.S.			Non-U.S.
Components of Net Periodic Benefit Cost:
	Service cost		$	0.7		$	23.7		$	0.2		$	6.9		$	21.1		$	5.4		$	17.3		$	3.3
	Interest cost			0.6			19.0			0.2			6.1			17.7			5.4			15.5			4.1
	Expected return on plan assets			(0.6	)		(20.8	)		(0.2	)		(5.4	)		(17.9	)		(4.5	)		(15.9	)		(2.8	)
	Amortization:
		Transition		—			—			—			—			—			—			—			0.7
		Amendments		—			0.5			—			—			0.5			—			0.5			—
		Losses and other		0.1			3.5			0.1			1.8			1.8			1.2			2.1			1.2
		Settlement loss		—			1.1			—			—			—			—			—			—

	Net pension expense		$	0.8		$	27.0		$	0.3		$	9.4		$	23.2		$	7.5		$	19.5		$	6.5

Weighted-average discount rate for expense				5.75	%		5.75	%		5.14	%		5.14	%		6.25	%		5.52	%		6.75	%		5.73	%
Weighted-average assumed long-term rate of return on assets				8.75	%		8.75	%		6.90	%		6.90	%		8.75	%		6.93	%		8.75	%		6.94	%

The discount rate used to determine the December 31, 2005 benefit obligations for U.S. pension plans is based on an average of three indices of high quality corporate bonds whose duration closely matches that of our plans. The rates on these bond indices are adjusted to reflect callable issues. For our plans outside the U.S., the discount rate reflects the market rates for high-quality corporate bonds currently available. The discount rate in a country was determined based on a yield curve constructed

from high quality corporate bonds in that country. The rate selected from the yield curve has a duration that matches our plan.

The expected return on plan assets for each funded plan is based on expected future investment returns considering the target investment mix of plan assets.

			Health Care & Life Insurance (U.S.)
			Successor			Predecessor			Predecessor
			For the periods from						Years ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			Years ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			2004			2003
Components of Net Periodic Benefit Cost:
	Service cost		$	—		$	0.4		$	0.4		$	0.4
	Interest cost			0.1			0.9			1.0			0.8
	Amortization:
		Losses and other		—			0.2			0.2			0.1

	Net postretirement expense		$	0.1		$	1.5		$	1.6		$	1.3

Weighted-average discount rate for expense				5.75	%		5.75	%		6.25	%		6.75	%
Initial health care cost trend rate				11.0	%		11.0	%		10.0	%		10.0	%
Ultimate health care cost trend rate				5.0	%		5.0	%		5.0	%		5.0	%
Number of years to ultimate trend rate				9			9			10			11

Changing the assumed health care cost trend rates by one percentage point is estimated to have the following effects in whole dollars:

		One Percentage Point Increase			One Percentage Point Decrease
Effect on total of service and interest cost components		$	109,000		$	(95,000	)
Effect on postretirement benefit obligation		$	1,221,000		$	(1,071,000	)

The estimated cost for postretirement health care and life insurance benefits is accrued on an actuarially determined basis. Retirement rate and salary increase assumptions were changed in 2003 to reflect historical experience, the effect of which was not considered material. The 2003 increase in the number of years to ultimate trend rate resulted from changes in trend assumptions.

The provisions charged to income for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and 2003 for all other pension plans were approximately (in millions of dollars) $0.2, $8.0, $7.8 and $7.3, respectively.

The provisions charged to income for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and 2003 for the defined contribution plans were approximately (in millions of dollars) $0.5, $14.8, $13.7 and $12.3, respectively.

Plan Assets

Our major U.S. and Non-U.S. pension plans' weighted-average asset allocations at December 31, 2005 and 2004, by asset category, are as follows:

			Plan assets
			U.S.				Non-U.S.
Asset Category			U.S.				Non-U.S.
Asset Category			2005		2004		2005		2004
	Equity securities		70.6	%	72.4	%	86.2	%	84.6	%
	Fixed income securities		29.4		27.6		13.8		15.4

		Total	100.0	%	100.0	%	100.0	%	100.0	%

We have a long-term investment outlook for the assets held in our Company sponsored plans, which is consistent with the long-term nature of each plan's respective liabilities. We have two major plans which reside in the U.S. and the United Kingdom.

The U.S. Plan, or the "Plan," currently has a target asset allocation of 70% equity and 30% fixed income. The equity portion of the Plan is invested in one passively managed index fund, one actively managed U.S. small/midcap fund and one actively managed international portfolio. The fixed income portion of the Plan is actively managed by a professional investment manager and is benchmarked to the Lehman Long Govt/Credit Index. The Plan currently assumes an 8.75% rate of return on assets which represents the expected long-term annual weighted-average return for the Plan in total. The annualized long-term performance of the Plan has generally been in excess of the long-term rate of return assumptions.

The U.K. Plan currently invests in a professionally managed Balanced Consensus Index Fund which has the investment objective of achieving a total return relatively equal to its benchmark. The benchmark is based upon the average asset weightings of a broad universe of U.K. pension funds invested in pooled investment vehicles and each of their relevant indices. The asset allocation as of December 31, 2005, was 86.2% equity and 13.8% fixed income. The U.K. Plan currently assumes a rate of return on assets of 7.0%, which represents the expected long-term annual weighted-average return.

Contributions

Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations, and union agreements. From time to time we make contributions beyond those legally required. In 2005 and 2004, we made discretionary cash contributions of $28.0 million and $48.0 million, respectively, to our U.S. pension plan. In 2006, we expect to contribute, at a minimum, approximately $23 million to our worldwide pension plans, including contributions required by funding regulations, discretionary contributions and benefit payments for unfunded plans. The majority of what we expect to contribute relates to discretionary contributions to our U.K. Plan.

Estimated Future Benefit Payments

The following table presents estimated future benefit payments (in millions of dollars):

	Pension Benefits		Healthcare & Life Insurance (U.S.)
2006	$	14.0	$	0.6
2007		16.9		0.7
2008		18.4		0.9
2009		23.0		1.0
2010		24.7		1.1
2011-2015		180.0		7.3

Note 7—Stock-Based Employee Compensation

Certain of our employees participate in the stock option plan of Ford under Ford's 1998 Long-Term Incentive Plan, or the "Incentive Plan." Options granted under the Incentive Plan became exercisable 33% after one year from the date of grant, 66% after two years and in full after three years.

Effective with the Acquisition, all unvested options became vested and exercisable. We have no future liability for these options. As of the Acquisition date, the remaining life of all options outstanding became the lesser of five years from the Acquisition date, or the remainder of the original 10-year term. See Note 16—Subsequent Events.

A summary of option transactions is presented below (all exercise prices and fair values are with respect to Ford common stock):

	2005				2004				2003
	Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
Outstanding at January 1	8,436,833		$	23.14	7,227,817		$	25.10	5,994,339		$	29.43
Granted	1,489,275		$	12.49	1,490,500		$	13.26	1,473,625		$	7.55
Expired or canceled	(256,313	)	$	22.65	(239,673	)	$	23.59	(240,147	)	$	25.38
Exercised	(104,980	)	$	7.55	(41,811	)	$	7.55	—			—

Outstanding at December 31	9,564,815		$	21.73	8,436,833		$	23.14	7,227,817		$	25.10

Options exercisable at end of year	9,564,815		$	21.73	5,608,824		$	28.74	4,305,981		$	30.57
Weighted-average fair value of options granted during year			$	4.45			$	4.62			$	1.90

The following table summarizes information about stock options at December 31, 2005:

	Options Outstanding and Exercisable
Range of Exercise Prices	Number of Options	Remaining Contractual Life	Exercise Price
$41.40–$42.52	630,889	2.3	$	41.42
$35.66	1,023,247	4.1	$	35.66
$31.95–$35.19	974,158	3.1	$	34.98
$27.42–$30.19	1,544,262	5.0	$	27.80
$16.91	1,309,825	5.0	$	16.91
$13.07–$13.26	1,409,200	5.0	$	13.26
$12.49	1,458,325	5.0	$	12.49
$7.55	1,214,909	5.0	$	7.55

Note 8—Revenue Earning Equipment

Revenue earning equipment consists of rental cars and industrial and construction equipment and leased cars under capital leases where the disposition of the cars upon termination of the lease is for our account.

Depreciation of revenue earning equipment includes the following (in thousands of dollars):

		Successor			Predecessor			Predecessor
		For the periods from						Years ended December 31,
		December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			2004			2003
Depreciation of revenue earning equipment		$	45,362		$	1,605,243		$	1,506,988		$	1,504,482
Adjustment of depreciation upon disposal of the equipment			(2,123	)		(68,307	)		(57,212	)		808
Rents paid for vehicles leased			588			18,926			13,482			18,101

	Total	$	43,827		$	1,555,862		$	1,463,258		$	1,523,391

The adjustment of depreciation upon disposal of revenue earning equipment for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and the years ended December 31, 2004 and 2003 included (in millions of dollars) net gains of $1.3, $41.8, $25.8 and a net loss of $1.9, respectively, on the disposal of industrial and construction equipment, and net gains of $0.8, $26.5, $31.4 and $1.1, respectively, on the disposal of vehicles used in the car rental operations. Depreciation rates being used to compute the provision for depreciation of revenue earning equipment were decreased in our domestic car rental operations (effective April 1, July 1, and October 1, 2005) and in our North American equipment rental operations (primarily effective January 1 and July 1, 2005) to reflect changes in the estimated residual values to be realized when revenue earning equipment is sold, resulting in net reductions in depreciation expense for the year ended December 31, 2005 of $21.8 million and $13.2 million, respectively.

As a result of the Acquisition, the net book value of our revenue earning equipment was adjusted to its estimated fair value, resulting in a net increase of $93.1 million. This net increase in net book value resulted in an increase in depreciation expense of approximately $0.5 million for the Successor period ended December 31, 2005.

Note 9—Taxes on Income

The provision (benefit) for taxes on income consists of the following (in thousands of dollars):

				Successor			Predecessor			Predecessor
				For the periods from						Years ended December 31,
				December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
Current:
	Federal			$	—		$	577,573		$	(22,950	)	$	(214,487	)
	Foreign				—			17,550			16,679			22,341
	State and local				—			7,670			10,565			10,175

		Total current			—			602,793			4,294			(181,971	)

Deferred:
	Federal				(5,711	)		(435,037	)		132,877			270,248
	Foreign				(4,822	)		11,224			(11,801	)		(6,400	)
	State and local				(1,710	)		12,352			8,500			(3,000	)

		Total deferred			(12,243	)		(411,461	)		129,576			260,848

			Total provision (benefit)	$	(12,243	)	$	191,332		$	133,870		$	78,877

The principal items in the deferred tax provision (benefit) are as follows (in thousands of dollars):

	Successor			Predecessor			Predecessor
	For the periods from						Years ended December 31,
	December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			2004			2003
Difference between tax and book depreciation	$	57,176		$	(781,555	)	$	489,202		$	145,208
Accrued and prepaid expense deducted for tax purposes when paid or incurred		(21,114	)		16,391			(41,640	)		(32,267	)
Intangible assets		11,291			—			—			—
Tax operating loss (carryforwards) utilized		(57,229	)		401,035			(341,090	)		288,783
Foreign tax credit carryforwards		—			(48,471	)		(8,556	)		(105,980	)
Federal and state alternative minimum tax credit (carryforwards) utilized		(2,367	)		36,087			(3,288	)		(34,896	)
Increase (decrease) in valuation allowance		—			(34,948	)		34,948			—

Total deferred provision (benefit)	$	(12,243	)	$	(411,461	)	$	129,576		$	260,848

The principal items in the deferred tax liability at December 31, 2005 and 2004 are as follows (in thousands of dollars):

			2005			2004
Assets:
	Employee benefit plans		$	126,454		$	76,335
	Tax operating loss carry forwards			101,156			448,458
	Foreign tax credit carry forwards			—			140,533
	Federal and state alternative minimum tax credit carry forwards			4,464			38,184
	Accrued and prepaid expenses deducted for tax purposes when paid or incurred			145,608			186,635

	Total Gross Assets			377,682			890,145
	Less: Valuation Reserves			(21,377	)		(59,821	)

	Total Net Assets			356,305			830,324

Liabilities:
	Difference between book and tax depreciation			(1,027,906	)		(1,680,024	)
	Intangible assets			(1,180,941	)		—

	Total Liabilities			(2,208,847	)		(1,680,024	)

		Total	$	(1,852,542	)	$	(849,700	)

At December 31, 2005 we had operating loss carryforwards for federal, state and foreign tax purposes totaling $101.2 million of which $63.4 million expire through 2025. The remaining $37.8 million may be carried forward indefinitely. It is anticipated that such operations will become profitable in the future and the carryforwards will be fully utilized. During 2005, foreign tax credit valuation reserves in the amount of $35.0 million were reversed when we determined that the foreign tax credits would be utilized in full.

In October 2004, President Bush signed the "American Jobs Creation Act of 2004," which contains provisions related to the distribution of the earnings of foreign subsidiaries. During December 2005, in connection with Ford pre-sale activities and to obtain the benefit of favorable one-time tax treatment of distributions offered by the American Jobs Creation Act of 2004, dividends of $547.8 million were recognized, of which $216.9 million were cash dividends and $330.9 million were deemed dividends for tax purposes. The deemed dividends relate to undistributed foreign earnings which are no longer considered to be permanently reinvested. These dividends generated $168.2 million of tax expense, of which $136.9 million was offset by foreign tax credits, resulting in a net tax expense of $31.3 million. See Note 1A—Restatement of Predecessor Financial Statements.

The principal items accounting for the difference in taxes on income computed at the U.S. statutory rate of 35% and as recorded are as follows (in thousands of dollars):

		Successor			Predecessor			Predecessor
		For the periods from						Years ended December 31,
		December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
Computed tax at statutory rate		$	(11,626	)	$	201,217		$	175,893		$	83,122
Taxes on foreign earnings, net of utilized foreign tax credits			—			31,353			—			—
State and local income taxes, net of Federal income tax benefit			(1,112	)		13,014			12,392			4,664
Income taxes on foreign earnings at effective rates different from the U.S. statutory rate, including the anticipated realization of certain foreign tax benefits and the effect of subsidiaries' gains and losses and exchange adjustments with no tax effect			926			(10,638	)		(7,529	)		(9,949	)
Increase (decrease) in valuation allowance			—			(34,948	)		34,948			—
Adjustments made to Federal and foreign tax accruals in connection with tax audit evaluations			—			—			(69,834	)		—
Favorable foreign tax adjustments relating to tax return filings			—			(5,300	)		(11,684	)		—
All other items, net			(431	)		(3,366	)		(316	)		1,040

	Total provision (benefit)	$	(12,243	)	$	191,332		$	133,870		$	78,877

Note 10—Lease and Concession Agreements

We have various concession agreements, which provide for payment of rents and a percentage of revenue with a guaranteed minimum, and real estate leases under which the following amounts were expensed (in thousands of dollars):

			Successor		Predecessor		Predecessor
			For the periods from				Years ended December 31,
			December 21, 2005 to December 31, 2005		January 1, 2005 to December 20, 2005		2004		2003
Rents			$	3,500	$	112,627	$	100,243	$	90,421
Concession fees:
	Minimum fixed obligations			7,653		246,304		227,535		230,443
	Additional amounts, based on revenues			5,544		178,431		182,069		132,860

		Total	$	16,697	$	537,362	$	509,847	$	453,724

As of December 31, 2005, minimum obligations under existing agreements referred to above are approximately as follows (in thousands of dollars):

	Rents		Concessions
Years ended December 31, 2006	$	90,871	$	217,232
2007		78,605		184,295
2008		65,377		130,643
2009		48,691		93,197
2010		33,939		67,929
Years after 2010		119,036		394,147

Many of our concession agreements and real estate leases require us to pay or reimburse operating expenses, such as common area charges and real estate taxes, to pay concession fees above guaranteed minimums or additional rent based on a percentage of revenues or sales (as defined in those agreements) arising at the relevant premises, or both. Such obligations are not reflected in the table of minimum future obligations appearing immediately above.

In addition to the above, we have various leases on revenue earning equipment and office and computer equipment under which the following amounts were expensed (in thousands of dollars):

						Predecessor
		Successor		Predecessor		Predecessor
		Successor		Predecessor		Years ended December 31,
		For the periods from				Years ended December 31,
		December 21, 2005 to December 31, 2005		January 1, 2005 to December 20, 2005		2004		2003
Revenue earning equipment		$	588	$	18,926	$	13,482	$	18,101
Office and computer equipment			466		14,984		15,338		13,075

	Total	$	1,054	$	33,910	$	28,820	$	31,176

As of December 31, 2005, minimum obligations under existing agreements referred to above that have a maturity of more than one year are as follows (in thousands): 2006, $20,215; 2007, $6,876; 2008, $1,230; 2009, $506; 2010, $20; after 2010, $0.

Note 11—Segment Information

We follow SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The statement requires companies to disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance.

Our operating segments are aggregated into reportable business segments based primarily upon similar economic characteristics, products, services, customers, and delivery methods. We have identified two reportable segments: rental of cars and light trucks, or "car rental"; and rental of industrial, construction and material handling equipment, or "equipment rental." The contribution of these segments, as well as "corporate and other," for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and 2003 are summarized below (in millions of dollars). Corporate and other includes general corporate expenses, certain interest expense, as well as other business activities, such as claim management.

				Successor			Predecessor			Predecessor
				For the periods from						Years ended December 31,
				December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			Years ended December 31,
				December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			2004			2003
Revenues
	Car rental			$	131.8		$	5,915.0		$	5,507.7		$	4,888.2
	Equipment rental				22.5			1,392.8			1,162.2			1,038.1
	Corporate and other				0.2			6.9			6.1			7.4

		Total		$	154.5		$	7,314.7		$	6,676.0		$	5,933.7

Income (loss) before income taxes and minority interest
	Car rental			$	(16.2	)	$	390.8		$	437.7		$	278.7
	Equipment rental				(11.4	)		250.5			87.8			(21.8	)
	Corporate and other				(5.6	)		(66.4	)		(22.9	)		(19.4	)

		Total		$	(33.2	)	$	574.9		$	502.6		$	237.5

Depreciation of revenue earning equipment
	Car rental			$	37.4		$	1,344.1		$	1,228.6		$	1,258.3
	Equipment rental				6.4			211.8			234.7			265.1
	Corporate and other				—			—			—			—

		Total		$	43.8		$	1,555.9		$	1,463.3		$	1,523.4

Depreciation of property and equipment
	Car rental			$	4.1		$	141.1		$	136.1		$	111.0
	Equipment rental				1.2			36.4			36.7			36.2
	Corporate and other				0.2			4.9			4.8			4.5

		Total		$	5.5		$	182.4		$	177.6		$	151.7

Amortization of intangibles
	Car rental			$	1.1		$	0.7		$	0.6		$	0.4
	Equipment rental				1.0			—			—			0.6
	Corporate and other				—			—			—			—

		Total		$	2.1		$	0.7		$	0.6		$	1.0

Operating income (loss): pre-tax income (loss) before interest expense and minority interest
	Car rental			$	(0.6	)	$	735.7		$	742.7		$	550.5
	Equipment rental				(8.1	)		337.0			159.8			54.0
	Corporate and other				1.2			(23.5	)		(15.5	)		(12.0	)

		Total		$	(7.5	)	$	1,049.2		$	887.0		$	592.5

Revenue earning equipment and property and equipment
	Car rental
		Expenditures		$	234.9		$	11,530.1		$	10,885.7		$	9,292.1
		Proceeds from disposals			(199.8	)		(9,927.2	)		(8,554.3	)		(7,700.8	)

			Net expenditures	$	35.1		$	1,602.9		$	2,331.4		$	1,591.3

	Equipment rental
		Expenditures		$	8.2		$	987.9		$	707.8		$	368.3
		Proceeds from disposals			(1.1	)		(251.4	)		(245.5	)		(227.6	)

			Net expenditures	$	7.1		$	736.5		$	462.3		$	140.7

	Corporate and other
		Expenditures		$	0.2		$	2.7		$	3.0		$	2.9
		Proceeds from disposals			—			(0.3	)		(0.4	)		(0.7	)

			Net expenditures	$	0.2		$	2.4		$	2.6		$	2.2

			Successor		Predecessor
			December 31,
			2005		2004
Total assets at end of year
	Car rental		$	11,456.4	$	10,351.2
	Equipment rental			3,418.8		2,156.7
	Corporate and other			3,705.7		1,588.5

		Total	$	18,580.9	$	14,096.4

Revenue earning equipment, net, at end of year
	Car rental		$	7,399.5	$	7,597.2
	Equipment rental			2,075.5		1,525.7
	Corporate and other			—		—

		Total	$	9,475.0	$	9,122.9

We operate in the United States and in foreign countries. Foreign operations are substantially in Europe. The operations within major geographic areas are summarized as follows (in millions of dollars):

			Successor			Predecessor		Predecessor
			For the periods from					Years ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005		2004		2003
Revenues
	United States		$	123.7		$	5,150.5	$	4,678.2	$	4,257.1
	Foreign			30.8			2,164.2		1,997.8		1,676.6

		Total	$	154.5		$	7,314.7	$	6,676.0	$	5,933.7

Income (loss) before income taxes and minority interest
	United States		$	(19.1	)	$	371.6	$	322.8	$	132.5
	Foreign			(14.1	)		203.3		179.8		105.0

		Total	$	(33.2	)	$	574.9	$	502.6	$	237.5

Depreciation of revenue earning equipment
	United States		$	35.5		$	1,179.8	$	1,107.3	$	1,240.8
	Foreign			8.3			376.1		356.0		282.6

		Total	$	43.8		$	1,555.9	$	1,463.3	$	1,523.4

Depreciation of property and equipment
	United States		$	4.6		$	140.3	$	136.4	$	114.0
	Foreign			0.9			42.1		41.2		37.7

		Total	$	5.5		$	182.4	$	177.6	$	151.7

				Successor			Predecessor			Predecessor
				For the periods from						Years ended December 31,
				December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005			2004			2003
Amortization of intangibles
	United States			$	1.3		$	0.1		$	—		$	0.7
	Foreign				0.8			0.6			0.6			0.3

		Total		$	2.1		$	0.7		$	0.6		$	1.0

Operating income (loss): pre-tax income (loss) before interest expense and minority interest
	United States			$	2.8		$	786.0		$	661.3		$	448.8
	Foreign				(10.3	)		263.2			225.7			143.7

		Total		$	(7.5	)	$	1,049.2		$	887.0		$	592.5

Revenue earning equipment and property and equipment
	United States
		Expenditures		$	188.9		$	8,762.3		$	7,928.5		$	6,801.4
		Proceeds from disposals			(131.8	)		(6,940.8	)		(5,818.6	)		(5,452.9	)

			Net expenditures	$	57.1		$	1,821.5		$	2,109.9		$	1,348.5

	Foreign
		Expenditures		$	54.4		$	3,758.4		$	3,668.0		$	2,861.9
		Proceeds from disposals			(69.1	)		(3,238.1	)		(2,981.6	)		(2,476.2	)

			Net expenditures	$	(14.7	)	$	520.3		$	686.4		$	385.7

			Successor		Predecessor
			December 31,
			2005		2004
Total assets at end of year
	United States		$	13,981.0	$	10,098.9
	Foreign			4,599.9		3,997.5

		Total	$	18,580.9	$	14,096.4

Revenue earning equipment, net, at end of year
	United States		$	7,270.9	$	6,704.5
	Foreign			2,204.1		2,418.4

		Total	$	9,475.0	$	9,122.9

Note 12—Litigation and Guarantees

On August 1, 2002,Jennifer Myers, an individual and on behalf of all others similarly situated, v. The Hertz Corporation was filed in the United States District Court for the Eastern District of New York. The complaint alleges a nationwide "opt-in collective action" on behalf of all Senior Station Managers, Station Managers and "B" Station Managers employed by us throughout the United States, contesting their exempt classification and seeking payment of overtime compensation under the federal Fair Labor Standards Act and seeks attorneys' fees and costs. Our motion for summary judgment was initially denied but, on reconsideration, the court granted our motion, in part, by ruling that the managers are salaried. This leaves to be tried the issue of the exempt status of the managers' duties. Plaintiffs' claims that we violated independent New York labor laws were previously dismissed and the plaintiffs' motion for opt in certification remains pending before the court.

On August 28, 2003,Naomi R. Henderson, individually and on behalf of all others similarly situated, v. The Hertz Corporation was commenced in the Superior Court of New Jersey, Essex County. Henderson purported to be a class action on behalf of all persons who purchased optional insurance products in the State of New Jersey or in other states from or through us at times that we did not have licenses to sell such insurance. The plaintiff sought unspecified compensatory damages, punitive damages, attorneys' fees, interest and costs and an order declaring such sales of insurance to be illegal, thereby voiding or making voidable the relevant contracts. In January 2004, our motion to dismiss was granted and an order of dismissal was thereafter entered. The plaintiff has appealed the dismissal, and that appeal has now been briefed, argued and submitted to the Superior Court of New Jersey, Appellate Division for a decision.

On December 22, 2003,Stephen Moore, on behalf of himself and all others similarly situated, v. The Hertz Corporation was commenced in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, in and for Hillsborough County.Moore purported to be a class action on behalf of persons who rented vehicles from us in Florida and were allegedly overcharged for the recovery of a tire and battery solid waste management fee and the recovery of registration fees for the issuance of Florida license plates. Similar lawsuits were separately commenced by the same plaintiff against Avis Rent A Car System Inc. and Budget Rent A Car System, Inc. In February 2004, the plaintiff filed an amended class action complaint which alleged that, in addition to the initial causes of action, we deceptively collected an improper "federal excise tax" on frequent flyer mileage awards to class members. The plaintiff sought unspecified damages for the alleged improper and wrongful acts, attorneys' fees, costs and injunctive relief. We answered the amended complaint and discovery commenced. In January 2005, we filed a motion for summary judgment and the plaintiff filed a revised motion for class certification. In June 2005, our motion for summary judgment was granted and the plaintiff's revised motion for class certification was denied. A final judgment was thereafter entered. In July 2005, the plaintiff filed a notice of appeal and that appeal is currently being briefed.

On March 15, 2004,Jose M. Gomez, individually and on behalf of all other similarly situated persons, v. The Hertz Corporation was commenced in the 214th Judicial District Court of Nueces County, Texas. Gomez purports to be a class action filed alternatively on behalf of all persons who were charged a Fuel and Service Charge, or "FSC," by us or all Texas residents who were charged a FSC by us. The complaint alleged that the FSC is an unlawful penalty and that, therefore, it is void and unenforceable. The plaintiff seeks compensatory damages, with the return of all FSC paid or the difference between the FSC and our actual costs, disgorgement of unearned profits, attorneys' fees and costs. In response to various motions by us, the plaintiff has filed two amended complaints which scaled back the putative class from a nationwide class to a class of all Texas residents who were charged a FSC by us or by our Corpus Christi licensee. A new cause of action was also added for conversion for which the plaintiff is

seeking punitive damages. After some limited discovery, we filed a motion for summary judgment in December 2004. That motion was denied in January 2005. The parties are now engaged in more extensive discovery.

On November 18, 2004,Keith Kochner, individually and on behalf of all similarly situated persons, v. The Hertz Corporation was commenced in the District Court in and for Tulsa County, State of Oklahoma. As with the Gomez case, Kochner purports to be a class action, this time on behalf of Oklahoma residents who rented from us and incurred our FSC. The petition alleged that the imposition of the FSC is a breach of contract and amounts to an unconscionable penalty or liquidated damages in violation of Article 2A of the Oklahoma Uniform Commercial Code. The plaintiff seeks compensatory damages, with the return of all FSC paid or the difference between the FSC and our actual costs, disgorgement of unearned profits, attorneys' fees and costs. In March 2005, the trial court granted our motion to dismiss the action but also granted the plaintiff the right to replead. In April 2005, the plaintiff filed an amended class action petition, newly alleging that our FSC violates the Oklahoma Consumer Protection Act and that we have been unjustly enriched, and again alleging that our FSC is unconscionable under Article 2A of the Oklahoma Uniform Commercial Code. In May 2005, we filed a motion to dismiss the amended class action petition. In October 2005, the court granted our motion to dismiss, but allowed the plaintiff to file a second amended complaint by the end of October, which the plaintiff did. A third amended complaint was filed in November 2005 and we then answered the complaint. Discovery has now commenced.

In February 2005, the Hazardous Materials Division of the San Diego Department of Environmental Health, or the "Department," indicated in writing that it was preparing to bring an administrative action against us due to an alleged noncompliance related to secondary containment testing for certain underground storage tanks located at one of our facilities. The Department verbally proposed a monetary penalty of approximately $113,000. We have commenced settlement discussions concerning the alleged violations.

On December 13, 2005,Janelle Johnson, individually and on behalf of all other similarly situated persons v. The Hertz Corporation was filed in the Second Judicial District Court of the County of Bernalillo, New Mexico. As with the Gomez and Kochner cases, Johnson purports to be a class action, this time on behalf of all New Mexico residents who rented from us and who were charged a FSC. The complaint alleges that the FSC is unconscionable as a matter of law under pertinent sections of the New Mexico Uniform Commercial Code and that, under New Mexico common law, the collection of FSC does not constitute valid liquidated damages, but rather is a void penalty. The plaintiff seeks compensatory damages, with the return of all FSC paid or the difference between the FSC and its actual cost. In the alternative, the plaintiff requests that the court exercise its equitable jurisdiction and order us to cease and desist from our unlawful conduct and to modify our lease provisions to conform with applicable provisions of New Mexico statutory and common law. The complaint also asks for attorneys fees and costs. We have removed the action to the U.S. District Court for the District of New Mexico, and, in lieu of an answer, filed a motion to dismiss.

We believe that we have meritorious defenses in the foregoing matters and will defend ourselves vigorously.

In addition, we are currently a defendant in numerous actions and have received numerous claims on which actions have not yet been commenced for bodily injury, including death, and property damage, referred to as "PL/PD," arising from the operation of motor vehicles and equipment rented from us and our licensees. In the aggregate, we can be expected to expend material sums to defend and settle PL/PD actions and claims or to pay judgments resulting from them.

Among the PL/PD pending actions against us are a total of 161 actions filed in Mississippi on behalf of 1,560 plaintiffs seeking damages for silicosis, which the plaintiffs allegedly sustained from the use of equipment (primarily air compressors) rented from HERC. The complaints name HERC as one of approximately 88 co-defendants (including the manufacturers of the equipment allegedly rented from HERC). All similar cases previously filed against us in Texas were either voluntarily dismissed or settled for a nominal amount. PL/PD claims and actions are provided for within our PL/PD program.

In addition to the foregoing, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries. Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided unfavorably to us or any of our subsidiaries involved. Although the amount of liability with respect to these matters cannot be ascertained, potential liability in excess of related accruals is not expected to materially affect our consolidated financial position, results of operations or cash flows.

Guarantees

At December 31, 2005, the following guarantees were issued and outstanding.

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

Sponsor: On the Closing Date of the Acquisition, Hertz entered into indemnification agreements with Hertz Holdings, the Sponsors and Hertz Holdings stockholders affiliated with the Sponsors, pursuant to which Hertz Holdings and Hertz will indemnify the Sponsors, the Hertz Holdings stockholders affiliated with the Sponsors and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of the Sponsors and certain other claims and liabilities, including liabilities arising out of financing arrangements and securities offerings.

Environmental: We have indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which we may be held responsible could be substantial. The probable losses that we expect to incur for such matters have been accrued and those losses are reflected in our consolidated financial statements. As of December 31, 2005 and 2004, the aggregate amounts accrued for environmental liabilities including liability for environmental indemnities, reflected in our consolidated balance sheet in "Other accrued liabilities" were $3.9 million and $5.4 million, respectively. The accrual generally represents the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required.

Cost estimates are developed by site. Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the site.

For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).

Tax: We provide various tax-related indemnifications as part of the transactions giving rise to the indemnification obligations. The indemnified party typically is protected from certain events that result in a tax treatment different from that originally anticipated. In some cases, a payment under a tax indemnification may be offset in whole or in part by refunds from the applicable governmental taxing authority. We are party to a number of tax indemnifications and many of these indemnities do not limit potential payment; therefore, we are unable to estimate a maximum amount of potential future payments that could result from claims made under these indemnities.

Note 13—Quarterly Financial Information (Unaudited)

A summary of the quarterly operating results during 2005 and 2004 were as follows (in thousands of dollars):

	Predecessor								Predecessor						Successor
									For the periods from
	First Quarter 2005		Second Quarter 2005			Third Quarter 2005			October 1, 2005 to December 20, 2005 As Previously Reported⁽¹⁾			October 1, 2005 to December 20, 2005 As Restated⁽¹⁾			December 21, 2005 to December 31, 2005
Revenues	$	1,640,573	$	1,862,329		$	2,123,630		$	1,688,213		$	1,688,213		$	154,469
Operating income (loss): pre-tax income (loss) before interest expense and minority interest		134,691		267,386	⁽²⁾		405,460	⁽³⁾		241,616	⁽⁶⁾		241,616	⁽⁶⁾		(7,483	)⁽⁶⁾
Income (loss) before income taxes and minority interest		35,479		154,554	⁽²⁾		264,296	⁽³⁾⁽⁴⁾		120,577	⁽⁶⁾⁽⁷⁾		120,577	⁽⁶⁾⁽⁷⁾		(33,218	)⁽⁶⁾
Net income (loss)		20,875		99,200			205,221	⁽⁵⁾		73,527	⁽⁸⁾		46,027	⁽⁸⁾⁽⁹⁾		(21,346	)

	Predecessor
	First Quarter 2004			Second Quarter 2004			Third Quarter 2004			Fourth Quarter 2004
Revenues	$	1,456,244		$	1,656,122		$	1,879,197		$	1,684,389
Operating income: pre-tax income before interest expense and minority interest		82,967			241,459	⁽¹⁰⁾		353,236			209,354	⁽¹²⁾
Income (loss) before income taxes and minority interest		(4,996	)		146,716	⁽¹⁰⁾		250,864			109,968	⁽¹²⁾
Net income (loss)		(3,283	)		95,466			184,440	⁽¹¹⁾		88,848	⁽¹¹⁾

⁽¹⁾: We have restated our previously issued consolidated statement of operations for the Predecessor period ended December 20, 2005. An explanation of the Restatement appears in Note 1A—Restatement of Predecessor Financial Statements. The

Restatement resulted in the previously reported provision for taxes to be increased by $27.5 million and net income to be decreased by $27.5 million due to the recording of additional non-cash tax expense relating to dividends repatriated prior to the Acquisition.

⁽²⁾: Includes a $14.9 million decrease in depreciation expense related to a change in revenue earning equipment depreciation rates in our domestic car rental operations and our North American equipment rental operations.
⁽³⁾: Includes a $9.8 million decrease in depreciation expense related to a change in revenue earning equipment depreciation rates in our domestic car rental operations and our North American equipment rental operations.
⁽⁴⁾: Includes interest expense of $16.3 million on the Intercompany note payable to Ford Holdings LLC (relating to the dividend declared and paid June 10, 2005).
⁽⁵⁾: Includes the reversal of a valuation allowance on foreign tax credit carryforwards of $35.0 million.
⁽⁶⁾: The total combined fourth quarter of 2005 includes a $10.3 million decrease in depreciation expense related to a change in revenue earning equipment depreciation rates in our domestic car rental operations and our North American equipment rental operations.
⁽⁷⁾: Includes interest expense of $15.6 million on the Intercompany note payable to Ford Holdings LLC (relating to the dividend declared and paid on June 10, 2005) for the Predecessor period October 1, 2005 to December 20, 2005. The note was repaid on December 21, 2005.
⁽⁸⁾: Includes favorable foreign tax adjustments of $5.3 million.
⁽⁹⁾: Includes a $31.3 million provision relating to the repatriation of foreign earnings.
⁽¹⁰⁾: Includes $7.0 million received regarding claims made by us on our insurance policies for business interruption losses resulting from the terrorist attacks of September 11, 2001.
⁽¹¹⁾: Includes favorable foreign tax adjustments of $23.3 million in the third quarter of 2004 and net favorable domestic and foreign tax adjustments of $23.3 million in the fourth quarter of 2004.
⁽¹²⁾: Includes a final gain of $7.5 million from the condemnation of a car rental and support facility in Florida.

Note 14—Financial Instruments

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash equivalents, short term investments and trade receivables. We place our cash equivalents with a number of financial institutions and investment funds to limit the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising our customer base, and their dispersion across different businesses and geographic areas. As of December 31, 2005, we had no significant concentration of credit risk.

Cash and Equivalents

Fair value approximates cost indicated on the balance sheet at December 31, 2005 because of the short-term maturity of these instruments.

Debt

For borrowings with an initial maturity of 93 days or less, fair value approximates carrying value because of the short-term nature of these instruments. For all other debt, fair value is estimated based on quoted market rates as well as borrowing rates currently available to us for loans with similar terms and average maturities. Since all debt was recorded at fair value on December 21, 2005 due to the Acquisition, the fair value approximates carrying value at December 31, 2005. The fair value of all debt at December 31, 2004 approximated $8.63 billion, compared to carrying value of $8.43 billion.

Derivative Instruments and Hedging Activities

We utilize certain derivative instruments to enhance our ability to manage risk relating to cash flow and interest rate exposure. Derivative instruments are entered into for periods consistent with the

related underlying exposures. We document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategies for undertaking various hedge transactions.

Interest Rate Risk

From time to time, we enter into interest rate swap agreements to manage interest rate risk. Effective September 30, 2003, we entered into interest rate swap agreements relating to the issuance of our 4.7% Notes due October 2, 2006. Effective June 3, 2004, we entered into interest rate swap agreements relating to the issuance of our 6.35% Notes due June 15, 2010. Under these agreements, we pay interest at a variable rate in exchange for fixed rate receipts, effectively transforming these notes to floating rate obligations. These swaps were accounted for as fair value hedges under SFAS 133. Prior to the Acquisition, the swap transactions qualified for the short-cut method of recognition under SFAS 133; therefore, no portion of the swaps were treated as ineffective. As of December 31, 2004, the fair values of the interest rate swaps associated with the 4.7% Notes and the 6.35% Notes were $7.0 million and $11.5 million, respectively. The fair value relating to the interest rate swap on the 4.7% Notes was reflected in the consolidated balance sheet in "Other accrued liabilities" with an offsetting decrease in "Debt." The fair value related to the interest rate swap on the 6.35% Notes was reflected in the consolidated balance sheet in "Prepaid expenses and other assets" with a corresponding increase in "Debt." As a result of the Acquisition, a significant portion of the underlying fixed rate debt was tendered, causing the interest rate swaps to be ineffective as of December 21, 2005. Consequently, as fair value hedge accounting must now be discontinued, any changes in the fair value of the derivatives are now recognized in earnings. As of December 31, 2005, the fair value adjustments relating to the interest rate swaps on the 4.7% Notes and the 6.35% Notes were $8.4 million and $8.7 million, respectively, which were reflected in the consolidated balance sheet in "Other accrued liabilities." Between December 21, 2005 (the date that hedge accounting was discontinued) and December 31, 2005, the fair value adjustment related to these swaps was a gain of $2.7 million, which was recorded in earnings. See Note 16—Subsequent Events.

In connection with the Acquisition and the issuance of $3.55 billion of floating rate U.S. Fleet Debt, Hertz Vehicle Financing LLC, or "HVF," a consolidated special purpose entity, entered into seven interest rate swap agreements, or the "HVF swaps," effective December 21, 2005, which qualify as cash flow hedging instruments in accordance with FAS 133. The HVF swaps were entered into for the purpose of locking in the interest cash outflows on the floating rate U.S. Fleet Debt. These agreements mature at various terms, in connection with the associated debt obligations, through November 25, 2011. Under these agreements, we pay interest at a fixed rate in exchange for variable rate receipts, effectively transforming the floating rate U.S. Fleet Debt Notes to fixed rate obligations. For the Successor period ended December 31, 2005, we recognized $1.0 million of additional interest expense, which resulted from the inherent ineffectiveness associated with the HVF swaps, as these interest rate swaps were entered into at off-market rates. HVF paid $44.8 million to reduce the fixed rate leg of the swap from the prevailing market rates to 4.5%. As of December 31, 2005, the fair value of these interest rate swap agreements was $37.0 million, which is reflected in the consolidated balance sheet in "Prepaid expenses and other assets."

Also in connection with the issuance of $3.55 billion of floating rate U.S. Fleet Debt, we entered into seven differential interest rate swap agreements, or the "differential swaps." These differential swaps were required to be put in place to protect the counterparties to the HVF swaps in the event of a default by HVF on the asset backed notes, which will cause a "rapid amortization" of the notes. In the event of a "rapid amortization period," the differential is transferred to us. There was no initial

payment associated with these differential swaps and their notional amounts are and will continue to be zero unless 1) there is an amortization event, which causes the rapid amortization of the loan balance, 2) there is an increased probability that an amortization event will occur, which would cause the rapid amortization of the loan balance, or 3) the debt is prepaid. Given this and that the initial assessment of the probability of the occurrence of an amortization event is considered remote, the current fair value of the differential swaps is considered to be zero. Should any of the above events occur, then the differential swaps will have a fair value, which will result in the differential swaps being recorded at fair value on the balance sheet, with a corresponding amount affecting earnings, as there is no qualifying hedge relationship.

In connection with our Euro Medium Term Notes, or the "Euro Medium Term Notes," that were not tendered to us in connection with the Acquisition, we entered into an interest rate swap agreement on December 21, 2005, effective January 16, 2006, maturing on July 16, 2007. The purpose of this swap is to lock in the interest cash outflows on the variable rate Euro Medium Term Notes. As the critical terms of the swap and remaining portion of the Euro Medium Term Notes match, the swap qualifies for cash flow hedge accounting and the shortcut method of assessing effectiveness, in accordance with FAS 133. Therefore, the fair value of the swap will be carried on the balance sheet, with offsetting gains or losses recorded in other comprehensive income. At December 31, 2005, the fair value of this swap was zero.

Foreign Currency Risk

We have entered into arrangements to manage exposure to fluctuations in foreign exchange rates, for selected marketing programs. These arrangements consist of the purchase of foreign exchange options. At December 31, 2005, the total notional amount of these instruments was $15.5 million, maturing at various dates in 2006 and 2007, and the fair value of all outstanding contracts, was approximately $0.3 million. The fair value of the foreign currency instruments was estimated using market prices provided by financial institutions. Gains and losses resulting from changes in the fair value of these instruments are included in earnings. The total notional amount included options to sell British Pounds, Yen, Canadian dollars and Euro, in the amounts of $9.5 million, $2.3 million, $2.2 million and $1.5 million, respectively.

We manage exposure to fluctuations in currency risk on intercompany loans we make to certain of our foreign subsidiaries by entering into foreign currency forward contracts, or "forwards," at the time of the loans. The forward rate is reflected in the intercompany loan rate to the foreign subsidiaries, and as a result, the forward contracts have no material impact on earnings. At December 31, 2005, the total notional amount of these forwards was $31.4 million, maturing within one month. The total notional amount includes forwards to sell Euro and Australian dollars in the notional amounts of $17.7 million and $13.7 million, respectively.

Note 15—Related Party Transactions

Relationship with Ford

Prior to the Acquisition, we were an indirect wholly owned subsidiary of Ford. We and certain of our subsidiaries had entered into contracts, or other transactions or relationships, with Ford or subsidiaries of Ford, the most significant of which are described below.

Car purchases/repurchases and advertising arrangements

Over the three years ended December 31, 2005, on a weighted-average basis, approximately 45% of the cars acquired by us for our U.S. car rental fleet, and approximately 33% of the cars acquired by us for our international fleet, were manufactured by Ford and subsidiaries. During 2005, approximately 41% of the cars we acquired domestically were manufactured by Ford and subsidiaries and approximately 34% of the cars we acquired for our international fleet were manufactured by Ford and subsidiaries, which represented the largest percentage of any automobile manufacturer in that year.

On July 5, 2005, Hertz, one of its wholly owned subsidiaries and Ford signed a Master Supply and Advertising Agreement, effective July 5, 2005 and expiring August 31, 2010, that covers the 2005 through 2010 vehicle model years. This agreement replaces and supersedes previously existing joint advertising and vehicle supply agreements that would have expired August 31, 2007.

The terms of the Master Supply and Advertising Agreement only apply to our fleet requirements and advertising in the United States and to Ford, Lincoln or Mercury brand vehicles, or "Ford Vehicles." Under the Master Supply and Advertising Agreement, Ford has agreed to supply to us and we have agreed to purchase from Ford, during each of the 2005 through 2010 vehicle model years, a specific number of Ford Vehicles. Ford has also agreed in the Master Supply and Advertising Agreement to pay us a contribution toward the cost of our advertising of Ford Vehicles equal to one-half of our total expenditure on such advertising, up to a specified maximum amount. To be eligible for advertising cost contribution under the Master Supply and Advertising Agreement, the advertising must meet certain conditions, including the condition that we feature Ford Vehicles in a manner and with a prominence that is reasonably satisfactory to Ford. It further provides that the amounts Ford will be obligated to pay to us for our advertising costs will be increased or reduced according to the number of Ford Vehicles acquired by us in any model year, provided Ford will not be required to pay any amount for our advertising costs for any year if the number of Ford Vehicles acquired by us in the corresponding model year is less than a specified minimum except to the extent that our failure to acquire the specified minimum number of Ford Vehicles is attributable to the availability of Ford Vehicles or Ford vehicle production is disrupted for reasons beyond the control of Ford. To the extent we acquire less than a specified minimum number of Ford Vehicles in any model year, we have agreed to pay Ford a specified amount per vehicle below the minimum.

The amounts contributed by Ford for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and 2003 were (in millions of dollars) $1.3, $42.4, $38.1 and $47.9, respectively. The advertising contributions paid by Ford for the 2005 vehicle model year under the Master Supply and Advertising Agreement were less than the advertising contributions we received from Ford for the 2004 model year. We expect that contributions in future years may also be below levels for the 2005 model year based upon anticipated reductions in the number of Ford Vehicles to be acquired. We do not expect that the reductions in Ford's advertising contributions will have a material adverse effect on our results of operations. We incurred net advertising expense for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and 2003 of (in millions of dollars) $5.0, $159.9, $168.3 and $126.9, respectively.

Under the terms of the Master Supply and Advertising Agreement we will be able to enter into vehicle advertising and supply agreements with other automobile manufacturers in the United States and in other countries, and we intend to explore those opportunities. However, we cannot offer assurance that we will be able to obtain advertising contributions from other automobile manufacturers that will mitigate the reduction in Ford's advertising contributions.

Ford subsidiaries and affiliates also supply other brands of cars, including Jaguar, Volvo, Mazda and Land Rover cars, to us in the United States under arrangements separate from the Master Supply and Advertising Agreement. In addition, Ford, its subsidiaries and affiliates are significant suppliers of cars to our international operations.

During the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and years ended December 31, 2004 and 2003, we purchased cars from Ford and its subsidiaries at a cost of approximately (in billions of dollars) $0.1, $4.7, $4.4 and $4.9, respectively. and sold cars to Ford and its subsidiaries under various repurchase programs for approximately (in billions of dollars) $0.1, $3.5, $3.3 and $3.8, respectively.

Stock option plan

Certain employees of ours participate in the stock option plan of Ford under Ford's 1998 Long-Term Incentive Plan. As a result of the Acquisition, all outstanding options became vested. See Note 1—Summary of Significant Accounting Policies and Note 7—Stock-Based Employee Compensation.

Financial arrangements

In February 1997, Ford extended us a line of credit of $500.0 million, which was to expire on June 30, 2006. This line of credit had an evergreen feature that provided on an annual basis for automatic one-year extensions of the expiration date, unless notice was provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminated however, at any time Ford ceased to own, directly or indirectly, our capital stock having more than 50% of the total voting power of all our outstanding capital stock. Our obligations under this agreement would have rankedpari passu with our senior debt securities. A commitment fee of 0.2% per annum was payable on the unused available credit. This line of credit terminated as a result of the Acquisition.

We maintained a Sales Agency Agreement with Ford Financial Services, Inc, or "FFS," a NASD registered broker/dealer and an indirect wholly owned subsidiary of Ford, whereby FFS acted as a dealer for our domestic commercial paper programs. Through our subsidiary Hertz Australia Pty. Limited, had a similar agreement with Ford Credit Australia Limited, also an indirect wholly owned subsidiary of Ford. These commercial paper agreements terminated as a result of the Acquisition.

As of December 31, 2004, Ford owed us and our subsidiaries $445.2 million, the majority of which related to various car repurchase and warranty programs. The balance at December 31, 2004, also included $250.7 million which represented amounts due under a tax sharing agreement with Ford. As of December 31, 2004, we owed Ford $76.5 million, (which was included in "Accounts payable" in our consolidated balance sheet), relating to vehicles purchased, and included the liability for Ford stock-based employee compensation. As a result of the Acquisition, all existing and future Ford receivables and payable relating to vehicles repurchased/sold and purchased, respectively, are classified as external manufacturer receivables and payables, respectively.

We historically made short-term investments with a Ford-controlled investment fund that pooled and invested excess cash balances of certain Ford subsidiaries to maximize returns. These short-term

investments totaled $557.0 million at December 31, 2004. Prior to the Acquisition, these short-term investments were liquidated.

Taxes

Prior to the Acquisition, we and our domestic subsidiaries filed consolidated Federal income tax returns with Ford. We had entered into a tax sharing agreement with Ford providing that we and Ford would make payments between us such that, with respect to any period, the amount of taxes to be paid by us (subject to certain adjustments) would be determined as though we were to file separate federal, state and local income tax returns as the common parent of an affiliated group of corporations filing combined, consolidated or unitary federal, state and local returns, rather than a consolidated subsidiary of Ford, with respect to federal, state and local income taxes. With respect to foreign tax credits, the agreement provided that our right to reimbursement will be determined based on usage of such foreign tax credits by the consolidated group.

On December 21, 2005, in connection with the Acquisition, we terminated our tax sharing agreement with Ford. In connection with the termination of the agreement, all payables and receivables under the agreement between us and Ford were cancelled, and neither we nor Ford have any future rights or obligations under the agreement.

Other relationships and transactions

We and Ford also engage in other transactions in the ordinary course of our respective businesses. These transactions include providing equipment rental services to Ford, our providing insurance and insurance claim management services to Ford and our providing car rental services to Ford. In addition, Ford subsidiaries are our car rental licensees in Scandinavia and Finland.

Relationship with Hertz Holdings and CCMG Corporation

On the Closing Date of the Acquisition, we entered into consulting agreements, or the "Consulting Agreements," with Hertz Holdings and each of the Sponsors (or one of their affiliates), pursuant to which such Sponsor or its affiliate will provide Holdings, us and our subsidiaries with financial advisory and management consulting services. Pursuant to the Consulting Agreements, we will pay to each Sponsor or its affiliate an annual fee of $1 million for such services, plus expenses, unless the Sponsors unanimously agree to a higher amount, and we may pay to them a fee for certain types of transactions that Holdings or its subsidiaries complete. If an individual designated by Clayton, Dubilier & Rice, Inc., or "CD&R," serves as both Chairman of our board of directors and Chief Executive Officer for any quarter, we will pay CD&R an additional fee of $500,000 for that quarter.

Our obligations under the Senior Term Facility and Senior ABL Facility are guaranteed by CCMG Corporation. See Note 3—Debt.

Sponsors

In connection with the Acquisition, Hertz paid a fee of $25 million to each Sponsor and reimbursed certain expenses of the Sponsors and their affiliates. Of this amount, $35 million has been recorded as deferred finance charges and $40 million has been recorded as direct costs of the Acquisition. In addition, an affiliate of one of the Sponsors was engaged to provide advisory services to the Sponsors and was paid a fee of $5 million. This affiliate is in the business of providing such services and was engaged by the Sponsors in an arms-length transaction.

Note 16—Subsequent Events

Interest Rate Swaps

During January 2006, we assigned our interest rate swaps relating to our 4.7% Notes due October 2, 2006 and our 6.35% Notes due June 15, 2010 to a third party in return for cash. As a result of the assignment of these interest rate swaps, we recorded a gain of $6.6 million in our statement of operations in "Selling, general and administrative expenses."

Hertz Holdings Stock Incentive Plan

All option grants will be non-qualified options with a per-share exercise price no less than fair market value of one share of Hertz Holdings stock on the grant date. Any stock options granted will generally have a term of ten years, and unless otherwise determined by the Board or the Compensation Committee of Hertz Holdings will vest in five equal annual installments. The Board or Compensation Committee may accelerate the vesting of an option at any time. In addition, vesting of options will be accelerated if Hertz Holdings experiences a change in control (as defined in the Stock Incentive Plan) unless options with substantially equivalent terms and economic value are substituted for existing options in place of accelerated vesting. Vesting of options will also be accelerated in the event of an employee's death or disability (as defined in the Stock Incentive Plan). Upon a termination for cause (as defined in the Stock Incentive Plan), all options held by an employee are immediately cancelled. Following a termination without cause, vested options will generally remain exercisable through the earliest of the expiration of their term or 60 days following termination of employment (180 days in the case of death, disability or retirement at normal retirement age).

Unless sooner terminated by our Board of Directors, the Stock Incentive Plan will remain in effect until February 15, 2016.

SCHEDULE I— CONDENSED FINANCIAL INFORMATION OF REGISTRANT

THE HERTZ CORPORATION
(Parent Company Only)

CONDENSED BALANCE SHEETS

(In Thousands of Dollars)

		Successor December 31,			Predecessor December 31,
		2005			2004
Assets
Cash and equivalents		$	150,757		$	174,756
Short-term investments			—			556,997
Due from Hertz affiliates			6,009,643			6,517,227
Receivables, net			212,085			513,902
Inventories, at lower of cost or market			23,570			19,506
Prepaid expenses and other assets			269,704			100,967
Revenue earning equipment, net			171,780			566,070
Property and equipment, net			873,380			796,170
Investments in subsidiaries, net			3,599,023			2,704,571
Goodwill and other intangible assets, net			3,140,430			433,141

	Total assets	$	14,450,372		$	12,383,307

Liabilities and Stockholder's Equity
Due to Hertz affiliates		$	5,420,943		$	2,656,100
Accounts payable			176,547			221,807
Accrued liabilities			204,008			240,283
Debt			5,517,810			5,795,361
Public liability and property damage			169,546			191,537
Deferred taxes on income			695,336			607,972

	Total liabilities		12,184,190			9,713,060
Stockholder's Equity:
Additional capital paid-in			2,295,000			983,132
Retained earnings (deficit)			(21,346	)		1,479,217
Accumulated other comprehensive income (loss)			(7,472	)		207,898

	Total stockholder's equity		2,266,182			2,670,247

	Total liabilities and stockholder's equity	$	14,450,372		$	12,383,307

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

THE HERTZ CORPORATION
(Parent Company Only)

CONDENSED STATEMENTS OF OPERATIONS

(In Thousands of Dollars)

			Successor			Predecessor
			For the periods from
			For the periods from						Years Ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			Years Ended December 31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
Total revenues			$	101,762		$	3,944,249		$	3,700,251		$	3,391,958
Expenses:
	Direct operating			60,700			2,275,201			2,087,910			1,832,580
	Depreciation of revenue earning equipment			49,902			1,579,035			1,336,539			1,232,178
	Selling, general and administrative			4,787			242,287			230,008			178,688
	Interest, net			10,723			303,084			258,395			243,702

		Total expenses		126,112			4,399,607			3,912,852			3,487,148

Loss before income taxes and equity in earnings (losses) of subsidiaries				(24,350	)		(455,358	)		(212,601	)		(95,190	)
Benefit for taxes on income				13,818			221,459			96,977			39,116
Equity in earnings (losses) of subsidiaries				(10,814	)		605,222			481,095			214,689

Net income (loss)			$	(21,346	)	$	371,323		$	365,471		$	158,615

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

THE HERTZ CORPORATION
(Parent Company Only)

CONDENSED STATEMENTS OF STOCKHOLDER'S EQUITY

(in Thousands of Dollars)

				Common Stock		Additional Capital Paid-In		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholder's Equity
Predecessor
Balance at:
DECEMBER 31, 2002				$	—	$	983,132	$	955,131		$	(16,376	)	$	1,921,887
		Net income							158,615						158,615
		Translation adjustment changes										149,037			149,037
		Unrealized holding losses on securities, net of tax of $61										(551	)		(551	)
		Minimum pension liability adjustment, net of tax of $1,748										(3,597	)		(3,597	)

			Total Comprehensive Income												303,504

DECEMBER 31, 2003					—		983,132		1,113,746			128,513			2,225,391
		Net income							365,471						365,471
		Translation adjustment changes										83,420			83,420
		Unrealized holding losses on securities, net of tax of $8										(82	)		(82	)
		Minimum pension liability adjustment, net of tax of $1,076										(3,953	)		(3,953	)

			Total Comprehensive Income												444,856

DECEMBER 31, 2004					—		983,132		1,479,217			207,898			2,670,247
		Net income (as restated)							371,323						371,323
		Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $281										424			424
		Translation adjustment changes										(123,893	)		(123,893	)
		Unrealized holding losses on securities, net of tax of $5										(37	)		(37	)
		Minimum pension liability adjustment, net of tax of $5,891										(12,076	)		(12,076	)

			Total Comprehensive Income												235,741
	Dividend to Ford Motor Company								(1,185,000	)					(1,185,000	)

DECEMBER 20, 2005, as restated					—		983,132		665,540			72,316			1,720,988

Successor
Balance at:
DECEMBER 21, 2005					—		—		—			—			—
	Capital contribution						2,295,000								2,295,000
		Net loss							(21,346	)					(21,346	)
		Change in fair value of derivatives qualifying as cash flow hedges, net of tax of $2,704										(4,078	)		(4,078	)
		Translation adjustment changes										(3,394	)		(3,394	)

			Total Comprehensive Loss												(28,818	)

DECEMBER 31, 2005				$	—	$	2,295,000	$	(21,346	)	$	(7,472	)	$	2,266,182

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

THE HERTZ CORPORATION
(Parent Company Only)

CONDENSED STATEMENTS OF CASH FLOWS

(in Thousands of Dollars)

			Successor			Predecessor			Predecessor
			For the periods from
			For the periods from						Years ended December31,
						January 1, 2005 to December 20, 2005 Restated			Years ended December31,
			December 21, 2005 to December 31, 2005			January 1, 2005 to December 20, 2005 Restated			2004			2003
Cash flows from operating activities:
	Net income (loss)		$	(21,346	)	$	371,323		$	365,471		$	158,615
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities			3,584,912			(683,925	)		(304,779	)		418,689

		Net cash provided by (used in) operating activities		3,563,566			(312,602	)		60,692			577,304

Cash flows from investing activities:
	Purchase predecessor company stock			(4,379,374	)		—			—			—
	Proceeds from sales (purchases) of short-term investments, net			—			556,997			(56,889	)		(500,108	)
	Revenue earning equipment expenditures			(3,396	)		(109,353	)		(914,104	)		(988,431	)
	Proceeds from disposal of revenue earning equipment			3,058			98,390			711,108			811,841
	Property and equipment expenditures			23,859			(177,008	)		(160,434	)		(139,567	)
	Proceeds from disposal of property and equipment			145			35,152			31,134			26,292
	Other investing activities			—			—			—			5,640

		Net cash provided by (used in) investing activities		(4,355,708	)		404,178			(389,185	)		(784,333	)

Cash flows from financing activities:
	Issuance of an intercompany note			—			1,185,000			—			—
	Proceeds from issuance of long-term debt			4,337,526			18,732			1,100,803			501,986
	Repayment of long-term debt			(4,886,310	)		(611,347	)		(900,000	)		(700,000	)
	Other financing activities			(1,165,986	)		881,371			254,143			208,628
	Dividends paid			—			(1,185,000	)		—			—
	Capital invested by third parties			2,295,000			—			—			—
	Payment of financing costs			(192,419	)		—			—			—

		Net cash provided by financing activities		387,811			288,756			454,946			10,614

Net increase (decrease) in cash and equivalents during the period				(404,331	)		380,332			126,453			(196,415	)
Cash and equivalents at beginning of period				555,088			174,756			48,303			244,718

Cash and equivalents at end of period			$	150,757		$	555,088		$	174,756		$	48,303

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

THE HERTZ CORPORATION
(Parent Company Only)

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1—Basis of Presentation

The accompanying condensed financial statements include only the accounts of The Hertz Corporation, or the "Company." Investments in the Company's subsidiaries are accounted for under the equity method. These condensed parent company financial statements have been prepared in accordance with Rule 12-04 of Regulation S-X, as restricted net assets of the Company's subsidiaries exceed 25% of the Company's consolidated net assets as of December 31, 2005.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted since this information is included in the Company's consolidated financial statements included elsewhere in this Form 10-K.

As a result of the restatement by The Hertz Corporation and its subsidiaries discussed in Note 1A to the audited annual consolidated financial statements included in this Amendment, the Company has restated its previously issued condensed statements of operations, stockholder's equity and cash flows for the Predecessor period ended December 20, 2005.

Note 2—Commitments and Contingencies

The following table details the contractual cash obligations of the Company for debt (excluding obligations for interest and estimated payments under interest rate swap agreements) as of December 31, 2005 (in thousands of dollars):

		Total			2006			2007			2008			2009			2010			Thereafter
Debt		$	5,581,882		$	564,316		$	129,054		$	49,595		$	71,131		$	49,077		$	4,718,709

The following table details the contractual cash obligations of the Company for operating leases and purchase obligations as of December 31, 2005 (in thousands of dollars):

		Total		Less than 1 Year		1–3 Years		3–5 Years		More than 5 Years
Operating leases and concession agreements		$	1,156,402	$	225,347	$	328,256	$	169,449	$	433,350
Purchase obligations			5,003,700		4,966,700		36,500		500		—

	Total	$	6,160,102	$	5,192,047	$	364,756	$	169,949	$	433,350

Note 3—Dividends

The following table details cash dividends received by the Company from its subsidiaries during 2005, 2004 and 2003 (in thousands of dollars):

		2005			2004			2003
Cash dividends		$	86,950		$	83,533		$	48,000

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

THE HERTZ CORPORATION AND SUBSIDIARIES

						Additions
			Balance at Beginning of Period			Charged to Expense		Translation Adjustments			Deductions			Balance at End of Period
			(In thousands of dollars)
Allowance for doubtful accounts:
Successor
		For the period from December 21, 2005 to December 31, 2005	$	—	^(a)	$	462	$	(10	)	$	(8	)^(b)	$	460
Predecessor
	For the period from January 1, 2005 to December 20, 2005		$	30,447		$	11,447	$	(1,202	)	$	22,529	^(b)	$	18,163
	Year ended December 31, 2004		$	35,758		$	14,133	$	1,123		$	20,567	^(b)	$	30,447
	Year ended December 31, 2003		$	29,047		$	23,053	$	3,646		$	19,988	^(b)	$	35,758

^(a): The underlying accounts receivable were revalued at their estimated net realizable value as of the date of the Acquisition. Accordingly, the allowance for doubtful accounts was valued at zero.
^(b): Amounts written off, net of recoveries.

ITEM 9A. CONTROLS AND PROCEDURES

Restatement of Predecessor Financial Statements and Impact on Internal Control over Financial Reporting

As discussed in Note 1A to our financial statements, we are restating our previously issued consolidated financial statements for the Predecessor period ended December 20, 2005, or the "Restatement." The Restatement revises our tax provision on repatriated foreign earnings. These dividends, which were initiated by Ford, our previous parent, and occurred prior to the Acquisition, resulted in an estimated provision for taxes of $54.1 million, net of foreign tax credits of $50.3 million, or $3.8 million. Upon Ford's completion of a detailed study in June 2006, for the purpose of preparing their 2005 tax return, it was determined that the amount of tax expense should be increased by $27.5 million to $31.3 million.

The dividends were originally completed as part of Ford pre-sale activities and also to obtain the one-time favorable tax treatment of dividends offered by the American Jobs Creation Act of 2004. Otherwise, it is not our policy to repatriate undistributed earnings of our foreign subsidiaries, but rather to invest them within their operations. All Federal income taxes associated with this one-time repatriation are to be paid by Ford and, as such, have no impact on the Successor period ended December 31, 2005 or in 2006 and beyond.

Our management, who has responsibility for establishing and maintaining internal control over financial reporting, concluded that the Restatement is not an indication of a material weakness existing as of December 31, 2005 because management has assessed our controls as of that date and determined they were adequate to prevent or detect a material misstatement to our financial statements after the Acquisition. Accordingly, the Restatement did not have an impact on our management's conclusion that our internal control over financial reporting and disclosure controls and procedures as of December 31, 2005 were effective. Also, our management has concluded that no revisions to our controls over income tax accounting and reporting were required as a result of this matter.

Evaluation of Disclosure Controls and Procedures

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

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

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005. The assessment was based on criteria established in the frameworkInternal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, after considering the impact of the Restatement, management concluded that our internal control over financial reporting was effective as of December 31, 2005. Management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurred during the quarter ended December 31, 2005 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART IV

ITEM 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this report:

		Page
(a) 1.	Financial Statements:
	The Hertz Corporation and Subsidiaries—
	Reports of Independent Registered Public Accounting Firm	31
	Consolidated Balance Sheets	33
	Consolidated Statements of Operations	34
	Consolidated Statements of Stockholder's Equity	35
	Consolidated Statements of Cash Flows	36
	Notes to Consolidated Financial Statements	38
2.	Financial Statement Schedules:
	The Hertz Corporation and Subsidiaries—
	Schedule I—Condensed Financial Information of Registrant	84
	Schedule II—Valuation and Qualifying Accounts	89
3.	Exhibits:

Exhibit Number		Description
2.1		Stock Purchase Agreement, dated as of September 12, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), Ford Holdings LLC and Ford Motor Company with respect to the sale of The Hertz Corporation (Incorporated by reference to Exhibit 99.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005)
3.1		Restated Certificate of Incorporation of The Hertz Corporation (Incorporated by reference to Exhibit (3)(i) to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2001)
3.2		By-Laws of The Hertz Corporation, as amended and restated on December 21, 2005**
4.1.1		Indenture, dated as of December 21, 2005, by and between CCMG Acquisition Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as Trustee, governing the U.S. Dollar 8.875% Senior Notes due 2014 and the Euro 7.875% Senior Notes due 2014**
4.1.2		Merger Supplemental Indenture, dated as of December 21, 2005, by and between The Hertz Corporation and Wells Fargo Bank, National Association, as Trustee, relating to the U.S. Dollar 8.875% Senior Notes due 2014 and the Euro 7.875% Senior Notes due 2014**
4.1.3		Supplemental Indenture in Respect of Subsidiary Guarantee, dated as of December 21, 2005, by and between The Hertz Corporation, the Subsidiary Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the U.S. Dollar 8.875% Senior Notes due 2014 and the Euro 7.875% Senior Notes due 2014**
4.2.1		Indenture, dated as of December 21, 2005, by and between CCMG Acquisition Corporation, as Issuer, the Subsidiary Guarantors from time to time parties thereto, and Wells Fargo Bank, National Association, as Trustee, governing the 10.5% Senior Subordinated Notes due 2016**
4.2.2		Merger Supplemental Indenture, dated as of December 21, 2005, by and between The Hertz Corporation and Wells Fargo Bank, National Association, as Trustee, relating to the 10.5% Senior Subordinated Notes due 2016**

4.2.3		Supplemental Indenture in Respect of Subsidiary Guarantee, dated as of December 21, 2005, by and between The Hertz Corporation, the Subsidiary Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee, relating to the 10.5% Senior Subordinated Notes due 2016**
4.3.1		Exchange and Registration Rights Agreement, dated as of December 21, 2005, by and between CCMG Acquisition Corporation, Deutsche Bank Securities Inc. and the other financial institutions named therein, relating to the 8.875% Senior Notes due 2014 and the 7.875% Senior Notes due 2014**
4.3.2		Joinder Agreement to the Exchange and Registration Rights Agreement, dated as of December 21, 2005, of The Hertz Corporation. relating to the 8.875% Senior Notes due 2014 and the 7.875% Senior Notes due 2014**
4.3.3		Joinder Agreement to the Exchange and Registration Rights Agreement, dated as of December 21, 2005, of the Subsidiary Guarantors named therein, relating to the 8.875% Senior Notes due 2014 and the 7.875% Senior Notes due 2014**
4.4.1		Exchange and Registration Rights Agreement, dated as of December 21, 2005, by and between CCMG Acquisition Corporation, Deutsche Bank Securities Inc. and the other financial institutions named therein, relating to the 10.5% Senior Subordinated Notes due 2016**
4.4.2		Joinder Agreement to the Exchange and Registration Rights Agreement, dated as of December 21, 2005, of The Hertz Corporation, relating to the 10.5% Senior Subordinated Notes due 2016**
4.4.3		Joinder Agreement to the Exchange and Registration Rights Agreement, dated as of December 21, 2005, of the Subsidiary Guarantors named therein, relating to the 10.5% Senior Subordinated Notes due 2016**
4.5.1		Senior Bridge Facilities Agreement, dated as of December 21, 2005, by and between Hertz International, Ltd., certain of its subsidiaries, Hertz Europe Limited, as Coordinator, BNP Paribas and The Royal Bank of Scotland plc, as Mandated Lead Arrangers, Calyon, as Co-Arranger, BNP Paribas, The Royal Bank of Scotland plc, and Calyon, as Joint Bookrunners, BNP Paribas, as Facility Agent, BNP Paribas, as Security Agent, BNP Paribas, as Global Coordinator, and the financial institutions named therein**
4.5.2		Intercreditor Deed, dated as of December 21, 2005, by and between Hertz International, Ltd., as Parent, Hertz Europe Limited, as Coordinator, certain of its subsidiaries, BNP Paribas as A/C Facility Agent and NZ Facility Agent, BNP Paribas as Security Agent, Banco BNP Paribas Brasil S.A., as Brazilian Facility Agent, BNP Paribas, as Australian Security Trustee, the financial institutions named therein, and The Hertz Corporation**
4.5.3		Australian Purchaser Charge (Project H) — Unlimited, dated as of December 21, 2005, by and between Hertz Australia Pty Limited and HA Funding Pty Limited**
4.5.4		Australian Purchaser Charge (Project H) — South Australia, dated as of December 21, 2005, by and between Hertz Australia Pty Limited and HA Funding Pty Limited**
4.5.5		Australian Purchaser Charge (Project H) — Queensland, dated as of December 21, 2005, by and between Hertz Australia Pty Limited and HA Funding Pty Limited**
4.5.6		Australian Share Mortgage of Purchaser Shares (Project H), dated as of December 21, 2005, by and between Hertz Investment (Holdings) Pty Limited and HA Funding Pty Limited**
4.5.7		Australian Issuer Charge (Project H), dated as of December 21, 2005, by and between Hertz Note Issuer Pty Limited and HA Funding Pty Limited**

4.5.8		Australian Borrower Charge (Project H), dated as of December 20, 2005, by and between HA Funding Pty Limited and the BNP Paribas**
4.5.9		Australian Security Trust Deed (Project H), dated as of December 21, 2005, between HA Funding Pty Limited and BNP Paribas**
4.5.10		Business Pledge Agreement, dated as of December 21, 2005, by and between Hertz Belgium N.V., as Pledgor, and BNP Paribas S.A., as Pledgee (English language version)**
4.5.11		Receivables and Bank Account Pledge Agreement, dated as of December 21, 2005, by and between Hertz Belgium NV as Pledgor, and BNP Paribas, as Pledgee**
4.5.12		Share Pledge Agreement, dated as of December 21, 2005, by and between Hertz Holdings Netherlands B.V., as Pledgor, and BNP Paribas, as Pledgee**
4.5.13		Security Agreement, dated as of December 21, 2005, by and between Hertz Canada Limited, as Obligor, and BNP Paribas (Canada), as Security Agent**
4.5.14.1		Deed of Hypothec, dated as of December 21, 2005, by and between Hertz Canada Limited and BNP Paribas (Canada), and related Bond and Bond Pledge Agreement**
4.5.14.2		Bond Pledge Agreement, dated as of December 21, 2005, by and between Hertz Canada Limited, as Pledgor, and BNP Paribas (Canada), as Security Agent**
4.5.15		Security Agreement, dated as of December 21, 2005, by and between 1677932 Ontario Limited, as Obligor, and BNP Paribas (Canada), as Security Agent**
4.5.16		Security Agreement, dated as of December 21, 2005, by and between CMGC Canada Acquisition ULC, as Obligor, and BNP Paribas (Canada), as Security Agent**
4.5.17		Pledge of a Business as a Going Concern(Acte de Nantissement de Fonds de Commerce), dated as of December 21, 2005, by and between Hertz France, as Pledgor, and BNP Paribas, as Security Agent, and the beneficiaries described therein (English language version)**
4.5.18		Bank Account Pledge Agreement(Acte de Nantissement de Solde de Compte Bancaire), dated as of December 21, 2005, by and between Hertz France, as Pledgor, and BNP Paribas, as Security Agent, and the beneficiaries described therein (English language version)**
4.5.19		Share Account Pledge Agreement(Acte de Nantissement de Compte d'Instruments Financiers), dated as of December 21, 2005, by and between Hertz France, as Pledgor, BNP Paribas, as Security Agent, Hertz Equipement France, as Account Holder, BNP Paribas, as Bank Account Holder, and the beneficiaries described therein**
4.5.20		Pledge of a Business as a Going Concern(Acte de Nantissement de Fonds de Commerce), dated as of December 21, 2005, by and between Hertz Equipement France, as Pledgor, BNP Paribas, as Security Agent, and the beneficiaries described therein (English language version)**
4.5.21		Bank Account Pledge Agreement(Acte de Nantissement de Solde de Compte Bancaire), dated as of December 21, 2005, by and between Hertz Equipement France, as Pledgor, BNP Paribas, as Security Agent, and the beneficiaries described therein (English language version)**
4.5.22		Master Agreement For Assignment of Receivables(Contrat Cadre de Cession de Creances Professionnelles a Titre de Garantie), dated as of December 21, 2005, by and between Hertz Equipement France, as Assignor, BNP Paribas, as Security Agent, and the assignees described therein**
4.5.23		Pledge of a Business as a Going Concern(Acte de Nantissement de Fonds de Commerce), dated as of December 21, 2005, by and between Equipole Finance Services, as Pledgor, BNP Paribas, as Security Agent, and the beneficiaries described therein (English language version)**

4.5.24		Master Agreement for Assignment of Receivables(Contrat Cadre de Cession de Creances Professionnelles a Titre de Garantie), dated as of December 21, 2005, by and between Equipole Finance Services, as Assignor, BNP Paribas, as Security Agent, and the assignees described therein**
4.5.25		Bank Account Pledge Agreement(Acte de Nantissement de Solde de Compte Bancaire), dated as of December 21, 2005, by and between Equipole Finance Services, as Pledgor, BNP Paribas, as Security Agent, and the beneficiaries described therein (English language version)**
4.5.26		Shares Account Pledge Agreement(Acte de Nantissement de Compte d'Instruments Financiers), dated as of December 21, 2005, by and between Equipole, as Pledgor, BNP Paribas, as Security Agent, Equipole Finance Services, as Account Holder, BNP Paribas, as Bank Account Holder, and the beneficiaries described therein**
4.5.27		Share Account Pledge Agreement(Acte de Nantissement de Compte d'Instruments Financiers), dated as of December 21, 2005, by and between Equipole, as Pledgor, BNP Paribas, as Security Agent, Hertz France, as Account Holder, BNP Paribas, as Bank Account Holder, and the beneficiaries described therein**
4.5.28		Shares Account Pledge Agreement(Acte de Nantissement de Compte d'Instruments Financiers), dated as of December 21, 2005, by and between Equipole, as Pledgor, BNP Paribas, as Security Agent, Hertz Equipement France, as Account Holder, BNP Paribas, as Bank Account Holder, and the beneficiaries described therein**
4.5.29		Account Pledge Agreement, dated as of December 21, 2005, among Hertz Autovermietung GmbH, The Royal Bank of Scotland plc, Calyon, BNP Paribas (Canada) and Indosuez Finance (U.K) Limited as Pledgees and BNP Paribas S.A. as Security Agent**
4.5.30		Global Assignment Agreement, dated as of December 21, 2005, between Hertz Autoverrmietung GmbH as assignor and BNP Paribas S.A. as Security Agent and lender (English language version)**
4.5.31		Security Transfer of Moveable Assets, dated as of December 21, 2005, between Hertz Autovermietung GmbH as assignor and BNP Paribas S.A. as Security Agent and lender**
4.5.32		Share Pledge Agreement, dated as of December 21, 2005, among Equipole S.A. (France), The Royal Bank of Scotland plc, Calyon, BNP Paribas (Canada), Indosuez Finance (U.K.) Limited and BNP Paribas S.A., as Security Agent**
4.5.33		Security Assignment of Receivables, dated as of December 21, 2005, between Hertz Italiana S.p.A as assignor and BNP Paribas S.A. as Security Agent**
4.5.34		Pledge Agreement over the Balance of Bank Account, dated as of December 21, 2005, between Hertz Italiana S.p.A as pledgor and BNP Paribas S.A. as Pledgee and Security Agent**
4.5.35		Pledge Agreement over the Balance of Bank Account, dated as of December 21, 2005, between Hertz Italiana S.p.A., as Pledgor, and BNP Paribas S.A., as Pledgee and Security Agent**
4.5.36		Pledge Agreement over Hertz Italiana S.p.A. shares, dated as of December 21, 2005, between Hertz Holding South Europe S.r.l as Pledgor and BNP Paribas S.A. as Pledgee and Security Agent**
4.5.37		Deed of Non-Possessory Pledge of Movables, dated as of December 21, 2005, between Stuurgroep Holland B.V., as Pledgor, and BNS Automobile Funding B.V. and BNP Paribas as Security Agent, as Pledgees**

4.5.38		Deed of Disclosed Pledge of Receivables, dated as of December 21, 2005, between Stuurgroep Holland B.V., as Pledgor, and BNS Automobile Funding B.V. and BNP Paribas as Security Agent, as Pledgees**
4.5.39		Deed of Undisclosed Pledge of Receivables between Stuurgroep Holland B.V., as Pledgor, and BNS Automobile Funding B.V. and BNP Paribas as Security Agent, as Pledgees**
4.5.40		Deed of Pledge of Registered Shares, dated as of December 21, 2005, between Stuurgroep Holland B.V., as Pledgor, BNS Automobile Funding B.V. and BNP Paribas, as Pledgees, and Hertz Automobielen Netherlands B.V.**
4.5.41		Deed of Pledge on Registered Shares, dated as of December 21, 2005, between Hertz Holdings Netherlands B.V., as Pledgor, BNS Automobile Funding B.V., as Pledgee, and Stuurgroep Holland B.V.**
4.5.42		Deed of Disclosed Pledge of Receivables between BNS Automobile Funding B.V., as Pledgor, and BNP Paribas as Security Agent, as Pledgee**
4.5.43		Pledges of Shares Contract, dated as of December 21, 2005, among Hertz de España, S.A, Hertz Alquiler de Maquinaria, S.L., BNS Automobile Funding B.V. and BNP Paribas S.A. as Security Agent relating to Hertz Alquiler de Maquinaria**
4.5.44		Contract on Pledges of Credit Rights, dated as of December 21, 2005, among Hertz de España, S.A., BNS Automobile Funding B.V. and BNP Paribas S.A. as Security Agent**
4.5.45		Pledge of Credit Rights of Insurance Policies Contract, dated as of December 21, 2005,among Hertz de España, S.A., BNS Automobile Funding B.V. and BNP Paribas S.A. as Security Agent**
4.5.46		Pledge of Credit Rights of Bank Accounts, dated as of December 21, 2005 among Hertz de España, S.A., as Pledgor, BNS Automobile Funding B.V. and BNP Paribas S.A., as Security Agent**
4.5.47		Pledges over VAT Credit Rights Contract, dated as of December 21, 2005, among Hertz de España, S.A., as Pledgor, BNS Automobile Funding B.V. and BNP Paribas S.A., as Security Agent**
4.5.48		Contract on Pledges of Credit Rights, dated as of December 21, 2005, among Hertz Alquiler de Maquinaria, S.L., as Pledgor, BNS Automobile Funding B.V. and BNP Paribas S.A., as Security Agent**
4.5.49		Pledge of Credit Rights of Bank Accounts Contract, dated as of December 21, 2005, among Hertz Alquiler de Maquinaria, S.L., as Pledgor, BNS Automobile Funding B.V. and BNP Paribas S.A., as Security Agent**
4.5.50		Pledges of Credit Rights of Insurance Policies Contract, dates as of December 21, 2005, among Hertz Alquiler de Maquinaria, S.L., as Pledgor, BNS Automobile Funding B.V. and BNP Paribas S.A., as Security Agent**
4.5.51		Pledges over VAT Credit Rights Contracts, dated as of December 21, 2005, among Hertz Alquiler de Maquinaria S.L., as Pledgor, BNS Automobile Funding B.V., and BNP Paribas S.A., as Security Agent**
4.5.52		Pledges of Credit Rights Contract, dated as of December 21, 2005, among BNS Automobile Funding B.V., as Pledgor, Hertz de Espana S.A., Hertz Alquiler de Maquinaria, S.L., and BNP Paribas S.A., as Security Agent**
4.5.53		Pledges of Shares Contract, dated as of December 21, 2005, among Hertz International Ltd., Hertz Equipment Rental International, Limited, Hertz de España, S.A., and BNP Paribas S.A., as Security Agent**

4.5.54		Share Pledge Agreement, dated as of December 21, 2005, between Hertz AG and BNP Paribas S.A. as Security Agent relating to the pledge of the entire share capital of Züri-Leu Garage AG and SociétéImmobilière Fair Play**
4.5.55		Assignment Agreement, dated as of December 21, 2005, between Hertz AG and BNP Paribas S.A. as Security Agent relating to the assignment and transfer of trade receivables, insurance claims, inter-company receivables and bank accounts**
4.5.56		Share Pledge Agreement, dated as of December 21, 2005, between Hertz Holdings South Europe S.r.l and BNP Paribas S.A. as Security Agent relating to the pledge of the entire share capital of Hertz AG**
4.5.57		Deed of Charge, dated as of December 21, 2005, between Hertz (U.K.) Limited as Chargor and BNP Paribas as Security Agent**
4.5.58		Deed of Charge over Shares, in Hertz (U.K.) Limited, dated as of December 21, 2005, between Hertz Holdings II U.K. Limited as Chargor and BNP Paribas as Security Agent**
4.5.59		Deed of Charge over Shares in Hertz Holdings III UK Limited, dated as of December 21, 2005, between Hertz International, Ltd. and BNP Paribas as Security Agent**
4.5.60		Deed of Charge, dated as of December 21, 2005, between BNS Automobile Funding B.V. as Chargor and BNP Paribas as Security Agent**
4.6.1		Credit Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, the several lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent, Lehman Commercial Paper Inc., as Syndication Agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Documentation Agent, Deutsche Bank Securities Inc., Lehman Brothers Inc., and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Joint Lead Arrangers, and BNP Paribas, The Royal Bank of Scotland plc, and Calyon New York Branch, as Co-Arrangers, and Deutsche Bank Securities Inc., Lehman Brothers, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Goldman Sachs Credit Partners L.P., and JPMorgan Chase Bank, N.A., as Joint Bookrunning Managers**
4.6.2		Guarantee and Collateral Agreement, dated as of December 21, 2005, by and between CCMG Corporation, The Hertz Corporation, certain of its subsidiaries, and Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent**
4.6.3		Copyright Security Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, certain of its subsidiaries, and Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent**
4.6.4		Trademark Security Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, certain of its subsidiaries, and Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent**
4.6.5		Deed of Trust, Security Agreement, and Assignment of Leases and Rents and Fixture Filing, dated as of December 21, 2005, among the Hertz Corporation and Deutsche Bank AG, New York Branch.**
4.6.6		Term Loan Mortgage Schedule listing the material differences in mortgages from Exhibit 4.6.5 for each of the mortgaged properties.**

4.7.1		Credit Agreement, dated as of December 21, 2005, by and between Hertz Equipment Rental Corporation, The Hertz Corporation, the Canadian Borrowers parties thereto, the several lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent, Deutsche Bank AG, Canada Branch, as Canadian Agent and Canadian Collateral Agent, Lehman Commercial Paper Inc., as Syndication Agent, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Documentation Agent, Deutsche Bank Securities Inc., Lehman Brothers Inc., and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, as Joint Lead Arrangers, BNP Paribas, The Royal Bank of Scotland plc, and Calyon New York Branch, as Co-Arrangers, and Deutsche Bank Securities Inc., Lehman Brothers Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner and Smith Incorporated, Goldman Sachs Credit Partners L.P., and JPMorgan Chase Bank, N.A., as Joint Bookrunning Managers.**
4.7.2		U.S. Guarantee and Collateral Agreement, dated as of December 21, 2005, by and between CCMG Corporation, The Hertz Corporation, certain of its subsidiaries, and Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent**
4.7.3		Canadian Guarantee and Collateral Agreement, dated as of December 21, 2005, by and between Matthews Equipment Limited, Western Shut-Down (1995) Limited, certain of its subsidiaries, and Deutsche Bank AG, Canada Branch, as Canadian Agent and Canadian Collateral Agent**
4.7.4		Copyright Security Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, certain of its subsidiaries, and Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent**
4.7.5		Trademark Security Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, certain of its subsidiaries, and Deutsche Bank AG, New York Branch, as Administrative Agent and Collateral Agent**
4.7.6		Trade-mark Security Agreement, dated as of December 21, 2005, by and between Matthews Equipment Limited and Deutsche Bank AG, Canada Branch, as Canadian Agent and Canadian Collateral Agent**
4.7.7		Deed of Trust, Security Agreement, and Assignment of Leases and Rents and Fixture Filing, dated as of December 21, 2005, among the Hertz Corporation and Deutsche Bank AG, New York Branch.**
4.7.8		Term Loan Mortgage Schedule listing the material differences in mortgages from Exhibit 4.7.7 for each of the mortgaged properties.**
4.8		Intercreditor Agreement, dated as of December 21, 2005, by and between Deutsche Bank AG, New York Branch, as ABL Agent, Deutsche Bank AG, New York Branch, as Term Agent, as acknowledged by CCMG Corporation, The Hertz Corporation and certain of its subsidiaries**
4.9.1		Amended and Restated Base Indenture, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee**
4.9.2		Series 2005-1 Supplement to the Amended and Restated Base Indenture, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee and Securities Intermediary**
4.9.3		Series 2005-2 Supplement to the Amended and Restated Base Indenture, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee and Securities Intermediary**

4.9.4		Series 2005-3 Supplement to the Amended and Restated Base Indenture, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee and Securities Intermediary**
4.9.5		Series 2005-4 Supplement to the Amended and Restated Base Indenture, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee and Securities Intermediary**
4.9.6		Amended and Restated Series 2004-1 Supplement to the Amended and Restated Base Indenture, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee and Securities Intermediary**
4.9.7		Amended and Restated Master Motor Vehicle Operating Lease and Servicing Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, as Lessee and Servicer, and Hertz Vehicle Financing LLC, as Lessor**
4.9.8		Amended and Restated Participation, Purchase and Sale Agreement, dated as of December 21, 2005, by and between Hertz General Interest LLC, Hertz Vehicle Financing LLC and The Hertz Corporation, as Lessee and Servicer**
4.9.9		Purchase and Sale Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicle Financing LLC and Hertz Funding Corp.**
4.9.10		Contribution Agreement, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC and The Hertz Corporation**
4.9.11		Amended and Restated Collateral Agency Agreement, dated as of December 21, 2005, by and between Hertz Vehicle Financing LLC, as a Grantor, Hertz General Interest LLC, as a Grantor, The Hertz Corporation, as Servicer, BNY Midwest Trust Company, as Collateral Agent, BNY Midwest Trust Company, as Trustee and Secured Party, and The Hertz Corporation, as Secured Party**
4.9.12		Amended and Restated Administration Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicle Financing LLC, and BNY Midwest Trust Company, as Trustee**
4.9.13		Master Exchange Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicle Financing LLC, Hertz General Interest LLC, Hertz Car Exchange Inc., and J.P. Morgan Property Holdings LLC**
4.9.14		Escrow Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicle Financing LLC, Hertz General Interest LLC, Hertz Car Exchange Inc., and J.P. Morgan Chase Bank, N.A.**
4.9.15		Amended and Restated Class A-1 Note Purchase Agreement (Series 2005-3 Variable Funding Rental Car Asset Backed Notes, Class A-1), dated as of March 3, 2006, by and between Hertz Vehicle Financing LLC, The Hertz Corporation, as Administrator, certain Conduit Investors, each as a Conduit Investor, certain Financial Institutions, each as a Committed Note Purchaser, certain Funding Agents, and Lehman Commercial Paper Inc., as Administrative Agent**
4.9.16		Amended and Restated Class A-2 Note Purchase Agreement (Series 2005-3 Variable Funding Rental Car Asset backed Notes, Class A-2), dated as of March 3, 2006, by and between Hertz Vehicle Financing LLC, The Hertz Corporation, as Administrator, certain Conduit Investors, each as a Conduit Investor, certain Financial Institutions, each as a Committed Note Purchaser, certain Funding Agents, and Lehman Commercial Paper Inc., as Administrative Agent**

4.9.17		Amended and Restated Class A Note Purchase Agreement (Series 2005-4 Variable Funding Rental Car Asset Backed Notes, Class A), dated as of March 3, 2006, by and between Hertz Vehicle Financing LLC, The Hertz Corporation, as Administrator, certain Conduit Investors, each as a Conduit Investor, certain Financial Institutions, each as a Committed Note Purchaser, certain Funding Agents, and Lehman Commercial Paper Inc., as Administrative Agent**
4.9.18		Letter of Credit Facility Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicle Financing LLC, and Ford Motor Company**
4.9.19		Insurance Agreement, dated as of December 21, 2005, by and between MBIA Insurance Corporation, as Insurer, Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee**
4.9.20		Insurance Agreement, dated as of December 21, 2005, by and between Ambac Assurance Corporation, as Insurer, Hertz Vehicle Financing LLC, as Issuer, and BNY Midwest Trust Company, as Trustee**
4.9.21		Note Guaranty Insurance Policy, dated as of December 21, 2005, of MBIA Insurance Corporation, relating to Series 2005-1 Rental Car Asset Backed Notes**
4.9.22		Note Guaranty Insurance Policy, dated as of December 21, 2005, of MBIA Insurance Corporation, relating to Series 2005-4 Rental Car Asset Backed Notes**
4.9.23		Note Guaranty Insurance Policy, dated as of December 21, 2005, of Ambac Assurance Corporation, relating to Series 2005-2 Rental Car Asset Backed Notes**
4.9.24		Note Guaranty Insurance Policy, dated as of December 21, 2005, of Ambac Assurance Corporation, relating to Series 2005-3 Rental Car Asset Backed Notes**
10.1		Hertz Global Holdings, Inc. Stock Incentive Plan* **
10.2		Form of Stock Subscription Agreement under Stock Incentive Plan* **
10.3		Form of Stock Option Agreement under Stock Incentive Plan* **
10.4		Employment Agreement between The Hertz Corporation and Craig R. Koch (Incorporated by reference to Exhibit 10.4(3) to our Registration Statement No. 333-125764)*
10.5		Form of Change in Control Agreement (and certain terms related thereto) among The Hertz Corporation, Ford Motor Company and each of Messrs. Koch, Nothwang, Siracusa, Taride and Plescia (Incorporated by reference to Exhibit 10.5 to our Registration Statement No. 333-125764)*
10.6		Non-Compete Agreement, dated April 10, 2000, between Hertz Europe Limited and Michael Taride (Incorporated by reference to Exhibit 10.6 to our Registration Statement No. 333-125764)*
10.7		The Hertz Corporation Compensation Supplemental Retirement and Savings Plan (Incorporated by reference to Exhibit 10.7 to our Registration Statement No. 333-125764)*
10.8		The Hertz Corporation Executive Long Term Incentive Compensation Plan (Incorporated by reference to Exhibit 10.8 our Registration Statement No. 333-125764)*
10.9		The Hertz Corporation Supplemental Executive Retirement Plan (Incorporated by reference to Exhibit 10.9 to our Registration Statement No. 333-125764)*
10.10		The Hertz Corporation Benefit Equalization Plan (Incorporated by reference to Exhibit 10.10 to our Registration Statement No. 333-125764)*
10.11		The Hertz Corporation Key Officer Postretirement Assigned Car Benefit Plan (Incorporated by reference to Exhibit 10.11 to our Registration Statement No. 333-125764)*

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10.12		The Hertz Corporation Retirement Plan (Incorporated by reference to Exhibit 10.12 to our Registration Statement No. 333-125764)*
10.13		The Hertz Corporation (UK) 1972 Pension Plan (Incorporated by reference to Exhibit 10.13 to our Registration Statement No. 333-125764)*
10.14		The Hertz Corporation (UK) Supplementary Unapproved Pension Scheme (Incorporated by reference to Exhibit 10.14 to our Registration Statement No. 333-125764)*
10.15		RCA Executive Deferred Compensation Plan and Employee Participation Agreement, dated May 29, 1985, between Craig R. Koch and The Hertz Corporation (Incorporated by reference to Exhibit 10.15 to our Registration Statement No. 333-125764)*
10.16		The Hertz Corporation 2005 Executive Incentive Compensation Plan* **
10.17		Letter Agreement, dated October 19, 2005, as amended and restated as of November 15, 2005, between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.) and Craig R. Koch* **
10.18		Amended and Restated Indemnification Agreement, dated as of December 21, 2005, by and between The Hertz Corporation, Hertz Vehicles LLC, Hertz Funding Corp., Hertz General Interest LLC, and Hertz Vehicle Financing LLC**
10.19		Consulting Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, and Clayton, Dubilier & Rice, Inc.**
10.20		Consulting Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, and TC Group IV, L.L.C.**
10.21		Consulting Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, and Merrill Lynch Global Partners, Inc.**
10.22		Indemnification Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, Clayton, Dubilier & Rice Fund VII, L.P., CDR CCMG Co-Investor L.P., and Clayton, Dubilier & Rice, Inc.**
10.23		Indemnification Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, Carlyle Partners IV, L.P., CP IV Coinvestment L.P., CEP II U.S. Investments, L.P., CEP II Participations S.à.r.l., and TC Group IV, L.L.C.**
10.24		Indemnification Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), The Hertz Corporation, ML Global Private Equity Fund, L.P., Merrill Lynch Ventures L.P. 2001, CMC-Hertz Partners, L.P., ML Hertz Co-Investor, L.P., and Merrill Lynch Global Partners, Inc.**
10.25		Tax Sharing Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), CCMG Corporation, The Hertz Corporation, and Hertz International, Ltd.**
10.26		Tax Sharing Agreement, dated as of December 21, 2005, by and between CCMG Holdings, Inc. (now known as Hertz Global Holdings, Inc.), CCMG Corporation, and The Hertz Corporation**

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10.27		Master Supply and Advertising Agreement, dated as of July 5, 2005, by and between Ford Motor Company, The Hertz Corporation and Hertz General Interest LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2005. Such Exhibit omits certain information that has been filed separately with the Securities and Exchange Commission and submitted pursuant to an application for confidential treatment.)
12.1		Computation of Consolidated Ratio of Earnings to Fixed Charges for the Successor period ended December 31, 2005 and the Predecessor period ended December 20, 2005 and each of the four years ended December 31, 2004***
21.1		List of Subsidiaries**
23.1		Consents of Independent Registered Public Accounting Firm.†
31.1		Certification of the Chief Executive Officer Pursuant to Rule 15d-14(a)†
31.2		Certification of the Chief Financial Officer Pursuant to Rule 15d-14(a)†
32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350†
32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350†

*: Denotes management contract or compensatory plan, contract or arrangement.
**: Incorporated by reference to the exhibit of the same number to our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 31, 2006
***: Incorporated by reference to the exhibit of the same number to our Annual Report on Form 10-K as originally filed on April 5, 2006.
†: Filed herewith.

As of December 31, 2005, we had various additional obligations which could be considered long-term debt, none of which exceeded 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.

Schedules and exhibits not included above have been omitted because the information required has been included in the financial statements or notes thereto or are not applicable or not required.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Park Ridge, and state of New Jersey, on the 14^th day of July, 2006.

		THE HERTZ CORPORATION (Registrant)
		By:	/s/ PAUL J. SIRACUSA Name: Paul J. Siracusa Title: Executive Vice President and Chief Financial Officer

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QuickLinks

ITEM 15. Exhibits and Financial Statement Schedules

SIGNATURES

Hertz (HRZ) 10-K/A2005 FY Annual report (amended)