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Hertz Reports Strong Second Quarter Operating Results
(Market Wire Via Thomson Dialog NewsEdge) PARK RIDGE, NJ, August 1 / MARKET WIRE/ --
-- Record second quarter revenues of $2.18 billion, up 6.6% compared with
the second quarter of 2006. Record quarterly revenues for worldwide car
and equipment rental.
-- Adjusted pre-tax income for the quarter of $157.2 million, up 34.7%.
-- Adjusted net income of $97.4 million, up 35.7%, or $0.30 adjusted
earnings per share, compared with $0.22 in the second quarter of 2006.
-- Net corporate debt decreased by $169.0 million during the first six
months of 2007, driven by a $627.1 million improvement in six month cash
flow over the first half of 2006.
-- The Company re-affirms its full year 2007 revenue and earnings
guidance.
Hertz Global Holdings, Inc. (NYSE: HTZ) (with its subsidiaries, the
"Company" or "we") reported record second quarter 2007 revenues of $2.18
billion, an increase of 6.6% over the same period in 2006. Worldwide car
rental revenues for the quarter were a record $1.74 billion, an increase of
7.5%, while revenues from worldwide equipment rental were a record $433.0
million, up 3.0% over the prior year period.
Adjusted pre-tax income(1), the measurement the Company believes best
reflects financial results from ongoing operations and which the Company
uses as its segment measure of profitability, for the second quarter of
2007 was $157.2 million, an increase of 34.7% over the second quarter of
2006. Corporate EBITDA(2) for the quarter was $371.1 million, an 8.6%
year-over-year improvement.
Income before income taxes and minority interest was $141.0 million, more
than double the $57.3 million of income before income taxes and minority
interest earned in the second quarter of 2006. Total adjustments to
reconcile from income before income taxes and minority interest to adjusted
pre-tax income for the quarter totaled $16.2 million, as restructuring,
purchase accounting charges and non-cash debt expense, among other
adjustments, were significantly offset by credits from a change in our
vacation policy and a gain on the marking to market of a derivative.(3)
The Company anticipates annualized savings of approximately $165 million
from previously announced job reductions, and incurred a $16.7 million
restructuring charge in the second quarter of 2007 related to these
reductions. There will be additional restructuring actions taken during
2007 which will be announced when plans are finalized.
Adjusted net income(4) was $97.4 million, an increase of 35.7% compared
with the second quarter of 2006, resulting in adjusted earnings per share
for the quarter of $0.30, based on the pro forma post-IPO diluted number of
shares outstanding (324.8 million), compared with adjusted earnings per
share of $0.22 in the prior year period. Net income for the quarter was
$83.7 million, or $0.26 per share on a fully diluted basis, compared with
net income of $17.8 million, or $0.08 per share on a fully diluted basis,
in the same period last year.
INCOME MEASUREMENTS, SECOND QUARTER 2007 & 2006(5)
Q2 2007 Q2 2006
------------------------- --------------------------
Fully Fully
Diluted Diluted
(in millions, except Pre-tax Net Earnings Pre-tax Net Earnings
per share amounts) Income Income Per Share Income Income Per Share
------- ------- -------- -------- ------- --------
Earnings Measures, as
reported (EPS based
on 327.6M and 230.6M
shares) $ 141.0 $ 83.7 $ 0.26 $ 57.3 $ 17.8 $ 0.08
======= ======== ======= ========
Adjustments:
Purchase accounting 22.6 20.1
Non-cash interest 4.1 23.5
Mark-to-market
adjustment (10.2) 15.0
Restructuring
charges 16.7 -
Vacation accrual
adjustment (19.6) -
Other 2.6 0.8
------- --------
Adjusted Pre-Tax
Income 157.2 157.2 116.7 116.7
Assumed provision for
income taxes at 35% (55.0) (40.8)
Minority interest (4.8) (4.1)
------- ------- -------- -------
Earnings Measures, as
adjusted (EPS based
on pro forma fully
diluted post-IPO
shares of 324.8M) $ 157.2 $ 97.4 $ 0.30 $ 116.7 $ 71.8 $ 0.22
======= ======= ======== ======== ======= ========
The Company generated strong cash flows during the second quarter of 2007,
with net corporate debt(6) decreasing from $4.41 billion as of March 31,
2007 to $4.37 billion as of June 30, 2007, and compared with $5.28 billion
as of June 30, 2006. Levered after-tax cash flows after fleet growth(6)
for the second quarter of 2007 were $46.1 million, compared with a use of
funds of $403.0 million in the prior year period. The improvement is due
primarily to better working capital management, lower investments in
worldwide equipment rental fleet, lower net investment in car rental fleet
assets, and higher earnings. Levered after-tax cash flows after fleet
growth were $169.0 million for the first six months of 2007, a $627.1
million year-over-year improvement in six month cash flows. The change in
cash flows for the first six months of the year is attributable to the same
factors that affected cash flows during the second quarter.
Mark P. Frissora, the Company's Chairman and Chief Executive Officer, said,
"Hertz achieved strong second quarter operating results due to a
combination of revenue growth, particularly off-airport in the United
States, and strong cost management, with direct operating expenses
decreasing by almost two percentage points of revenue compared with the
second quarter of 2006. Equipment rental volume in the second quarter was
affected by slower growth in some segments of the U.S. non-residential
construction market, but HERC nevertheless generated record revenues,
profits and improved margins in the second quarter, and we see evidence of
demand improvement in the current quarter."
WORLDWIDE CAR RENTAL
Worldwide car rental revenues were a record $1.74 billion for the second
quarter of 2007, an increase of 7.5% over the prior year period.
Transaction days for the quarter improved 5.3% [5.1% U.S.; 5.9%
International] reflecting growth in both the airport and off-airport
business in the U.S. and Europe. Rental rate revenue per transaction
day(6) for the quarter was (0.7%) below the prior year period [(1.6%) U.S.;
1.1% International]. Pricing in the United States continues to be
influenced by profitable, double-digit transaction day growth in the
Company's
off-airport market, including insurance replacement business, which
exhibits lower price characteristics and also lower vehicle, transaction
and real estate cost characteristics, combined with longer rental lengths.
Also, the insurance replacement business is subject to less economic and
seasonal volatility than the airport business. Finally, our corporate
accounts, which represent about 30% of total revenue, experienced an
average price increase for contract renewals during the second quarter of
3%.
Adjusted pre-tax income for the second quarter of 2007 was $153.1 million,
an improvement of 35.6% over the prior year period. The result was driven
by transaction day improvement and a 1.1 percentage point (54.7% v 55.8%)
improvement in direct operating expenses as a percentage of revenues
compared with the second quarter of 2006.
The worldwide average number of Company-operated cars for the second
quarter of 2007 was 473,000, an increase of 7.9% over the prior year
period, reflecting current year volume increases to meet rental demand.
WORLDWIDE EQUIPMENT RENTAL
Worldwide equipment rental revenues were a record $433.0 million for the
second quarter of 2007, a 3.0% increase over the prior year period, while
pricing increased 0.5%. Slower growth in certain segments of the U.S.
non-residential construction market continues to offset otherwise strong
year-over-year revenue growth in other sectors of the diversified U.S.
equipment rental industry, especially the industrial market.
Adjusted pre-tax income for the second quarter of 2007 was $96.7 million,
another record, and a 10.0% improvement over the second quarter of 2006,
attributable to revenue growth and a 2.3 percentage point decrease (47.6% v
49.9%) in direct operating expenses as a percentage of revenue, as well as
lower fleet purchases, reflecting recent volume patterns.
The average acquisition cost of rental equipment operated during the second
quarter of 2007 increased by 7.3% to $3.21 billion, and net revenue earning
equipment as of June 30, 2007 was $2.58 billion, a 4.4% increase over the
amount as of June 30, 2006.
OUTLOOK
The Company re-affirms its revenue, adjusted
pre-tax income, Corporate EBITDA, adjusted net income and adjusted net
income per share guidance provided in its earnings announcement dated April
26, 2007. The Company forecasts worldwide revenue of between $8.5 billion
to $8.6 billion, an increase of between 5% to 7%. The Company affirms
earlier guidance for adjusted pre-tax income in the range of $600 million
to $630 million, an increase of between 23% and 29%, Corporate EBITDA in
the range of $1.54 billion to $1.57 billion, an increase of between 12% to
14%, and adjusted net income of $372 million to $395 million, an increase
of between 24% to 32%, or $1.15 to $1.22 per share, based on the pro forma
post-IPO diluted number of shares outstanding (324.8 million). (5)
RESULTS OF THE HERTZ CORPORATION
The Company's operating subsidiary, The Hertz Corporation ("Hertz"), posted
the same revenues for the second quarter as the Company. The second
quarter of 2007 income before income taxes and minority interest and net
income of Hertz were, however, slightly higher than those of the Company
primarily because of costs incurred in connection with the secondary
offering of the Company's common stock in June 2007.
(1) Adjusted pre-tax income, a non-GAAP measure of profitability,
represents income before income taxes and minority interest plus non-cash
purchase accounting charges, non-cash debt charges relating to the
amortization of debt financing costs and debt discounts and certain other
one-time or non-operational items. See the accompanying reconciliations.
(2) Corporate EBITDA, a non-GAAP measure of profitability, consists of
earnings before net interest expense (other than interest expense relating
to certain car rental fleet financing), income taxes, depreciation (other
than depreciation related to the car rental fleet), amortization and
certain other items specified in the credit agreements governing the
Company's credit facilities. See the accompanying reconciliations.
(3) Adjustments in the second quarter of 2007 included costs incurred in
connection with the secondary offering of the Company's common stock in
June 2007. These costs are reflected in "Selling, General and
Administrative Expense."
(4) Adjusted net income, a non-GAAP measure of profitability, represents
the adjusted pre-tax amount less a provision for income taxes derived
utilizing a normalized income tax rate (35%) and minority interest. See
the accompanying reconciliations.
(5) Management believes that adjusted pre-tax income, Corporate EBITDA and
adjusted net income are useful in measuring the comparable results of the
Company period-over-period. The GAAP measures most directly comparable to
each of adjusted pre-tax income, Corporate EBITDA and adjusted net income
are income before income taxes and minority interest ("pre-tax income"),
cash flows from operating activities and net income. Because of the
forward-looking nature of the Company's forecasted adjusted pre-tax income,
Corporate EBITDA and adjusted net income, specific quantifications of the
amounts that would be required to reconcile forecasted pre-tax, cash flows
from operating activities and net income to forecasted adjusted pre-tax
income, Corporate EBITDA and adjusted net income are not available. The
Company believes that providing estimates of the amounts that would be
required to reconcile the range of these forecasted non-GAAP measures to
forecasted pre-tax, cash flows from operating activities and net income
would imply a degree of precision that could be confusing or misleading to
investors.
(6) Net corporate debt, levered after-tax cash flows after fleet growth and
rental rate revenue per transaction day are non-GAAP measures. See the
accompanying reconciliations.
CONFERENCE CALL INFORMATION
The Hertz Global Holdings, Inc. second quarter 2007 earnings conference
call will be held on Thursday, August 2, 2007, at 10:00 a.m. (EDT). To
access the conference call live, dial 800-230-1092 (U.S.) or 612-332-0228
(International) using the pass code 880034 or listen via webcast at
www.hertz.com/investorrelations. The conference call will be available
through August 9, 2007 by calling 800-475-6701 (U.S.) or 320-365-3844
(International) using the pass code 880034. The press release and related
tables containing the reconciliations of non-GAAP measures will be
available on our website, www.hertz.com/investorrelations.
ABOUT THE COMPANY
Hertz, the world's largest general use car rental brand, operates from
approximately 7,700 locations in 145 countries worldwide. Hertz is the
number one airport car rental brand in the United States and at 69 major
airports in Europe as well as the only car rental company with corporate
and licensee locations in Africa, Asia, Australia, Latin America and North
America. Product and service initiatives such as Hertz #1 Club Gold,
NeverLost customized, onboard navigation systems, SIRIUS Satellite Radio,
and unique cars and SUVs offered through Hertz's Prestige, Fun and Green
collections, set Hertz apart from the competition. Hertz also operates one
of the largest equipment rental companies in the United States and Canada
combined, with corporate locations in France and Spain. Hertz Global
Holdings, Inc. is the corporate parent of Hertz.
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release include "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. You should not place undue reliance on these statements.
Forward-looking statements include information concerning the Company's
outlook, anticipated revenues, results of operations and implementation of
productivity and efficiency initiatives, including targeted job reductions,
and the anticipated savings and restructuring charges expected to be
realized or incurred in connection therewith. These statements often
include words such as "believe," "expect," "project," "anticipate,"
"intend," "plan," "estimate," "seek," "will," "may," "should," "forecast"
or similar expressions. These statements are based on certain assumptions
that the Company has made in light of its experience in the industry as
well as its perceptions of historical trends, current conditions, expected
future developments and other factors that the Company believes are
appropriate in these circumstances. As you read this press release, you
should understand that these statements are not guarantees of performance
or results. They involve risks, uncertainties and assumptions. Many factors
could affect the Company's actual results and its ability to implement its
cost savings and efficiency initiatives successfully, and could cause the
Company's actual results to differ materially from those expressed in the
forward-looking statements. Some important factors include: the Company's
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; the
Company's ability to maintain profitability during adverse economic cycles
and unfavorable external events (including war, terrorist acts, natural
disasters and epidemic disease); future acquisitions and dispositions;
litigation; potential and contingent liabilities; management's plans;
taxes; and refinancing of existing debt. In light of these risks,
uncertainties and assumptions, the forward-looking statements contained in
this press release might not prove to be accurate and you should not place
undue reliance upon them. All forward-looking statements attributable to
the Company or persons acting on the Company's behalf are expressly
qualified in their entirety by the foregoing cautionary statements. All
such statements speak only as of the date made, and the Company undertakes
no obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
The Company cautions you therefore that you should not rely unduly on these
forward-looking statements. You should understand the risks and
uncertainties discussed in "Risk Factors" and elsewhere in the Company's
2006 Annual Report on Form 10-K for the fiscal year ended December 31,
2006, as filed with the United States Securities and Exchange Commission,
or the "SEC," on March 30, 2007, and its Quarterly Report on Form 10-Q for
the three months ended March 31, 2007, as filed with the SEC on May 11,
2007, could affect the Company's future results and the outcome of its
implementation of its cost savings and efficiency initiatives, and could
cause those results or other outcomes to differ materially from those
expressed or implied in the Company's forward-looking statements.
Attachments:
Table 1: Condensed Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2007 and 2006
Table 2: Condensed Consolidated Statements of Operations As Reported and
As Adjusted for the Three and Six Months Ended June 30, 2007 and
2006
Table 3: Segment Information for the Three and Six Months Ended June 30,
2007 and 2006
Table 4: Selected Operating and Financial Data as of or for the Three and
Six Months Ended June 30, 2007
Table 5: Non-GAAP Reconciliations of Adjusted Pre-Tax Income (Loss) and
Adjusted Net Income (Loss) for the Three and Six Months Ended
June 30, 2007 and 2006
Table 6: Non-GAAP Reconciliations of EBITDA, Corporate EBITDA, Unlevered
Pre-Tax Cash Flow, Levered After-Tax Cash Flow before Fleet
Growth and Levered After-Tax Cash Flow after Fleet Growth for the
Three and Six Months Ended June 30, 2007 and 2006
Table 7: Non-GAAP Reconciliations of Operating Cash Flows to EBITDA, Net
Corporate Debt, Net Fleet Debt, Car Rental Rate Revenue per
Transaction Day and Equipment Rental and Rental Related Revenue
for the Three and Six Months Ended June 30, 2007 and 2006
Table 8: Non-GAAP Reconciliations of Revenues and Adjusted Pre-Tax Income
(Loss) for the Twelve Months Ended June 30, 2007 and
September 30, 2006
Table 1
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
Unaudited
Three Months Ended As a Percent
June 30, of Total Revenues
-------------------- -------------------
2007 2006 2007 2006
--------- --------- -------- --------
Total revenues $ 2,175.7 $ 2,040.6 100.0 % 100.0 %
--------- --------- -------- --------
Expenses:
Direct operating 1,164.7 1,137.3 53.5 % 55.7 %
Depreciation of revenue earning
equipment 496.1 436.2 22.8 % 21.4 %
Selling, general and
administrative 182.4 197.2 8.4 % 9.7 %
Interest, net of interest income 191.5 212.6 8.8 % 10.4 %
--------- --------- -------- --------
Total expenses 2,034.7 1,983.3 93.5 % 97.2 %
--------- --------- -------- --------
Income before income taxes and
and minority interest 141.0 57.3 6.5 % 2.8 %
Provision for taxes on income (52.5) (35.4) (2.4)% (1.7)%
Minority interest (4.8) (4.1) (0.2)% (0.2)%
--------- --------- -------- --------
Net income $ 83.7 $ 17.8 3.9 % 0.9 %
========= ========= ======== ========
Weighted average number of
shares outstanding:
Basic 320.9 230.6
Diluted 327.6 230.6
Earnings per share:
Basic $ 0.26 $ 0.08
Diluted $ 0.26 $ 0.08
Six Months Ended As a Percent
June 30, of Total Revenues
-------------------- -------------------
2007 2006 2007 2006
--------- --------- -------- --------
Total revenues $ 4,097.2 $ 3,827.2 100.0 % 100.0 %
--------- --------- -------- --------
Expenses:
Direct operating 2,279.0 2,207.4 55.6 % 57.7 %
Depreciation of revenue earning
equipment 963.9 843.5 23.5 % 22.0 %
Selling, general and
administrative 382.8 359.4 9.4 % 9.4 %
Interest, net of interest income 421.1 422.9 10.3 % 11.0 %
--------- --------- -------- --------
Total expenses 4,046.8 3,833.2 98.8 % 100.1 %
--------- --------- -------- --------
Income (loss) before income
taxes and minority interest 50.4 (6.0) 1.2 % (0.1)%
Provision for taxes on income (20.4) (18.1) (0.5)% (0.5)%
Minority interest (8.9) (7.3) (0.2)% (0.2)%
--------- --------- -------- --------
Net income (loss) $ 21.1 $ (31.4) 0.5 % (0.8)%
========= ========= ======== ========
Weighted average number of
shares outstanding:
Basic 320.8 230.1
Diluted 324.1 230.1
Earnings (loss) per share:
Basic $ 0.07 $ (0.14)
Diluted $ 0.07 $ (0.14)
Table 2
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
Unaudited
Three Months Ended June 30, 2007
-----------------------------------
As As
Reported Adjustments Adjusted
--------- --------- ---------
Total revenues $ 2,175.7 $ - $ 2,175.7
--------- --------- ---------
Expenses:
Direct operating 1,164.7 (14.0) (a) 1,150.7
Depreciation of revenue earning
equipment 496.1 (4.2) (b) 491.9
Selling, general and administrative 182.4 6.1 (c) 188.5
Interest, net of interest income 191.5 (4.1) (d) 187.4
--------- --------- ---------
Total expenses 2,034.7 (16.2) 2,018.5
--------- --------- ---------
Income before income taxes and
minority interest 141.0 16.2 157.2
Provision for taxes on income (52.5) (2.5) (e) (55.0)
Minority interest (4.8) - (4.8)
--------- --------- ---------
Net income $ 83.7 $ 13.7 $ 97.4
========= ========= =========
Three Months Ended June 30, 2006
-----------------------------------
As As
Reported Adjustments Adjusted
--------- --------- ---------
Total revenues $ 2,040.6 $ - $ 2,040.6
--------- --------- ---------
Expenses:
Direct operating 1,137.3 (19.0) (a) 1,118.3
Depreciation of revenue earning
equipment 436.2 (0.9) (b) 435.3
Selling, general and administrative 197.2 (15.8) (c) 181.4
Interest, net of interest income 212.6 (23.7) (d) 188.9
--------- --------- ---------
Total expenses 1,983.3 (59.4) 1,923.9
--------- --------- ---------
Income before income taxes and
minority interest 57.3 59.4 116.7
Provision for taxes on income (35.4) (5.4) (e) (40.8)
Minority interest (4.1) - (4.1)
--------- --------- ---------
Net income $ 17.8 $ 54.0 $ 71.8
========= ========= =========
Six Months Ended June 30, 2007
-----------------------------------
As As
Reported Adjustments Adjusted
--------- --------- ---------
Total revenues $ 4,097.2 $ - $ 4,097.2
--------- --------- ---------
Expenses:
Direct operating 2,279.0 (45.5) (a) 2,233.5
Depreciation of revenue earning
equipment 963.9 (8.5) (b) 955.4
Selling, general and administrative 382.8 (16.4) (c) 366.4
Interest, net of interest income 421.1 (52.5) (d) 368.6
--------- --------- ---------
Total expenses 4,046.8 (122.9) 3,923.9
--------- --------- ---------
Income before income taxes and
minority interest 50.4 122.9 173.3
Provision for taxes on income (20.4) (40.3) (e) (60.7)
Minority interest (8.9) - (8.9)
--------- --------- ---------
Net income $ 21.1 $ 82.6 $ 103.7
========= ========= =========
Six Months Ended June 30, 2006
-----------------------------------
As As
Reported Adjustments Adjusted
--------- --------- ---------
Total revenues $ 3,827.2 $ - $ 3,827.2
--------- --------- ---------
Expenses:
Direct operating 2,207.4 (38.9) (a) 2,168.5
Depreciation of revenue earning
equipment 843.5 (2.8) (b) 840.7
Selling, general and administrative 359.4 (16.5) (c) 342.9
Interest, net of interest income 422.9 (52.9) (d) 370.0
--------- --------- ---------
Total expenses 3,833.2 (111.1) 3,722.1
--------- --------- ---------
Income (loss) before income taxes and
minority interest (6.0) 111.1 105.1
Provision for taxes on income (18.1) (18.7) (e) (36.8)
Minority interest (7.3) - (7.3)
--------- --------- ---------
Net income (loss) $ (31.4) $ 92.4 $ 61.0
========= ========= =========
(a) Represents the increase in amortization of other intangible assets,
depreciation of property and equipment and accretion of certain
revalued liabilities relating to purchase accounting. For the three
and six months ended June 30, 2007, also includes restructuring
charges of $12.0 million and $24.9 million, respectively. For the
three and six months ended June 30, 2007, also includes $16.1 million
relating to the vacation accrual adjustment.
(b) Represents the increase in depreciation of revenue earning equipment
based upon their revaluation relating to purchase accounting.
(c) Represents the increase in depreciation of property and equipment
relating to purchase accounting and CEO transition payments. For the
three and six months ended June 30, 2007, also includes restructuring
charges of $4.7 million and $24.4 million, respectively. For the
three and six months ended June 30, 2007, also includes $3.4 million
relating to the vacation accrual adjustment, $10.2 million unrealized
gain on derivative and $2.0 million of secondary offering costs. For
the three and six months ended June 30, 2006, includes losses on the
mark to market of the Euro-denominated debt of $15.0 million and $21.5
million, respectively. On October 1, 2006, we designated this Euro-
denominated debt as an effective net investment hedge of our Euro-
denominated net investment in our foreign operations, as such we will
no longer incur unrealized exchange transaction gains or losses in our
consolidated statement of operations. For the six months ended
June 30, 2006, also includes a $6.6 million gain on the sale of a swap
derivative.
(d) Represents non-cash debt charges relating to the amortization of debt
financing costs and debt discount. For the three months ended
June 30, 2007, also includes $12.8 million associated with the
reversal of the ineffectiveness of our interest rate swaps originally
recorded in the three months ended March 31, 2007 and for the three
months ended March 31, 2007 and the six months ended June 30, 2007,
includes the write off of $16.1 million of unamortized debt costs
associated with a debt modification.
(e) Represents a provision for income taxes derived utilizing a normalized
income tax rate (35%).
Table 3
HERTZ GLOBAL HOLDINGS, INC.
SEGMENT INFORMATION
(In millions, except per share amounts)
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues:
Car Rental $ 1,740.3 $ 1,618.2 $ 3,270.0 $ 3,039.8
Equipment Rental 433.0 420.5 822.9 783.6
Corporate and Other 2.4 1.9 4.3 3.8
--------- --------- --------- ---------
$ 2,175.7 $ 2,040.6 $ 4,097.2 $ 3,827.2
========= ========= ========= =========
Depreciation of property and
equipment:
Car Rental $ 33.8 $ 38.0 $ 68.0 $ 76.5
Equipment Rental 9.9 10.0 19.8 19.7
Corporate and Other 1.6 1.9 3.2 3.3
--------- --------- --------- ---------
$ 45.3 $ 49.9 $ 91.0 $ 99.5
========= ========= ========= =========
Amortization of other
intangible assets:
Car Rental $ 7.3 $ 7.3 $ 14.6 $ 14.7
Equipment Rental 8.1 8.1 16.2 16.1
Corporate and Other - - - -
--------- --------- --------- ---------
$ 15.4 $ 15.4 $ 30.8 $ 30.8
========= ========= ========= =========
Income (loss) before income
taxes and minority interest:
Car Rental $ 145.5 $ 89.4 $ 128.7 $ 78.3
Equipment Rental 83.8 71.3 129.8 105.8
Corporate and Other (88.3) (103.4) (208.1) (190.1)
--------- --------- --------- ---------
$ 141.0 $ 57.3 $ 50.4 $ (6.0)
========= ========= ========= =========
Corporate EBITDA:
Car Rental $ 187.9 $ 159.0 $ 260.9 $ 222.2
Equipment Rental 201.9 186.5 376.4 332.6
Corporate and Other (18.7) (3.8) (28.5) (23.1)
--------- --------- --------- ---------
$ 371.1 $ 341.7 $ 608.8 $ 531.7
========= ========= ========= =========
Adjusted pre-tax income (loss):
Car Rental $ 153.1 $ 112.9 $ 190.0 $ 130.4
Equipment Rental 96.7 87.9 162.3 141.2
Corporate and Other (92.6) (84.1) (179.0) (166.5)
--------- --------- --------- ---------
$ 157.2 $ 116.7 $ 173.3 $ 105.1
========= ========= ========= =========
Adjusted net income (loss):
Car Rental $ 99.5 $ 73.4 $ 123.5 $ 84.8
Equipment Rental 62.9 57.1 105.5 91.7
Corporate and Other (65.0) (58.7) (125.3) (115.5)
--------- --------- --------- ---------
$ 97.4 $ 71.8 $ 103.7 $ 61.0
========= ========= ========= =========
Pro forma post-IPO diluted
number of shares outstanding 324.8 324.8 324.8 324.8
Adjusted diluted earnings per
share $ 0.30 $ 0.22 $ 0.32 $ 0.19
Table 4
HERTZ GLOBAL HOLDINGS, INC.
SELECTED OPERATING AND FINANCIAL DATA
Three Percent Six Percent
Months change Months change
Ended, from Ended, from
or as of prior or as of prior
June 30, year June 30, year
2007 period 2007 period
--------- -------- --------- --------
Selected Car Rental Operating Data
Worldwide number of transactions
(in thousands) 7,642 4.4 % 14,307 4.2 %
Domestic 5,744 5.1 % 10,817 4.2 %
International 1,898 2.5 % 3,490 4.2 %
Worldwide transaction days
(in thousands) 32,820 5.3 % 61,756 4.8 %
Domestic 22,990 5.1 % 43,836 4.2 %
International 9,830 5.9 % 17,920 6.2 %
Worldwide rental rate revenue
per transaction day (a) $ 44.18 (0.7)% $ 44.43 (0.4)%
Domestic $ 42.50 (1.6)% $ 43.40 (0.9)%
International (b) $ 48.12 1.1 % $ 46.96 0.7 %
Worldwide average number of
company-operated cars
during period 473,000 7.9 % 448,200 6.6 %
Domestic 326,100 8.6 % 314,300 6.8 %
International 146,900 6.4 % 133,900 6.1 %
Worldwide revenue earning
equipment, net (in millions) $ 9,219.1 2.9 % $ 9,219.1 2.9 %
Selected Worldwide Equipment
Rental Operating Data
Rental and rental related
revenue (in millions) (a) (b) $ 378.9 3.2 % $ 726.9 5.6 %
Same store revenue growth (a) 1.2% (94.7)% 3.1% (87.5)%
Average acquisition cost of
rental equipment operated
during period (in millions) $ 3,210.0 7.3 % $ 3,156.4 9.6 %
Revenue earning equipment, net
(in millions) $ 2,575.8 4.4 % $ 2,575.8 4.4 %
Other Financial Data (in
millions)
Cash flows provided by
operating activities $ 1,077.7 19.5 % $ 2,202.5 4.6 %
Levered after-tax cash flow
before fleet growth (a) 356.9 139.2 % 796.4 55.7 %
Levered after-tax cash
after fleet growth (a) 46.1 N/M 169.0 N/M
EBITDA (a) 884.5 15.3 % 1,548.3 11.9 %
Corporate EBITDA (a) 371.1 8.6 % 608.8 14.5 %
Selected Balance Sheet Data (in
millions)
June 30, December 31,
2007 2006
--------- ---------
Cash and equivalents $ 401.6 $ 674.5
Total revenue earning equipment,
net 11,794.9 9,805.5
Total assets 19,852.4 18,677.4
Total debt 12,452.5 12,276.2
Net corporate debt (a) 4,368.3 4,537.3
Net fleet debt (a) 7,470.4 6,511.9
Stockholders' equity 2,633.9 2,534.6
(a) Represents a non-GAAP measure, see the accompanying reconciliations
and definitions.
(b) Based on 12/31/06 foreign exchange rates.
Table 5
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except per share amounts)
ADJUSTED PRE-TAX INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS)
Three Months Ended June 30, 2007
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Total revenues: $ 1,740.3 $ 433.0 $ 2.4 $ 2,175.7
--------- --------- --------- ---------
Expenses:
Direct operating and selling,
general and administrative 1,080.0 245.5 21.6 1,347.1
Depreciation of revenue
earning equipment 426.9 69.2 - 496.1
Interest, net of interest
income 87.9 34.5 69.1 191.5
--------- --------- --------- ---------
Total expenses 1,594.8 349.2 90.7 2,034.7
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest 145.5 83.8 (88.3) 141.0
Adjustments:
Purchase accounting (a):
Direct operating and
selling, general and
administrative 9.1 8.7 0.5 18.3
Depreciation of revenue
earning equipment (0.8) 5.1 - 4.3
Non-cash debt charges (b) (1.5) 2.7 2.9 4.1
Restructuring charges (c) 14.7 1.2 0.8 16.7
Vacation accrual adjustment
(c) (13.9) (4.8) (0.9) (19.6)
Unrealized gain on
derivative (c) - - (10.2) (10.2)
Secondary offering costs (c) - - 2.0 2.0
CEO transition costs (c) - - 0.6 0.6
--------- --------- --------- ---------
Adjusted pre-tax income (loss) 153.1 96.7 (92.6) 157.2
Assumed (provision) benefit for
income taxes of 35% (53.6) (33.8) 32.4 (55.0)
Minority interest - - (4.8) (4.8)
--------- --------- --------- ---------
Adjusted net income (loss) $ 99.5 $ 62.9 $ (65.0) $ 97.4
========= ========= ========= =========
Pro forma post-IPO diluted
number of shares outstanding 324.8
Adjusted diluted earnings per
share $ 0.30
Three Months Ended June 30, 2006
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Total revenues: $ 1,618.2 $ 420.5 $ 1.9 $ 2,040.6
--------- --------- --------- ---------
Expenses:
Direct operating and selling,
general and administrative 1,053.0 252.1 29.4 1,334.5
Depreciation of revenue
earning equipment 371.0 65.2 - 436.2
Interest, net of interest
income 104.8 31.9 75.9 212.6
--------- --------- --------- ---------
Total expenses 1,528.8 349.2 105.3 1,983.3
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest 89.4 71.3 (103.4) 57.3
Adjustments:
Purchase accounting (a):
Direct operating and
selling, general and
administrative 9.9 8.8 0.5 19.2
Depreciation of revenue
earning equipment (5.0) 5.9 - 0.9
Non-cash debt charges (b) 18.6 1.9 3.0 23.5
CEO transition costs (c) - - 0.6 0.6
Mark-to-market Euro-
denominated debt (d) - - 15.0 15.0
Interest on HGH debt - - 0.2 0.2
--------- --------- --------- ---------
Adjusted pre-tax income (loss) 112.9 87.9 (84.1) 116.7
Assumed (provision) benefit for
income taxes of 35% (39.5) (30.8) 29.5 (40.8)
Minority interest - - (4.1) (4.1)
--------- --------- --------- ---------
Adjusted net income (loss) $ 73.4 $ 57.1 $ (58.7) $ 71.8
========= ========= ========= =========
Pro forma post-IPO diluted
number of shares outstanding 324.8
Adjusted diluted earnings per
share $ 0.22
Six Months Ended June 30, 2007
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Total revenues: $ 3,270.0 $ 822.9 $ 4.3 $ 4,097.2
--------- --------- --------- ---------
Expenses:
Direct operating and selling,
general and administrative 2,125.3 482.4 54.1 2,661.8
Depreciation of revenue
earning equipment 822.8 141.1 - 963.9
Interest, net of interest
income 193.2 69.6 158.3 421.1
--------- --------- --------- ---------
Total expenses 3,141.3 693.1 212.4 4,046.8
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest 128.7 129.8 (208.1) 50.4
Adjustments:
Purchase accounting (a):
Direct operating and
selling, general and
administrative 18.7 17.5 0.9 37.1
Depreciation of revenue
earning equipment (2.7) 11.3 - 8.6
Non-cash debt charges (b) 24.8 5.5 22.2 52.5
Restructuring charges (c) 34.4 3.0 11.9 49.3
Vacation accrual adjustment
(c) (13.9) (4.8) (0.9) (19.6)
Unrealized gain on
derivative (c) - - (10.2) (10.2)
Secondary offering costs (c) - - 2.0 2.0
CEO transition costs (c) - - 3.2 3.2
--------- --------- --------- ---------
Adjusted pre-tax income (loss) 190.0 162.3 (179.0) 173.3
Assumed (provision) benefit for
income taxes of 35% (66.5) (56.8) 62.6 (60.7)
Minority interest - - (8.9) (8.9)
--------- --------- --------- ---------
Adjusted net income (loss) $ 123.5 $ 105.5 $ (125.3) $ 103.7
========= ========= ========= =========
Pro forma post-IPO diluted
number of shares outstanding 324.8
Adjusted diluted earnings per
share $ 0.32
Six Months Ended June 30, 2006
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Total revenues: $ 3,039.8 $ 783.6 $ 3.8 $ 3,827.2
--------- --------- --------- ---------
Expenses:
Direct operating and selling,
general and administrative 2,036.1 487.6 43.1 2,566.8
Depreciation of revenue
earning equipment 716.6 126.9 - 843.5
Interest, net of interest
income 208.8 63.3 150.8 422.9
--------- --------- --------- ---------
Total expenses 2,961.5 677.8 193.9 3,833.2
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest 78.3 105.8 (190.1) (6.0)
Adjustments:
Purchase accounting (a):
Direct operating and
selling, general and
administrative 20.7 17.5 1.1 39.3
Depreciation of revenue
earning equipment (9.3) 12.1 - 2.8
Non-cash debt charges (b) 40.7 5.8 6.2 52.7
CEO transition costs (c) - - 1.2 1.2
Gain on sale of swap
derivative (c) - - (6.6) (6.6)
Mark-to-market Euro-
denominated debt (d) - - 21.5 21.5
Interest on HGH debt - - 0.2 0.2
--------- --------- --------- ---------
Adjusted pre-tax income (loss) 130.4 141.2 (166.5) 105.1
Assumed (provision) benefit for
income taxes of 35% (45.6) (49.5) 58.3 (36.8)
Minority interest - - (7.3) (7.3)
--------- --------- --------- ---------
Adjusted net income (loss) $ 84.8 $ 91.7 $ (115.5) $ 61.0
========= ========= ========= =========
Pro forma post-IPO diluted
number of shares outstanding 324.8
Adjusted diluted earnings per
share $ 0.19
(a) Includes the purchase accounting effects of the acquisition of all of
Hertz's common stock on December 21, 2005, on our results of operations
relating to increased depreciation and amortization of tangible and
intangible assets and accretion of revalued workers' compensation and
public liability and property damages liabilities.
(b) Non-cash debt charges represents the amortization of deferred financing
costs and debt discount. For the three months ended June 30, 2007, also
includes $12.8 million associated with the reversal of the
ineffectiveness of our interest rates swaps originally recorded in the
three months ended March 31, 2007 and for the three months ended March
31, 2007 and the six months ended June 30, 2007, includes the write off
of $16.1 million of unamortized debt costs associated with a debt
modification.
(c) Amounts are included within direct operating and selling, general and
administrative expense in our statement of operations.
(d) Represents unrealized losses on currency translation of Euro
denominated debt, which are included within selling, general and
administrative expense in our statement of operations. On October 1,
2006, we designated this Euro-denominated debt as an effective net
investment hedge of our Euro-denominated net investment in our foreign
operations, as such we will no longer incur unrealized exchange
transaction gains or losses in our consolidated statement of
operations.
Table 6
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions)
EBITDA, CORPORATE EBITDA, UNLEVERED PRE-TAX CASH FLOW,
LEVERED AFTER-TAX CASH FLOW BEFORE FLEET GROWTH AND AFTER FLEET GROWTH
Three Months Ended June 30, 2007
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest $ 145.5 $ 83.8 $ (88.3) $ 141.0
Depreciation and
amortization 468.0 87.2 1.6 556.8
Interest, net of interest
income 87.9 34.5 69.1 191.5
Minority interest - - (4.8) (4.8)
--------- --------- --------- ---------
EBITDA 701.4 205.5 (22.4) 884.5
Adjustments:
Car rental fleet interest (85.4) - - (85.4)
Car rental fleet
depreciation (426.9) - - (426.9)
Non-cash expenses and
charges (a) (2.0) - 1.2 (0.8)
Extraordinary, unusual or
non-recurring gains
and losses (b) 0.8 (3.6) 2.5 (0.3)
--------- --------- --------- ---------
Corporate EBITDA $ 187.9 $ 201.9 $ (18.7) 371.1
========= ========= =========
Equipment rental maintenance
capital expenditures, net (61.6)
Non-fleet capital
expenditures, net (52.9)
Changes in working capital 192.0
Changes in other assets and
liabilities 10.7
---------
Unlevered pre-tax cash flow (c) 459.3
Corporate net cash interest (97.8)
Corporate cash taxes (4.6)
---------
Levered after-tax cash flow
before fleet growth (c) 356.9
Equipment rental fleet
growth capital expenditures (162.5)
Car rental net fleet equity
requirement (148.3)
---------
Levered after-tax cash flow
after fleet growth (c) $ 46.1
=========
Three Months Ended June 30, 2006
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest $ 89.4 $ 71.3 $ (103.4) $ 57.3
Depreciation and amortization 416.3 83.3 1.9 501.5
Interest, net of interest
income 104.8 31.9 75.9 212.6
Minority interest - - (4.1) (4.1)
--------- --------- --------- ---------
EBITDA 610.5 186.5 (29.7) 767.3
Adjustments:
Car rental fleet interest (98.3) - - (98.3)
Car rental fleet
depreciation (371.0) - - (371.0)
Non-cash expenses and
charges (a) 17.8 - 24.4 42.2
Extraordinary, unusual or
non-recurring gains
and losses (b) - - 0.6 0.6
Sponsors' fees - - 0.9 0.9
--------- --------- --------- ---------
Corporate EBITDA $ 159.0 $ 186.5 $ (3.8) 341.7
========= ========= =========
Equipment rental maintenance
capital expenditures, net (56.5)
Non-fleet capital
expenditures, net (62.4)
Changes in working capital 34.8
Changes in other assets and
liabilities 7.7
---------
Unlevered pre-tax cash flow (c) 265.3
Corporate net cash interest (107.3)
Corporate cash taxes (8.8)
---------
Levered after-tax cash flow
before fleet growth (c) 149.2
Equipment rental fleet
growth capital expenditures (279.1)
Car rental net fleet equity
requirement (273.1)
---------
Levered after-tax cash flow
after fleet growth (c) $ (403.0)
=========
Six Months Ended June 30, 2007
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest $ 128.7 $ 129.8 $ (208.1) $ 50.4
Depreciation and amortization 905.4 177.1 3.2 1,085.7
Interest, net of interest
income 193.2 69.6 158.3 421.1
Minority interest - - (8.9) (8.9)
--------- --------- --------- ---------
EBITDA 1,227.3 376.5 (55.5) 1,548.3
Adjustments:
Car rental fleet interest (188.2) - - (188.2)
Car rental fleet
depreciation (822.8) - - (822.8)
Non-cash expenses and
charges (a) 24.1 1.7 10.8 36.6
Extraordinary, unusual or
non-recurring gains
and losses (b) 20.5 (1.8) 16.2 34.9
--------- --------- --------- ---------
Corporate EBITDA $ 260.9 $ 376.4 $ (28.5) 608.8
========= ========= =========
Equipment rental maintenance
capital expenditures, net (124.2)
Non-fleet capital
expenditures, net (84.2)
Changes in working capital 638.0
Changes in other assets and
liabilities (33.5)
---------
Unlevered pre-tax cash flow (c) 1,004.9
Corporate net cash interest (200.7)
Corporate cash taxes (7.8)
---------
Levered after-tax cash flow
before fleet growth (c) 796.4
Equipment rental fleet
growth capital expenditures (154.8)
Car rental net fleet equity
requirement (472.6)
---------
Levered after-tax cash flow
after fleet growth (c) $ 169.0
=========
Six Months Ended June 30, 2006
------------------------------------------
Car Equipment Corporate
Rental Rental and Other Total
--------- --------- --------- ---------
Income (loss) before income
taxes and minority interest $ 78.3 $ 105.8 $ (190.1) $ (6.0)
Depreciation and amortization 807.8 162.7 3.3 973.8
Interest, net of interest
income 208.8 63.3 150.8 422.9
Minority interest - - (7.3) (7.3)
--------- --------- --------- ---------
EBITDA 1,094.9 331.8 (43.3) 1,383.4
Adjustments:
Car rental fleet interest (196.3) - - (196.3)
Car rental fleet depreciation (716.6) - - (716.6)
Non-cash expenses and
charges (a) 40.2 0.8 23.9 64.9
Extraordinary, unusual or
non-recurring gains and
losses (b) - - (5.4) (5.4)
Sponsors' fees - - 1.7 1.7
--------- --------- --------- ---------
Corporate EBITDA $ 222.2 $ 332.6 $ (23.1) 531.7
========= ========= =========
Equipment rental maintenance
capital expenditures, net (109.2)
Non-fleet capital
expenditures, net (111.4)
Changes in working capital 406.5
Changes in other assets and
liabilities 18.3
---------
Unlevered pre-tax cash flow (c) 735.9
Corporate net cash interest (212.3)
Corporate cash taxes (12.0)
---------
Levered after-tax cash flow
before fleet growth (c) 511.6
Equipment rental fleet
growth capital expenditures (403.6)
Car rental net fleet equity
requirement (566.1)
---------
Levered after-tax cash flow
after fleet growth (c) $ (458.1)
=========
(a) As defined in the credit agreements for the senior credit facilities,
Corporate EBITDA excludes the impact of certain non-cash expenses and
charges. The adjustments reflect the following:
Three Months Ended June 30, 2007
------------------------------------------
Car Equipment Corporate
Non-Cash Expenses and Charges Rental Rental and Other Total
--------- --------- --------- ---------
Non-cash amortization of debt
costs included in car rental
fleet interest $ (2.0) $ - $ - $ (2.0)
Corporate non-cash stock-based
employee compensation charges - - 7.7 7.7
Corporate non-cash charges for
pension - - 0.4 0.4
Corporate non-cash charges for
public liability and property
damage - - 3.3 3.3
Corporate unrealized gain on
derivatives - - (10.2) (10.2)
--------- --------- --------- ---------
Total non-cash expenses and
charges $ (2.0) $ - $ 1.2 $ (0.8)
========= ========= ========= =========
Three Months Ended June 30, 2006
------------------------------------------
Car Equipment Corporate
Non-Cash Expenses and Charges Rental Rental and Other Total
--------- --------- --------- ---------
Non-cash amortization of debt
costs included in car rental
fleet interest $ 17.8 $ - $ - $ 17.8
Corporate non-cash stock-based
employee compensation charges - - 2.0 2.0
Corporate non-cash charges for
pension - - 7.0 7.0
Corporate unrealized loss on
derivatives - - 0.4 0.4
Corporate unrealized losses on
mark-to-market of Euro-
denominated debt - - 15.0 15.0
--------- --------- --------- ---------
Total non-cash expenses and
charges $ 17.8 $ - $ 24.4 $ 42.2
========= ========= ========= =========
Six Months Ended June 30, 2007
------------------------------------------
Car Equipment Corporate
Non-Cash Expenses and Charges Rental Rental and Other Total
--------- --------- --------- ---------
Non-cash amortization of debt
costs included in car rental
fleet interest $ 23.7 $ - $ - $ 23.7
Corporate non-cash stock-based
employee compensation charges - - 13.8 13.8
Non-cash charges for workers'
compensation 0.4 1.7 0.1 2.2
Corporate non-cash charges for
pension - - 1.7 1.7
Corporate non-cash charges for
public liability and property
damage - - 5.1 5.1
Corporate unrealized gain on
derivatives - - (9.9) (9.9)
--------- --------- --------- ---------
Total non-cash expenses and
charges $ 24.1 $ 1.7 $ 10.8 $ 36.6
========= ========= ========= =========
Six Months Ended June 30, 2006
------------------------------------------
Car Equipment Corporate
Non-Cash Expenses and Charges Rental Rental and Other Total
--------- --------- --------- ---------
Non-cash amortization of debt
costs included in car rental
fleet interest $ 39.3 $ - $ - $ 39.3
Corporate non-cash stock-based
employee compensation charges - - 2.0 2.0
Non-cash charges for workers'
compensation 0.9 0.8 - 1.7
Corporate unrealized loss on
derivatives - - 0.4 0.4
Corporate unrealized losses on
mark-to-market of Euro-
denominated debt - - 21.5 21.5
--------- --------- --------- ---------
Total non-cash expenses and
charges $ 40.2 $ 0.8 $ 23.9 $ 64.9
========= ========= ========= =========
(b) As defined in the credit agreements for the senior credit facilities,
Corporate EBITDA excludes the impact of extraordinary, unusual or
non-recurring gains or losses or charges or credits. The adjustments
reflect the following:
Three Months Ended June 30, 2007
------------------------------------------
Extraordinary, Unusual or Car Equipment Corporate
Non-Recurring Items Rental Rental and Other Total
--------- --------- --------- ---------
Restructuring charges $ 14.7 $ 1.2 $ 0.8 $ 16.7
Vacation accrual adjustment (13.9) (4.8) (0.9) (19.6)
Secondary offering costs - - 2.0 2.0
CEO transition costs - - 0.6 0.6
--------- --------- --------- ---------
Total extraordinary, unusual or
non-recurring items $ 0.8 $ (3.6) $ 2.5 $ (0.3)
========= ========= ========= =========
Three Months Ended June 30, 2006
------------------------------------------
Extraordinary, Unusual or Car Equipment Corporate
Non-Recurring Items Rental Rental and Other Total
--------- --------- --------- ---------
CEO transition costs $ - $ - $ 0.6 $ 0.6
--------- --------- --------- ---------
Total extraordinary, unusual or
non-recurring items $ - $ - $ 0.6 $ 0.6
========= ========= ========= =========
Six Months Ended June 30, 2007
------------------------------------------
Extraordinary, Unusual or Car Equipment Corporate
Non-Recurring Items Rental Rental and Other Total
--------- --------- --------- ---------
Restructuring charges $ 34.4 $ 3.0 $ 11.9 $ 49.3
Vacation accrual adjustment (13.9) (4.8) (0.9) (19.6)
Secondary offering costs - - 2.0 2.0
CEO transition costs - - 3.2 3.2
--------- --------- --------- ---------
Total extraordinary, unusual or
non-recurring items $ 20.5 $ (1.8) $ 16.2 $ 34.9
========= ========= ========= =========
Six Months Ended June 30, 2006
------------------------------------------
Extraordinary, Unusual or Car Equipment Corporate
Non-Recurring Items Rental Rental and Other Total
--------- --------- --------- ---------
CEO transition costs $ - $ - $ 1.2 $ 1.2
Gain on sale of swap derivative - - (6.6) (6.6)
--------- --------- --------- ---------
Total extraordinary, unusual or
non-recurring items $ - $ - $ (5.4) $ (5.4)
========= ========= ========= =========
(c) Amounts include the effect of fluctuations in foreign currency.
Table 7
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except as noted)
Three Months Ended
Reconciliation from Operating Cash Flows June 30,
to EBITDA: ----------------------
2007 2006
---------- ----------
Net cash provided by operating activities $ 1,077.7 $ 901.5
Amortization of debt costs and debt
modification costs (16.8) (23.5)
Provision for losses on doubtful accounts (3.4) (4.6)
Unrealized gain (loss) on derivatives 10.0 (0.4)
Unrealized loss on mark-to-market of
Euro-denominated debt - (15.0)
Gain on ineffectiveness of interest rate swaps 12.8 -
Stock-based employee compensation (7.7) (2.0)
Provision for public liability and property
damage (45.3) (40.6)
Minority interest (4.8) (4.1)
Deferred income taxes (40.1) (17.8)
Vacation accrual adjustment 19.6 -
Payments of public liability and property
damage claims and expenses 41.9 51.0
Provision for taxes on income 52.5 35.4
Interest, net of interest income 191.5 212.6
Net changes in assets and liabilities (403.4) (325.2)
---------- ----------
EBITDA $ 884.5 $ 767.3
========== ==========
Six Months Ended
Reconciliation from Operating Cash Flows June 30,
to EBITDA: ----------------------
2007 2006
---------- ----------
Net cash provided by operating activities $ 2,202.5 $ 2,106.5
Amortization of debt costs and debt
modification costs (52.4) (52.7)
Provision for losses on doubtful accounts (6.3) (9.2)
Unrealized gain (loss) on derivatives 10.0 (0.4)
Unrealized loss on mark-to-market of
Euro-denominated debt - (21.5)
Gain on ineffectiveness of interest rate swaps - 1.0
Stock-based employee compensation (13.8) (2.0)
Provision for public liability and property
damage (92.3) (86.4)
Minority interest (8.9) (7.3)
Deferred income taxes (15.9) (18.4)
Vacation accrual adjustment 19.6 -
Payments of public liability and property
damage claims and expenses 87.1 95.0
Provision for taxes on income 20.4 18.1
Interest, net of interest income 421.1 422.9
Net changes in assets and liabilities (1,022.8) (1,062.2)
---------- ----------
EBITDA $ 1,548.3 $ 1,383.4
========== ==========
June 30, December 31,
Net Corporate Debt & Net Fleet Debt 2007 2006
---------- ----------
Corporate Debt
Debt, less: $ 12,452.5 $ 12,276.2
U.S Fleet Debt and Pre-Acquisition Notes 5,198.2 4,845.2
International Fleet Debt 1,937.4 1,987.8
Fleet Financing Facility 178.1 165.9
Canadian Fleet Financing Facility 223.4 -
Other International Facilities 81.6 -
---------- ----------
Fleet Debt $ 7,618.7 $ 6,998.9
========== ==========
Corporate Debt $ 4,833.8 $ 5,277.3
========== ==========
Corporate Restricted Cash
Restricted Cash, less: $ 212.2 $ 552.5
Restricted Cash Associated with Fleet Debt (148.3) (487.0)
---------- ----------
Corporate Restricted Cash $ 63.9 $ 65.5
========== ==========
Net Corporate Debt
Corporate Debt, less: $ 4,833.8 $ 5,277.3
Cash and Equivalents (401.6) (674.5)
Corporate Restricted Cash (63.9) (65.5)
---------- ----------
Net Corporate Debt $ 4,368.3 $ 4,537.3
========== ==========
Net Fleet Debt
Fleet Debt, less: $ 7,618.7 $ 6,998.9
Restricted Cash Associated with Fleet Debt (148.3) (487.0)
---------- ----------
Net Fleet Debt $ 7,470.4 $ 6,511.9
========== ==========
Three Months Ended
June 30,
----------------------
Car rental rate revenue per transaction day (a) 2007 2006
---------- ----------
Car rental revenue per statement of operations (b) $ 1,711.7 $ 1,592.7
Non-rental rate revenue (c) (245.8) (226.6)
Foreign currency adjustment (15.8) 20.4
---------- ----------
Rental rate revenue $ 1,450.1 $ 1,386.5
========== ==========
Transactions days (in thousands) 32,820 31,161
Rental rate revenue per transaction
day (in whole dollars) $ 44.18 $ 44.50
Six Months Ended
June 30,
----------------------
Car rental rate revenue per transaction day (a) 2007 2006
---------- ----------
Car rental revenue per statement of operations (b) $ 3,216.8 $ 2,992.3
Non-rental rate revenue (c) (457.2) (415.6)
Foreign currency adjustment (15.5) 51.9
---------- ----------
Rental rate revenue $ 2,744.1 $ 2,628.6
========== ==========
Transactions days (in thousands) 61,756 58,944
Rental rate revenue per transaction
day (in whole dollars) $ 44.43 $ 44.59
Three Months Ended
June 30,
----------------------
Equipment rental and rental related revenue (a) 2007 2006
---------- ----------
Equipment rental revenue per statement
of operations $ 432.8 $ 420.2
Equipment sales and other revenue (49.5) (53.1)
Foreign currency adjustment (4.4) (0.1)
---------- ----------
Rental and rental related revenue $ 378.9 $ 367.0
========== ==========
Six Months Ended
June 30,
----------------------
Equipment rental and rental related revenue (a) 2007 2006
---------- ----------
Equipment rental revenue per statement
of operations $ 822.6 $ 783.3
Equipment sales and other revenue (91.3) (97.2)
Foreign currency adjustment (4.4) 2.5
---------- ----------
Rental and rental related revenue $ 726.9 $ 688.6
========== ==========
(a) Based on 12/31/06 foreign exchange rates.
(b) Consists of U.S. off-airport revenues of $237.9 million and $220.7
million for the three months ended June 30, 2007 and 2006,
respectively, and $455.4 million and $427.9 million for the six months
ended June 30, 2007 and 2006, respectively.
(c) Consists of domestic revenues of $171.8 million and $156.4 million and
international revenues of $74.0 million and $70.2 million for the
three months ended June 30, 2007 and 2006, respectively, and domestic
revenues of $323.9 million and $291.2 million and international
revenues of $133.3 million and $124.4 million for the six months ended
June 30, 2007 and 2006, respectively.
Table 8
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions)
REVENUES & ADJUSTED PRE-TAX INCOME (LOSS)
Last Twelve Six Months Ended
Months Ended June 30, Year Ended
June 30, -------------------- December 31,
2007 2007 2006 2006
--------- --------- --------- ---------
Revenues $ 8,328.4 $ 4,097.2 $ 3,827.2 $ 8,058.4
========= ========= ========= =========
Income (loss) before income
taxes and minority interest $ 257.0 $ 50.4 $ (6.0) $ 200.6
Adjustments:
Purchase accounting (a) 94.0 45.7 42.1 90.4
Non-cash debt charges (b) 99.3 52.5 52.7 99.5
Restructuring charges 49.3 49.3 - -
Vacation accrual
adjustment (19.6) (19.6) - -
Unrealized gain on
derivative (10.2) (10.2) - -
Loss (gain) on sale of
swap derivative 5.6 - (6.6) (1.0)
Secondary offering costs 2.0 2.0 -
CEO transition costs 11.8 3.2 1.2 9.8
Mark-to-market Euro-
denominated debt (c) (2.3) - 21.5 19.2
Interest on HGH debt 39.7 - 0.2 39.9
Stock-based compensation
charges 13.3 - - 13.3
Sponsor termination fee 15.0 - - 15.0
--------- --------- --------- ---------
Adjusted pre-tax income $ 554.9 $ 173.3 $ 105.1 $ 486.7
========= ========= ========= =========
Three Months Ended
Last Twelve December 31,
Months Ended --------------------
September 2005 Year Ended
30, 2006 Pro Forma December 31,
Pro Forma(d) 2006 (d)Combined 2006
--------- --------- --------- ---------
Revenues $ 7,910.5 $ 1,990.6 $ 1,842.7 $ 8,058.4
========= ========= ========= =========
Income before income
taxes and minority interest $ 164.9 $ 42.7 $ 7.0 $ 200.6
Adjustments:
Purchase accounting (a) 87.6 26.0 23.2 90.4
Non-cash debt charges (b) 104.1 22.7 27.3 99.5
(Gain) loss on sale of
swap derivative (6.6) 5.6 - (1.0)
CEO transition costs 5.4 4.4 - 9.8
Mark-to-market Euro-
denominated debt (c) 16.4 - (2.8) 19.2
Interest on HGH debt 23.8 16.1 - 39.9
Stock-based compensation
charges 13.3 - - 13.3
Sponsor termination fee - 15.0 - 15.0
--------- --------- --------- ---------
Adjusted pre-tax income $ 408.9 $ 132.5 $ 54.7 $ 486.7
========= ========= ========= =========
(a) Includes the purchase accounting effects of the acquisition of all of
Hertz's common stock on December 21, 2005, on our results of operations
relating to increased depreciation and amortization of tangible and
intangible assets and accretion of revalued workers' compensation
and public liability and property damages liabilities.
(b) Non-cash debt charges represents the amortization of deferred financing
costs and debt discount. For the six months ended June 30, 2007,
includes the write off of $16.1 million of unamortized debt costs
associated with a debt modification.
(c) Represents unrealized (gains) losses on currency translation of
Euro-denominated debt. On October 1, 2006, we designated this Euro-
denominated debt as an effective net investment hedge of our Euro-
denominated net investment in our foreign operations, as such we will
no longer incur unrealized exchange transaction gains or losses in our
consolidated statement of operations.
(d) Amounts presented are on a pro-forma basis to give effect to the
Company's new capital structure as if the debt associated with the
acquisition of the Company on December 21, 2005 and related purchase
accounting adjustments had occurred on January 1, 2005.
Non-GAAP Measures: Definitions and Use/Importance
On December 21, 2005 ("Closing Date") an indirect, wholly owned subsidiary
of Hertz Global Holdings, Inc. ("Hertz Holdings") acquired all of The Hertz
Corporation's ("Hertz") common stock from Ford Holdings LLC ("Ford
Holdings") pursuant to a Stock Purchase Agreement, dated as of September
12, 2005, among Ford Motor Company ("Ford"), Ford Holdings and Hertz
Holdings (previously known as CCMG Holdings, Inc.). As a result of this
transaction, investment funds associated with or designated by Clayton,
Dubilier & Rice, Inc., The Carlyle Group and Merrill Lynch Global Private
Equity (collectively, the "Sponsors"), owned all of the common stock of
Hertz Holdings. After giving effect to the initial public offering of the
common stock of Hertz Holdings in November 2006 and a secondary offering in
June 2007, the Sponsors now own approximately 55% of the common stock of
Hertz Holdings. We refer to the acquisition of all of Hertz's common stock
as the "Acquisition." 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 term
"GAAP" refers to accounting principles generally accepted in the United
States of America.
Definitions of non-GAAP financial and other measures utilized in Hertz
Holdings' August 1, 2007 Press Release are set forth below. Also set forth
below is a summary of the reasons why management of Hertz Holdings and
Hertz believe that presentation of the non-GAAP financial measures included
in the Press Release provide useful information regarding Hertz Holdings'
and Hertz's financial condition and results of operations and additional
purposes, if any, for which management of Hertz Holdings and Hertz utilize
the non-GAAP financial measures.
1. Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") and Corporate EBITDA
We present EBITDA and Corporate EBITDA to provide investors with
supplemental measures of our operating performance and liquidity and, in
the case of Corporate EBITDA, information utilized in the calculation of
the financial covenants under Hertz's senior credit facilities. EBITDA is
defined as consolidated net income before net interest expense,
consolidated income taxes and consolidated depreciation and amortization.
Corporate EBITDA differs from the term "EBITDA" as it is commonly used.
Corporate EBITDA means "EBITDA" as that term is defined under Hertz's
senior credit facilities, which is generally consolidated net income before
net interest expense (other than interest expense relating to certain car
rental fleet financing), consolidated income taxes, consolidated
depreciation (other than depreciation related to the car rental fleet) and
amortization and before certain other items, in each case as more fully
defined in the agreements governing Hertz's senior credit facilities. The
other items excluded in this calculation include, but are not limited to:
non-cash expenses and charges; extraordinary, unusual or non-recurring
gains or losses; gains or losses associated with the sale or write-down of
assets not in the ordinary course of business; certain management fees paid
to the Sponsors; and earnings to the extent of cash dividends or
distributions paid from non-controlled affiliates. Further, the covenants
in Hertz's senior credit facilities are calculated using Corporate EBITDA
for the most recent four fiscal quarters as a whole. As a result, the
measure can be disproportionately affected by a particularly strong or weak
quarter. Further, it may not be comparable to the measure for any
subsequent four-quarter period or for any complete fiscal year.
Management uses EBITDA and Corporate EBITDA as performance and cash flow
metrics for internal monitoring and planning purposes, including the
preparation of our annual operating budget and monthly operating reviews,
as well as to facilitate analysis of investment decisions. In addition,
both metrics are important to allow us to evaluate profitability and make
performance trend comparisons between us and our competitors. Further, we
believe EBITDA and Corporate EBITDA are frequently used by securities
analysts, investors and other interested parties in the evaluation of
companies in our industries.
EBITDA is also used by management and investors to evaluate our operating
performance exclusive of financing costs and depreciation policies.
Further, because we have two business segments that are financed
differently and have different underlying depreciation characteristics,
EBITDA enables investors to isolate the effects on profitability of
operating metrics such as revenue, operating expenses and selling, general
and administrative expenses. In addition to its use to monitor performance
trends, EBITDA provides a comparative metric to management and investors
that is consistent across companies with different capital structures and
depreciation policies. This enables management and investors to compare our
performance on a consolidated basis and on a segment basis to that of our
peers. In addition, our management uses consolidated EBITDA as a proxy for
cash flow available to finance fleet expenditures and the costs of our
capital structure on a day-to-day basis so that we can more easily monitor
our cash flows when a full statement of cash flows is not available.
Corporate EBITDA also serves as an important measure of our performance.
Corporate EBITDA for our car rental segment enables us to assess our
operating performance inclusive of fleet management performance,
depreciation assumptions and the cost of financing our fleet. In addition,
Corporate EBITDA for our car rental segment allows us to compare our
performance, inclusive of fleet mix and financing decisions, to the
performance of our competitors. Since most of our competitors utilize
asset-backed fleet debt to finance fleet acquisitions, this measure is
relevant for evaluating our operating efficiency inclusive of our fleet
acquisition and utilization. For our equipment rental segment, Corporate
EBITDA provides an appropriate measure of performance because the
investment in our equipment fleet is longer-term in nature than for our car
rental segment and therefore Corporate EBITDA allows management to assess
operating performance exclusive of interim changes in depreciation
assumptions. Further, unlike our car rental segment, our equipment rental
fleet is not financed through separate securitization-based fleet financing
facilities, but rather through our corporate debt. Corporate EBITDA for our
equipment rental segment is a key measure used to make investment decisions
because it enables us to evaluate return on investments. For both segments,
Corporate EBITDA provides a relevant profitability metric for use in
comparison of our performance against our public peers, many of whom
publicly disclose a comparable metric. In addition, we believe that
investors, analysts and rating agencies consider EBITDA and Corporate
EBITDA useful in measuring our ability to meet our debt service obligations
and make capital expenditures. Several of Hertz's material debt covenants
are based on financial ratios utilizing Corporate EBITDA and non-compliance
with those covenants could result in the requirement to immediately repay
all amounts outstanding under those agreements, which could have a material
adverse effect on our results of operations, financial position and cash
flows.
EBITDA and Corporate EBITDA are not recognized measurements under GAAP.
When evaluating our operating performance or liquidity, investors should
not consider EBITDA and Corporate EBITDA in isolation of, or as a
substitute for, measures of our financial performance and liquidity as
determined in accordance with GAAP, such as net income, operating income or
net cash provided by operating activities. EBITDA and Corporate EBITDA may
have material limitations as performance measures because they exclude
items that are necessary elements of our costs and operations. Because
other companies may calculate EBITDA and Corporate EBITDA differently than
we do, EBITDA may not be, and Corporate EBITDA as presented is not,
comparable to similarly titled measures reported by other companies.
Borrowings under Hertz's senior credit facilities are a key source of our
liquidity. Hertz's ability to borrow under these senior credit facilities
depends upon, among other things, the maintenance of a sufficient borrowing
base and compliance with the financial ratio covenants based on Corporate
EBITDA set forth in the credit agreements for Hertz's senior credit
facilities. Hertz's senior term loan facility requires it to maintain a
specified consolidated leverage ratio and a consolidated interest expense
coverage ratio based on Corporate EBITDA, while its senior asset-based loan
facility requires that a specified consolidated leverage ratio and
consolidated fixed charge coverage ratio be maintained for periods during
which there is less than $200 million of available borrowing capacity under
the senior asset-based loan facility. These financial covenants became
applicable to Hertz on September 30, 2006, reflecting the four quarter
period ending thereon. Failure to comply with these financial ratio
covenants would result in a default under the credit agreements for Hertz's
senior credit facilities and, absent a waiver or an amendment from the
lenders, permit the acceleration of all outstanding borrowings under the
senior credit facilities. As of June 30, 2007, we performed the
calculations associated with the above noted financial covenants and
determined that Hertz is in compliance with such covenants.
2. Adjusted Pre-Tax Income
Adjusted pre-tax income is calculated as income before income taxes and
minority interest plus non-cash purchase accounting charges, non-cash debt
charges relating to the amortization of debt financing costs and debt
discounts, unrealized transaction gains (losses) on Euro-denominated debt
(through September 30, 2006) and certain one-time charges and
non-operational items. Adjusted pre-tax income is important to management
and investors because it represents our preferred measure of our
operational performance exclusive of the effects of purchase accounting,
non-cash debt charges, one-time charges and items that are not operational
in nature or comparable to those of our competitors.
3. Adjusted Net Income
Adjusted net income is calculated as adjusted pre-tax income less a
provision for income taxes derived utilizing a normalized income tax rate
and minority interest. Adjusted net income is important to management and
investors because it represents our preferred measure of our operational
performance exclusive of the effects of purchase accounting, non-cash debt
charges, one-time charges and items that are not operational in nature or
comparable to those of our competitors.
4. Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is calculated as adjusted net income
divided by the post-IPO pro forma number of shares outstanding. Adjusted
diluted earnings per share is important to management and investors because
it represents a measure of our operational performance exclusive of the
effects of purchase accounting adjustments, one-time charges and items that
are not operational in nature or comparable to those of our competitors.
Utilizing the post-IPO pro forma number of shares outstanding is important
to management and investors because it represents a measure of our earnings
per share as if the effects of the initial public offering were applicable
to all periods.
5. Transaction Days
Transaction days represent the total number of days that vehicles were on
rent in a given period.
6. Car Rental Rate Revenue and Rental Rate Revenue Per Transaction Day
Car rental rate revenue consists of all revenue, net of discounts,
associated with the rental of cars including charges for optional insurance
products, but excluding revenue derived from fueling and concession and
other expense pass-throughs, NeverLost units and certain ancillary revenue.
Rental rate revenue per transaction day is calculated as total rental rate
revenue, divided by the total number of transaction days, with all periods
adjusted to eliminate the effect of fluctuations in foreign currency. Our
management believes eliminating the effect of fluctuations in foreign
currency is appropriate so as not to affect the comparability of underlying
trends. This statistic is important to management and investors as it
represents the best measurement of the changes in underlying pricing in the
car rental business and encompasses the elements in car rental pricing that
management has the ability to control.
7. Equipment Rental and Rental Related Revenue
Equipment rental and rental related revenue consists of all revenue, net of
discounts, associated with the rental of equipment including charges for
delivery, loss damage waivers and fueling, but excluding revenue arising
from the sale of equipment, parts and supplies and certain other ancillary
revenue. Rental and rental related revenue is adjusted in all periods to
eliminate the effect of fluctuations in foreign currency. Our management
believes eliminating the effect of fluctuations in foreign currency is
appropriate so as not to affect the comparability of underlying trends.
This statistic is important to our management and to investors as it is
utilized in the measurement of rental revenue generated per dollar invested
in fleet on an annualized basis and is comparable with the reporting of
other industry participants.
8. Same Store Revenue Growth
Same store revenue growth represents the change in the current period total
same store revenue over the prior period total same store revenue as a
percentage of the prior period. The same store revenue amounts are adjusted
in all periods to eliminate the effect of fluctuations in foreign currency.
Our management believes eliminating the effect of fluctuations in foreign
currency is appropriate so as not to affect the comparability of underlying
trends.
9. Unlevered Pre-Tax Cash Flow
Unlevered pre-tax cash flow is calculated as Corporate EBITDA less
equipment rental fleet depreciation including gain (loss) on sale,
non-fleet capital expenditures, net of non-fleet disposals, plus changes in
working capital (accounts receivable, inventories, prepaid expenses,
accounts payable and accrued liabilities), and changes in other assets and
liabilities (including public liability and property damage, U.S. pension
liability, other assets and liabilities, equity and minority interest).
Unlevered pre-tax cash flow is important to management and investors as it
represents funds available to pay corporate interest and taxes and to grow
our fleet or reduce debt.
10. Levered After-Tax Cash Flow Before Fleet Growth
Levered after-tax cash flow before fleet growth is calculated as Unlevered
Pre-Tax Cash Flow less corporate net cash interest and corporate cash
taxes. Levered after-tax cash flow before fleet growth is important to
management and investors as it represents the funds available to grow our
fleet or reduce our debt.
11. Levered After-Tax Cash Flow After Fleet Growth
Levered after-tax cash flow after fleet growth is calculated as Levered
After-Tax Cash Flow Before Fleet Growth less equipment rental fleet growth
capital expenditures and less gross car rental fleet growth capital
expenditures plus car rental fleet financing. Levered after-tax cash flow
after fleet growth is important to management and investors as it
represents the funds available for the reduction of corporate debt.
12. Corporate Net Cash Interest (used in the calculation of Levered
After-Tax Cash Flow Before Fleet Growth)
Corporate net cash interest represents total interest expense, net of total
interest income, less car rental fleet interest expense, net of car rental
fleet interest income, and non-cash corporate interest charges. Non-cash
corporate interest charges represent the amortization of corporate debt
financing costs and corporate debt discounts. Corporate net cash interest
helps management and investors measure the ongoing costs of financing the
business exclusive of the costs associated with the fleet financing.
13. Corporate Cash Taxes (used in the calculation of Levered After-Tax Cash
Flow Before Fleet Growth)
Corporate cash taxes represents cash paid by the Company during the period
for income taxes.
14. Net Corporate Debt
Net corporate debt is calculated as total debt excluding fleet debt less
cash and equivalents and short-term investments, if any, and "corporate
restricted cash." Corporate debt consists of senior notes and Euro medium
term notes issued prior to the Acquisition; borrowings under our Senior
Term Facility; borrowings under our Senior ABL Facility; our Senior Notes;
our Senior Subordinated Notes; and certain other indebtedness of our
domestic and foreign subsidiaries. Net Corporate Debt is important to
management, investors and ratings agencies as it helps measure our
leverage. Net Corporate Debt also assists in the evaluation of our ability
to service our non-fleet-related debt without reference to the expense
associated with the fleet debt, which is fully collateralized by assets not
available to lenders under the non-fleet debt facilities.
15. Net Fleet Debt
Net fleet debt is calculated as total fleet debt less "restricted cash
associated with fleet debt." Fleet debt consists of our U.S. ABS Fleet
Debt, the Fleet Financing Facility, obligations incurred under our
International Fleet Debt Facilities, capital lease financings relating to
revenue earning equipment that are outside the International Fleet Debt
Facilities, the Belgian Revolving Credit Facility, the Brazilian Credit
Facility, the Canadian Fleet Financing Facility and the pre-Acquisition ABS
Notes. This measure is important to management, investors and ratings
agencies as it helps measure our leverage.
16. Corporate Restricted Cash (used in the calculation of Net Corporate
Debt)
Total restricted cash includes cash and equivalents that are not readily
available for our normal disbursements. Total restricted cash and
equivalents are restricted for the acquisition of vehicles and other
specified uses under our Fleet Debt programs, our like-kind exchange
programs and to satisfy certain of our self insurance regulatory reserve
requirements. Corporate restricted cash is calculated as total restricted
cash less "restricted cash associated with fleet debt."
17. Restricted Cash Associated with Fleet Debt (used in the calculation of
Net Fleet Debt and Corporate Restricted Cash)
Total restricted cash includes cash and investments that are not readily
available for our normal disbursements. Restricted cash associated with
fleet debt is restricted for the acquisition of vehicles and other
specified uses under our Fleet Debt programs and our car rental like-kind
exchange program.
18. Pro Forma
The calculations give effect to the Company's new capital structure as if
the debt associated with the acquisition of the Company on December 21,
2005 and related purchase accounting adjustments had occurred on January 1,
2005.
CONTACT:
Investor Relations:
Lauren Babus
201-307-2100investorrelations@hertz.com
Media:
Richard Broome
201-307-2486rbroome@hertz.com
Copyright 2007 Market Wire, Incorporated
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