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Hertz Reports Third Quarter Operating Results and Maintains Strong Liquidity PARK RIDGE, NJ--(MARKET WIRE)--Nov 5, 2008 -- Hertz Global Holdings, Inc. (NYSE:HTZ - News)
-- Third quarter worldwide revenues of $2.4 billion, down 1.1%, year-over-
year.
-- International revenues comprise 37.5% of total worldwide revenues, up
from 35.0%.
-- Adjusted diluted EPS for the quarter of $0.33 compared with $0.65 in
2007; GAAP diluted EPS of $0.05 compared with $0.50 in 2007.
-- Liquidity of approximately $4.6 billion as of September 30, 2008,
including the completion, in September, of an $825 million 2-year, asset-
backed Variable Funding Note facility.
Hertz Global Holdings, Inc. (NYSE:HTZ - News) (with its subsidiaries, the "Company" or "we") reported third quarter 2008 worldwide revenues of $2.4 billion, a decrease of 1.1% over the prior year (a 3.5% decrease in constant currency). Worldwide car rental revenues for the quarter increased 0.2% to $2.0 billion. Revenues from worldwide equipment rental for the third quarter were $433.1 million, down 6.8% over the prior year period. Revenue growth outside of the United States is a key element of the Company's diversification strategy, and revenues from international operations constituted 37.5% of worldwide revenues for the quarter, up from 35.0%. Mark P. Frissora, The Company's Chairman and Chief Executive Officer said, "The third quarter was difficult for both the macro-economy and our industry; in response, we implemented unprecedented strategic actions to improve both liquidity and customer satisfaction. These initiatives negatively impacted our third quarter earnings by more than $58 million. Specifically, the actions involved accelerated fleet deletions, higher maintenance costs to prepare cars for sale, penalties for early turn backs, increased advertising for our new gasoline refueling and service guarantee initiatives, and higher gasoline costs associated with the refueling program. Additionally, in September we initiated programs to further reduce employee headcount by approximately 1,400 and to close 80 net locations, as we further re-balance the business due to declining volumes in global car and equipment rental markets. As a result of these and other actions, we took $85 million in restructuring and related charges for the quarter. We have also recently increased prices in major car and equipment rental markets. While these actions did not improve third quarter results, we believe they better position the Company to optimize liquidity going forward, especially in the fourth quarter when we generate most of our cash flow. I am especially pleased that we finished the quarter with liquidity of approximately $4.6 billion(1)," he added. Adjusted pre-tax income(2) for the third quarter of 2008 was $169.1 million, a decrease of 49.5% compared with the third quarter of 2007, and income before income taxes and minority interest ("pre-tax income"), on a GAAP basis, was $26.2 million, a 89.7% decrease from $255.1 million of pre-tax income in the third quarter of 2007. Corporate EBITDA(3) for the third quarter of 2008 was $386.7 million, a decrease of 30.3% from 2007. Third quarter 2008 adjusted net income(4) was $106.0 million, 50.0% lower than the third quarter of 2007, resulting in adjusted diluted earnings per share(4) for the quarter of $0.33, compared with $0.65 for the third quarter of 2007, with net income, on a GAAP basis, for the quarter, of $17.7 million, or $0.05 per share on a diluted basis, compared with net income of $162.7 million, or $0.50 per share on a diluted basis, for the third quarter of 2007. The decline in GAAP net income is attributable primarily to increased restructuring and related costs, residual value declines, higher planned advertising costs and decreased volume and pricing. Also, in 2007 we benefited from a change in the vacation accrual reserve. The Company took $85 million in restructuring and related charges in the third quarter, primarily attributable to costs associated with job reductions, the closure of rental locations and outsourcing/process reengineering. The annualized savings attributable to headcount reductions are estimated at approximately $76 million.
INCOME MEASUREMENTS, THIRD QUARTER 2008 & 2007
Q3 2008 Q3 2007
------------------------- -------------------------
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 322.9M and
327.5M diluted
shares) $ 26.2 $ 17.7 $ 0.05 $ 255.1 $ 162.7 $ 0.50
======= ======== ======= ========
Adjustments:
Purchase accounting 25.2 23.3
Non-cash debt
charges 20.2 34.8
Restructuring and
related charges 85.0 16.1
Loss on derivatives 15.0 7.0
Vacation accrual
adjustment (2.5) (9.2)
Other - 7.8
------- -------
Adjusted pre-tax
income 169.1 169.1 334.9 334.9
Assumed provision for
income taxes at 34%
and 35% (57.5) (117.2)
Minority interest (5.6) (5.5)
------- ------- ------- -------
Earnings Measures, as
adjusted (EPS based
on 325.5M and 324.8M
diluted shares) $ 169.1 $ 106.0 $ 0.33 $ 334.9 $ 212.2 $ 0.65
======= ======= ======== ======= ======= ========The Company ended the third quarter of 2008 with total debt of $12.84 billion and net corporate debt(5) of $4.25 billion, compared with total debt of $13.03 billion and net corporate debt of $4.57 billion as of September 30, 2007, a reduction in net corporate debt of $324.0 million. In addition, levered cash flow(5) for the quarter was a use of $335.1 million, compared with a use of $203.2 million in the third quarter of 2007, the change is attributable to an increase in working capital, which was anticipated, and lower earnings, partially offset by reduced fleet investment. On a GAAP basis, net cash provided by operating activities was a use of $261.7 million in the third quarter of 2008, compared to positive cash flow of $9.0 million in 2007. The Company's liquidity position remains strong and we believe there is sufficient debt capacity to meet fleet debt amortizations through mid-2010. WORLDWIDE CAR RENTAL Worldwide car rental revenues were $2.0 billion for the third quarter of 2008, an increase of 0.2% over the prior year period. Transaction days for the quarter decreased 3.0% [(5.6)% U.S.; 1.9% International]. U.S. off-airport revenues for the third quarter increased 0.4% year-over-year, while transaction days declined 1.6%. Rental rate revenue per transaction day(5) ("RPD") for the quarter was 0.8% below the prior year period [0.4% U.S.; (3.3)% International]. Worldwide car rental adjusted pre-tax income for the third quarter of 2008 was $167.1 million, compared with $301.1 million last year, a decrease of 44.5%. The decrease is attributable to volume, pricing and residual value declines, and inflation in key areas including gasoline and vehicle repair and maintenance, partially offset by strong cost management performance. The worldwide average number of Company-operated cars for the third quarter of 2008 was 490,700, a decrease of 2.7% over the prior year period. WORLDWIDE EQUIPMENT RENTAL Worldwide equipment rental revenues were $433.1 million for the third quarter of 2008, a 6.8% decrease from the prior year period. HERC continued to achieve strong growth in Canada, especially Western Canada where oil industry-related rental activity remains robust. Also, HERC continues to improve diversification into industrial and fragmented sectors of the U.S. equipment rental market. Adjusted pre-tax income for the third quarter of 2008 was $81.1 million, a 25.7% decrease over the prior year period, primarily attributable to the effects of reduced volume growth and pricing, partially offset by cost management initiatives. The average acquisition cost of rental equipment operated during the third quarter of 2008 increased by 0.2% year-over-year -- compared with a 6.7% increase in the third quarter of 2007 over the third quarter of 2006 -- to $3.4 billion, and net revenue earning equipment as of September 30, 2008 was $2.4 billion, a 10.6% decrease from the amount as of December 31, 2007. OUTLOOK Hertz still expects to generate a profit on an adjusted pre-tax and Corporate EBITDA basis in its car and equipment rental businesses, and generate positive levered and total net cash flow(5) for the full year. The impact of reduced demand, lower pricing and residual market conditions on profitability has become increasingly difficult to assess. For this reason, the Company will not meet its current guidance and is suspending giving specific earnings guidance on individual financial metrics. Once the economy and market conditions stabilize and our visibility over our businesses improves, we expect to resume guidance. RESULTS OF THE HERTZ CORPORATION The Company's operating subsidiary, The Hertz Corporation ("Hertz"), posted the same revenues for the third quarter 2008 as the Company. Hertz's third quarter 2008 pre-tax income and net income were, however, slightly lower than those of the Company primarily because of additional interest expense recognized by Hertz on an inter-company loan from the Company. (1) $3.9 billion of which is subject to borrowing base availability. (2) Adjusted pre-tax income, a non-GAAP measure of profitability, represents pre-tax income 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. (3) Corporate EBITDA, a non-GAAP measure of profitability and liquidity, 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. (4) Adjusted net income, a non-GAAP measure of profitability, represents the adjusted pre-tax income amount less a provision for income taxes derived utilizing a normalized income tax rate (34% in 2008 and 35% in 2007) and minority interest. Adjusted diluted earnings per share, a non-GAAP measure of profitability, is calculated as adjusted net income divided by the pro forma diluted number of shares outstanding (325.5 million in 2008 and 324.8 million in 2007). See the accompanying reconciliations. (5) Net corporate debt, levered after-tax cash flow after fleet growth ("levered cash flow") , rental rate revenue per transaction day and total net cash flow are non-GAAP measures. See the accompanying reconciliations. CONFERENCE CALL INFORMATION The Company's third quarter 2008 earnings conference call will be held on Thursday, November 6, 2008, at 10:00 a.m. (EST). To access the conference call live, dial 1-800-288-8960 in the U.S. and 1-612-288-0340 for international callers using the passcode: 962639 or listen via webcast at www.hertz.com/investorrelations. The conference call will be available for replay through November 13, 2008 by calling 1-800-475-6701 in the U.S. or 1-320-365-3844 for international callers with the passcode: 962639. 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 8,100 locations in 144 countries worldwide. Hertz is the number one airport car rental brand in the United States and at 69 major airports in Europe, operating both corporate and licensee locations in cities and airports in North America, Europe, Latin America, Australia and New Zealand. In addition the Company has licensee locations in cities and airports in Africa, Asia and the Middle East. 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 the Company's Prestige, Fun and Green collections, set Hertz apart from the competition. Hertz also operates one of the world's largest equipment rental businesses, Hertz Equipment Rental Corporation, offering a diverse line of equipment, including tools and supplies, as well as new and used equipment for sale, to customers ranging from major industrial companies to local contractors and consumers through nearly 350 branches in the United States, Canada, France, Spain and China. 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 and availability of additional or continued fleet financing including as a result of the financial instability of the entities providing credit support; anticipated growth; economies of scale; the economy; future economic performance; the Company's ability to maintain profitability during adverse economic cycles, potential tangible and intangible asset impairment charges 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 2007 Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as filed with the United States Securities and Exchange Commission, or the "SEC," on February 29, 2008, and its Quarterly Report on Form 10-Q for the three months ended June 30, 2008, as filed with the SEC on August 8, 2008, 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
Nine Months Ended September 30, 2008 and 2007
Table 2: Condensed Consolidated Statements of Operations As Reported and
As Adjusted for the Three and Nine Months Ended September 30,
2008 and 2007
Table 3: Segment and Other Information for the Three and Nine Months Ended
September 30, 2008 and 2007
Table 4: Selected Operating and Financial Data as of or for the Three and
Nine Months Ended September 30, 2008 compared to the prior year
period or December 31, 2007.
Table 5: Non-GAAP Reconciliations of Adjusted Pre-Tax Income (Loss) and
Adjusted Net Income (Loss) for the Three and Nine Months Ended
September 30, 2008 and 2007
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 Nine Months Ended September 30, 2008 and 2007
Table 7: Non-GAAP Reconciliations of Adjusted Pre-Tax Income (Loss) to
Corporate EBITDA for the Three and Nine Months Ended September
30, 2008 and 2007
Table 8: Non-GAAP Reconciliations of Operating Cash Flows to EBITDA for
the Three and Nine Months Ended September 30, 2008 and 2007, Net
Corporate Debt and Net Fleet Debt as of September 30, 2008, 2007
and 2006, June 30, 2008 and 2007 and December 31, 2007, Car
Rental Rate Revenue per Transaction Day and Equipment Rental and
Rental Related Revenue for the Three and Nine Months Ended
September 30, 2008 and 2007
Table 9: 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
Twelve Months Ended September 30, 2008 and 2007
Table 10: Non-GAAP Reconciliations of Financing Cash Flows to Total Net
Cash Flow for the Three Months Ended September 30, 2008 and
2007.
Table 1
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
Unaudited
Three Months Ended As a Percent
September 30, of Total Revenues
-------------------- -------------------
2008 2007 2008 2007
--------- --------- -------- --------
Total revenues $ 2,421.9 $ 2,449.6 100.0 % 100.0 %
--------- --------- -------- --------
Expenses:
Direct operating 1,351.8 1,216.1 55.8 % 49.7 %
Depreciation of revenue
earning equipment 595.0 535.0 24.5 % 21.8 %
Selling, general and
administrative 234.3 203.2 9.7 % 8.3 %
Interest, net of interest
income 214.6 240.2 8.9 % 9.8 %
--------- --------- -------- --------
Total expenses 2,395.7 2,194.5 98.9 % 89.6 %
--------- --------- -------- --------
Income before income taxes and
minority interest 26.2 255.1 1.1 % 10.4 %
Provision for taxes on income (2.9) (86.9) (0.2)% (3.6)%
Minority interest (5.6) (5.5) (0.2)% (0.2)%
--------- --------- -------- --------
Net income $ 17.7 $ 162.7 0.7 % 6.6 %
========= ========= ======== ========
Weighted average number of
shares outstanding:
Basic 322.9 321.5
Diluted 322.9 327.5
Earnings per share:
Basic $ 0.05 $ 0.51
Diluted $ 0.05 $ 0.50
Nine Months Ended As a Percent
September 30, of Total Revenues
-------------------- -------------------
2008 2007 2008 2007
--------- --------- -------- --------
Total revenues $ 6,736.3 $ 6,546.8 100.0 % 100.0 %
--------- --------- -------- --------
Expenses:
Direct operating 3,801.8 3,495.1 56.4 % 53.4 %
Depreciation of revenue
earning equipment 1,658.7 1,498.9 24.6 % 22.9 %
Selling, general and
administrative 595.8 586.0 8.9 % 8.9 %
Interest, net of interest
income 616.7 661.3 9.2 % 10.1 %
--------- --------- -------- --------
Total expenses 6,673.0 6,241.3 99.1 % 95.3 %
--------- --------- -------- --------
Income before income taxes and
minority interest 63.3 305.5 0.9 % 4.7 %
Provision for taxes on income (36.0) (107.3) (0.5)% (1.7)%
Minority interest (16.1) (14.4) (0.2)% (0.2)%
--------- --------- -------- --------
Net income $ 11.2 $ 183.8 0.2 % 2.8 %
========= ========= ======== ========
Weighted average number of
shares outstanding:
Basic 322.6 321.0
Diluted 322.6 325.3
Earnings per share:
Basic $ 0.03 $ 0.57
Diluted $ 0.03 $ 0.57
Table 2
HERTZ GLOBAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
Unaudited
Three Months Ended September 30, 2008
-----------------------------------------
As As
Reported Adjustments Adjusted
----------- ----------- -----------
Total revenues $ 2,421.9 $ - $ 2,421.9
----------- ----------- -----------
Expenses:
Direct operating 1,351.8 (76.8) (a) 1,275.0
Depreciation of revenue earning
equipment 595.0 (6.1) (b) 588.9
Selling, general and
administrative 234.3 (39.8) (c) 194.5
Interest, net of interest
income 214.6 (20.2) (d) 194.4
----------- ----------- -----------
Total expenses 2,395.7 (142.9) 2,252.8
----------- ----------- -----------
Income before income taxes and
minority interest 26.2 142.9 169.1
Provision for taxes on income (2.9) (54.6) (e) (57.5)
Minority interest (5.6) - (5.6)
----------- ----------- -----------
Net income $ 17.7 $ 88.3 $ 106.0
=========== =========== ===========
Three Months Ended September 30, 2007
-----------------------------------------
As As
Reported Adjustments Adjusted
----------- ----------- -----------
Total revenues $ 2,449.6 $ - $ 2,449.6
----------- ----------- -----------
Expenses:
Direct operating 1,216.1 (16.6) (a) 1,199.5
Depreciation of revenue earning
equipment 535.0 (4.5) (b) 530.5
Selling, general and
administrative 203.2 (23.9) (c) 179.3
Interest, net of interest
income 240.2 (34.8) (d) 205.4
----------- ----------- -----------
Total expenses 2,194.5 (79.8) 2,114.7
----------- ----------- -----------
Income before income taxes and
minority interest 255.1 79.8 334.9
Provision for taxes on income (86.9) (30.3) (e) (117.2)
Minority interest (5.5) - (5.5)
----------- ----------- -----------
Net income $ 162.7 $ 49.5 $ 212.2
=========== =========== ===========
Nine Months Ended September 30, 2008
-----------------------------------------
As As
Reported Adjustments Adjusted
----------- ----------- -----------
Total revenues $ 6,736.3 $ - $ 6,736.3
----------- ----------- -----------
Expenses:
Direct operating 3,801.8 (156.8) (a) 3,645.0
Depreciation of revenue earning
equipment 1,658.7 (15.7) (b) 1,643.0
Selling, general and
administrative 595.8 (48.6) (c) 547.2
Interest, net of interest
income 616.7 (56.4) (d) 560.3
----------- ----------- -----------
Total expenses 6,673.0 (277.5) 6,395.5
----------- ----------- -----------
Income before income taxes and
minority interest 63.3 277.5 340.8
Provision for taxes on income (36.0) (79.9) (e) (115.9)
Minority interest (16.1) - (16.1)
----------- ----------- -----------
Net income $ 11.2 $ 197.6 $ 208.8
=========== =========== ===========
Nine Months Ended September 30, 2007
-----------------------------------------
As As
Reported Adjustments Adjusted
----------- ----------- -----------
Total revenues $ 6,546.8 $ - $ 6,546.8
----------- ----------- -----------
Expenses:
Direct operating 3,495.1 (62.1) (a) 3,433.0
Depreciation of revenue earning
equipment 1,498.9 (13.0) (b) 1,485.9
Selling, general and
administrative 586.0 (40.3) (c) 545.7
Interest, net of interest
income 661.3 (87.3) (d) 574.0
----------- ----------- -----------
Total expenses 6,241.3 (202.7) 6,038.6
----------- ----------- -----------
Income before income taxes and
minority interest 305.5 202.7 508.2
Provision for taxes on income (107.3) (70.6) (e) (177.9)
Minority interest (14.4) - (14.4)
----------- ----------- -----------
Net income $ 183.8 $ 132.1 $ 315.9
=========== =========== ===========
(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 months ended
September 30, 2008 and 2007, also includes restructuring and restructuring
related charges of $60.3 million and $5.5 million, respectively. For the
nine months ended September 30, 2008 and 2007, also includes
restructuring and restructuring related charges of $98.7 million and $30.4
million, respectively. For the three months ended September 30, 2008
and 2007, also includes vacation accrual adjustments of $2.4 million and
$7.4 million, respectively. For the nine months ended September 30, 2007,
also includes vacation accrual adjustments of $23.5 million.
(b) Represents the increase in depreciation of revenue earning equipment
based upon its revaluation relating to purchase accounting.
(c) For the three months ended September 30, 2008 and 2007, also includes
restructuring and restructuring related charges of $24.7 million and $10.6
million, respectively. For the nine months ended September 30, 2008 and
2007, also includes restructuring and related charges of $49.5 million and
$35.0 million, respectively. For the three and nine months ended
September 30, 2008 and 2007, also includes an increase in depreciation of
property and equipment relating to purchase accounting, among other
adjustments which are detailed in Table 5.
(d) Represents non-cash debt charges relating to the amortization of
deferred debt financing costs and debt discounts. For the three and nine
months ended September 30, 2008, also includes $2.8 million and $7.8
million, respectively, associated with the ineffectiveness of our interest
rate swaps. For the three and nine months ended September 30, 2007, also
includes $17.7 million associated with the ineffectiveness of our interest
rate swaps. For the nine months ended September 30, 2007, includes the
write off of $16.2 million of unamortized debt costs associatedwith a debt
modification. Total adjusted interest, net of interestincome, for the
three and nine months ended September 30, 2008, consists of net corporate
interest of $64.5 million and $194.7 million, respectively, and net fleet
interest of $129.9 million and $365.6 million, respectively, and for the
three and nine months ended September 30, 2007, net corporate interest
of $66.6 million and $209.3 million, respectively, and net fleet interest
of $138.8 million and $364.7 million, respectively.
(e) Represents a provision for income taxes derived utilizing a normalized
income tax rate (34% for 2008 and 35% for 2007).
Table 3
HERTZ GLOBAL HOLDINGS, INC.
SEGMENT AND OTHER INFORMATION
(In millions, except per share amounts)
Unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Car rental $ 1,986.5 $ 1,982.2 $ 5,442.8 $ 5,252.2
Equipment rental 433.1 464.9 1,287.4 1,287.8
Other reconciling items 2.3 2.5 6.1 6.8
--------- --------- --------- ---------
$ 2,421.9 $ 2,449.6 $ 6,736.3 $ 6,546.8
========= ========= ========= =========
Depreciation of property and
equipment:
Car rental $ 30.0 $ 31.8 $ 94.6 $ 99.8
Equipment rental 11.2 10.0 32.3 29.8
Other reconciling items 1.5 1.6 4.6 4.8
--------- --------- --------- ---------
$ 42.7 $ 43.4 $ 131.5 $ 134.4
========= ========= ========= =========
Amortization of other
intangible assets:
Car rental $ 8.4 $ 7.6 $ 25.4 $ 22.2
Equipment rental 8.1 8.1 24.3 24.3
--------- --------- --------- ---------
$ 16.5 $ 15.7 $ 49.7 $ 46.5
========= ========= ========= =========
Income (loss) before income
taxes and minority interest:
Car rental $ 85.8 $ 250.5 $ 209.4 $ 379.2
Equipment rental 26.9 94.4 118.5 224.2
Other reconciling items (86.5) (89.8) (264.6) (297.9)
--------- --------- --------- ---------
$ 26.2 $ 255.1 $ 63.3 $ 305.5
========= ========= ========= =========
Corporate EBITDA (a)(b):
Car rental $ 193.2 $ 333.7 $ 439.4 $ 583.5
Equipment rental 199.7 226.6 578.5 603.8
Other reconciling items (6.2) (5.2) (31.7) (23.8)
--------- --------- --------- ---------
$ 386.7 $ 555.1 $ 986.2 $ 1,163.5
========= ========= ========= =========
Adjusted pre-tax income (loss) (a)(b):
Car rental $ 167.1 $ 301.1 $ 355.8 $ 480.9
Equipment rental 81.1 109.2 225.9 271.5
Other reconciling items (79.1) (75.4) (240.9) (244.2)
--------- --------- --------- ---------
$ 169.1 $ 334.9 $ 340.8 $ 508.2
========= ========= ========= =========
Adjusted net income (loss) (a)(b):
Car rental $ 110.3 $ 195.7 $ 234.8 $ 312.6
Equipment rental 53.5 71.0 149.1 176.5
Other reconciling items (57.8) (54.5) (175.1) (173.2)
--------- --------- --------- ---------
$ 106.0 $ 212.2 $ 208.8 $ 315.9
========= ========= ========= =========
Pro forma diluted
number of shares
outstanding (a) 325.5 324.8 325.5 324.8
Adjusted diluted
earnings per share (a) $ 0.33 $ 0.65 $ 0.64 $ 0.97
(a) Represents a non-GAAP measure, see the accompanying reconciliations
and definitions.
(b) In 2008, the Company has reclassified its 2007 realized and
unrealized gains/losses on derivatives from "other reconciling items" to
"car rental." See Tables 5 through 7.
Note: "Other Reconciling Items" includes general corporate expenses,
certain interest expense (including net interest on corporate debt),
as well as other business activities such as our third-party claim
management services. See Tables 5 through 7.
Table 4
HERTZ GLOBAL HOLDINGS, INC.
SELECTED OPERATING AND FINANCIAL DATA
Unaudited
Three Nine
Months Months
Ended, Percent Ended, Percent
or as of change from or as of change from
Sept. 30, prior year Sept. 30, prior year
2008 period 2008 period
----------- ---------- ----------- ----------
Selected Car Rental Operating Data
Worldwide number of
transactions
(in thousands) 7,133 (7.0)% 21,158 (3.7)%
Domestic 5,052 (9.4)% 15,368 (6.3)%
International 2,081 (0.4)% 5,790 3.8 %
Worldwide number of
transaction
days (in thousands) 35,525 (3.0)% 99,042 0.7 %
Domestic 22,613 (5.6)% 66,353 (2.1)%
International 12,912 1.9 % 32,689 7.0 %
Worldwide rental rate
revenue per
transaction day (a) $ 46.73 (0.8)% $ 45.58 (1.8)%
Domestic $ 45.01 0.4 % $ 43.41 (1.1)%
International (b) $ 49.74 (3.3)% $ 49.99 (3.8)%
Worldwide average
number of company-
operated cars
during period 490,700 (2.7)% 467,700 0.2 %
Domestic 312,400 (4.5)% 311,000 (2.4)%
International 178,300 0.6 % 156,700 5.7 %
Worldwide revenue
earning equipment,
net (in millions) $ 8,472.7 (4.5)% $ 8,472.7 (4.5)%
Selected Worldwide Equipment
Rental Operating Data
Rental and rental
related revenue
(in millions) (a)(b) $ 384.8 (9.0)% $ 1,139.8 (3.2)%
Same store revenue
growth,including
initiatives (a)(b) -5.5% N/M -2.9% N/M
Average acquisition
cost of revenue
earning equipment
operated during period
(in millions) $ 3,405.0 0.2 % $ 3,448.9 6.5 %
Revenue earning
equipment, net
(in millions) $ 2,411.6 (11.3)% $ 2,411.6 (11.3)%
Other Financial Data (in millions)
Cash flows provided by
(used in) operating
activities $ (261.7) N/M $ 1,574.8 (28.7)%
Levered after-tax cash
flow before fleet
growth (a) (651.5) (175.4)% (255.8) N/M
Levered after-tax cash
flow after fleet
growth (a) (335.1) (64.9)% (262.8) (668.4)%
EBITDA (a) 889.4 (17.9)% 2,503.8 (4.9)%
Corporate EBITDA (a) 386.7 (30.3)% 986.2 (15.2)%
Selected Balance Sheet
Data (in millions)
September 30, December 31,
2008 2007
----------- -----------
Cash and equivalents $ 731.5 $ 730.2
Total revenue earning
equipment, net 10,884.3 10,307.9
Total assets 19,895.0 19,255.7
Total debt 12,844.2 11,960.1
Net corporate debt (a) 4,247.5 3,984.7
Net fleet debt (a) 7,351.2 6,584.2
Stockholders' equity 2,864.4 2,913.4
(a) Represents a non-GAAP measure, see the accompanying reconciliations
and definitions.
(b) Based on 12/31/07 foreign exchange rates.
N/M Percentage change not meaningful.
Table 5
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except per share amounts)
Unaudited
ADJUSTED PRE-TAX INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS)
Three Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Total revenues: $ 1,986.5 $ 433.1 $ 2.3 $ 2,421.9
----------- ----------- ----------- -----------
Expenses:
Direct operating and
selling, general
and administrative 1,279.2 289.5 17.4 1,586.1
Depreciation of
revenue earning
equipment 504.2 90.8 - 595.0
Interest, net of
interest income 117.3 25.9 71.4 214.6
----------- ----------- ----------- -----------
Total expenses 1,900.7 406.2 88.8 2,395.7
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest 85.8 26.9 (86.5) 26.2
Adjustments:
Purchase accounting (a):
Direct operating
and selling, general
and administrative 9.9 8.7 0.5 19.1
Depreciation of
revenue earning
equipment - 6.1 - 6.1
Non-cash debt charges (b) 13.5 2.6 4.1 20.2
Restructuring charges (c) 36.4 36.6 1.9 74.9
Restructuring related
charges (c) 8.3 0.8 1.0 10.1
Vacation accrual
adjustment (c) (1.8) (0.6) (0.1) (2.5)
Unrealized loss on
derivative (d) 15.0 - - 15.0
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) 167.1 81.1 (79.1) 169.1
Assumed (provision)
benefit for income
taxes of 34% (56.8) (27.6) 26.9 (57.5)
Minority interest - - (5.6) (5.6)
----------- ----------- ----------- -----------
Adjusted net income
(loss) $ 110.3 $ 53.5 $ (57.8) $ 106.0
=========== =========== =========== ===========
Pro forma diluted
number of shares
outstanding 325.5
Adjusted diluted
earnings per share $ 0.33
Three Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Total revenues: $ 1,982.2 $ 464.9 $ 2.5 $ 2,449.6
----------- ----------- ----------- -----------
Expenses:
Direct operating and
selling, general
and administrative 1,139.4 254.6 25.3 1,419.3
Depreciation of
revenue earning
equipment 456.9 78.1 - 535.0
Interest, net of
interest income 135.4 37.8 67.0 240.2
----------- ----------- ----------- -----------
Total expenses 1,731.7 370.5 92.3 2,194.5
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest 250.5 94.4 (89.8) 255.1
Adjustments:
Purchase accounting (a):
Direct operating
and selling, general
and administrative 9.3 9.0 0.4 18.7
Depreciation of
revenue earning
equipment (0.2) 4.8 - 4.6
Non-cash debt charges (b) 29.1 2.8 2.9 34.8
Restructuring charges (c) 11.9 0.4 3.8 16.1
Vacation accrual
adjustment (c) (6.5) (2.2) (0.5) (9.2)
Unrealized loss on
derivative (d) 7.0 - - 7.0
Management transition
costs (d) - - 7.8 7.8
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) 301.1 109.2 (75.4) 334.9
Assumed (provision)
benefit for income
taxes of 35% (105.4) (38.2) 26.4 (117.2)
Minority interest - - (5.5) (5.5)
----------- ----------- ----------- -----------
Adjusted net income
(loss) $ 195.7 $ 71.0 $ (54.5) $ 212.2
=========== =========== =========== ===========
Pro forma diluted
number of shares
outstanding 324.8
Adjusted diluted
earnings per share $ 0.65
Nine Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Total revenues: $ 5,442.8 $ 1,287.4 $ 6.1 $ 6,736.3
----------- ----------- ----------- -----------
Expenses:
Direct operating and
selling, general
and administrative 3,516.8 822.5 58.3 4,397.6
Depreciation of
revenue earning
equipment 1,399.7 259.0 - 1,658.7
Interest, net of
interest income 316.9 87.4 212.4 616.7
----------- ----------- ----------- -----------
Total expenses 5,233.4 1,168.9 270.7 6,673.0
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest 209.4 118.5 (264.6) 63.3
Adjustments:
Purchase accounting (a):
Direct operating
and selling, general
and administrative 30.6 26.6 1.5 58.7
Depreciation of
revenue earning
equipment (0.1) 15.8 - 15.7
Non-cash debt charges (b) 37.9 8.0 10.5 56.4
Restructuring charges (c) 64.7 55.0 7.5 127.2
Restructuring related
charges (c) 16.1 2.0 2.9 21.0
Unrealized loss on
derivative (d) 12.0 - - 12.0
Realized gain on
derivative (d) (14.8) - - (14.8)
Management transition
costs (d) - - 1.3 1.3
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) 355.8 225.9 (240.9) 340.8
Assumed (provision)
benefit for income
taxes of 34% (121.0) (76.8) 81.9 (115.9)
Minority interest - - (16.1) (16.1)
----------- ----------- ----------- -----------
Adjusted net income
(loss) $ 234.8 $ 149.1 $ (175.1) $ 208.8
=========== =========== =========== ===========
Pro forma diluted
number of shares
outstanding 325.5
Adjusted diluted
earnings per share $ 0.64
Nine Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Total revenues: $ 5,252.2 $ 1,287.8 $ 6.8 $ 6,546.8
----------- ----------- ----------- -----------
Expenses:
Direct operating and
selling, general
and administrative 3,264.7 737.0 79.4 4,081.1
Depreciation of
revenue earning
equipment 1,279.7 219.2 - 1,498.9
Interest, net of
interest income 328.6 107.4 225.3 661.3
----------- ----------- ----------- -----------
Total expenses 4,873.0 1,063.6 304.7 6,241.3
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest 379.2 224.2 (297.9) 305.5
Adjustments:
Purchase accounting (a):
Direct operating
and selling, general
and administrative 28.0 26.5 1.3 55.8
Depreciation of
revenue earning
equipment (2.9) 16.1 - 13.2
Non-cash debt charges (b) 53.9 8.3 25.1 87.3
Restructuring charges (c) 46.3 3.4 15.7 65.4
Vacation accrual
adjustment (c) (20.4) (7.0) (1.4) (28.8)
Unrealized gain on
derivative (d) (3.2) - - (3.2)
Secondary offering
costs (d) - - 2.0 2.0
Management transition
costs (d) - - 11.0 11.0
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) 480.9 271.5 (244.2) 508.2
Assumed (provision)
benefit for income
taxes of 35% (168.3) (95.0) 85.4 (177.9)
Minority interest - - (14.4) (14.4)
----------- ----------- ----------- -----------
Adjusted net income
(loss) $ 312.6 $ 176.5 $ (173.2) $ 315.9
=========== =========== =========== ===========
Pro forma diluted
number of shares
outstanding 324.8
Adjusted diluted
earnings per share $ 0.97
(a) Represents the purchase accounting effects of the acquisition of all
of Hertz's common stock on December 21, 2005, and any subsequent
acquisitions on our results of operations relating to increased
depreciation and amortization of tangible and intangible assets and
accretion of revalued workers' compensation and public liability and
property damage liabilities.
(b) Represents non-cash debt charges relating to the amortization of
deferred debt financing costs and debt discounts. For the three and
nine months ended September 30, 2008, also includes $2.8 million and $7.8
million, respectively, associated with the ineffectiveness of our interest
rate swaps. For the three and nine months ended September 30, 2007, also
includes $17.7 million associated with the ineffectiveness of our interest
rate swaps. For the nine months ended September 30, 2007, includes the
write off of $16.2 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) Amounts are included within selling, general and administrative
expense in our statement of operations.
Table 6
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions)
Unaudited
EBITDA, CORPORATE EBITDA, UNLEVERED PRE-TAX CASH FLOW,
LEVERED AFTER-TAX CASH FLOW BEFORE FLEET GROWTH
AND AFTER FLEET GROWTH
Three Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest $ 85.8 $ 26.9 $ (86.5) $ 26.2
Depreciation and
amortization 542.6 110.1 1.5 654.2
Interest, net of
interest income 117.3 25.9 71.4 214.6
Minority interest - - (5.6) (5.6)
----------- ----------- ----------- -----------
EBITDA 745.7 162.9 (19.2) 889.4
Adjustments:
Car rental fleet
interest (119.9) - - (119.9)
Car rental fleet
depreciation (504.2) - - (504.2)
Non-cash expenses and
charges (a) 28.7 - 10.2 38.9
Extraordinary, unusual
or non-recurring
gains and losses (b) 42.9 36.8 2.8 82.5
----------- ----------- ----------- -----------
Corporate EBITDA $ 193.2 $ 199.7 $ (6.2) 386.7
=========== =========== ===========
Equipment rental
maintenance capital
expenditures, net (80.5)
Non-fleet capital
expenditures, net (12.3)
Changes in working
capital (654.4)
Changes in other
assets and liabilities (197.0)
-----------
Unlevered pre-tax cash
flow (c) (557.5)
Corporate net cash
interest (86.3)
Corporate cash taxes (7.7)
-----------
Levered after-tax cash
flow before fleet
growth (c) (651.5)
Equipment rental fleet
growth capital expenditures 191.0
Car rental net fleet
equity requirement 125.4
-----------
Levered after-tax cash
flow after fleet growth (c) $ (335.1)
===========
Three Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest $ 250.5 $ 94.4 $ (89.8) $ 255.1
Depreciation and
amortization 496.3 96.2 1.6 594.1
Interest, net of
interest income 135.4 37.8 67.0 240.2
Minority interest - - (5.5) (5.5)
----------- ----------- ----------- -----------
EBITDA 882.2 228.4 (26.7) 1,083.9
Adjustments:
Car rental fleet
interest (132.5) - - (132.5)
Car rental fleet
depreciation (456.9) - - (456.9)
Non-cash expenses and
charges (a) 35.5 - 10.4 45.9
Extraordinary, unusual
or non-recurring
gains and losses (b) 5.4 (1.8) 11.1 14.7
----------- ----------- ----------- -----------
Corporate EBITDA $ 333.7 $ 226.6 $ (5.2) 555.1
=========== =========== ===========
Equipment rental
maintenance capital
expenditures, net (69.9)
Non-fleet capital
expenditures, net (46.5)
Changes in working
capital (599.5)
Changes in other
assets and liabilities 34.4
-----------
Unlevered pre-tax cash
flow (c) (126.4)
Corporate net cash
interest (99.7)
Corporate cash taxes (10.5)
-----------
Levered after-tax cash
flow before fleet growth (c) (236.6)
Equipment rental fleet
growth capital
expenditures (149.1)
Car rental net fleet
equity requirement 182.5
-----------
Levered after-tax cash
flow after fleet growth (c) $ (203.2)
===========
Nine Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest $ 209.4 $ 118.5 $ (264.6) $ 63.3
Depreciation and
amortization 1,519.7 315.6 4.6 1,839.9
Interest, net of
interest income 316.9 87.4 212.4 616.7
Minority interest - - (16.1) (16.1)
----------- ----------- ----------- -----------
EBITDA 2,046.0 521.5 (63.7) 2,503.8
Adjustments:
Car rental fleet
interest (322.2) - - (322.2)
Car rental fleet
depreciation (1,399.7) - - (1,399.7)
Non-cash expenses and
charges (a) 49.3 - 20.3 69.6
Extraordinary, unusual
or non-recurring
gains and losses (b) 66.0 57.0 11.7 134.7
----------- ----------- ----------- -----------
Corporate EBITDA $ 439.4 $ 578.5 $ (31.7) 986.2
=========== =========== ===========
Equipment rental
maintenance capital
expenditures, net (232.0)
Non-fleet capital
expenditures, net (106.5)
Changes in working
capital (323.1)
Changes in other
assets and liabilities (288.3)
-----------
Unlevered pre-tax cash
flow (c) 36.3
Corporate net cash
interest (269.5)
Corporate cash taxes (22.6)
-----------
Levered after-tax cash
flow before fleet growth (c) (255.8)
Equipment rental fleet
growth capital
expenditures 277.6
Car rental net fleet
equity requirement (284.6)
-----------
Levered after-tax cash
flow after fleet growth (c) $ (262.8)
===========
Nine Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Income (loss) before
income taxes and
minority interest $ 379.2 $ 224.2 $ (297.9) $ 305.5
Depreciation and
amortization 1,401.7 273.3 4.8 1,679.8
Interest, net of
interest income 328.6 107.4 225.3 661.3
Minority interest - - (14.4) (14.4)
----------- ----------- ----------- -----------
EBITDA 2,109.5 604.9 (82.2) 2,632.2
Adjustments:
Car rental fleet
interest (320.7) - - (320.7)
Car rental fleet
depreciation (1,279.7) - - (1,279.7)
Non-cash expenses and
charges (a) 48.5 2.5 31.1 82.1
Extraordinary, unusual
or non-recurring
gains and losses (b) 25.9 (3.6) 27.3 49.6
----------- ----------- ----------- -----------
Corporate EBITDA $ 583.5 $ 603.8 $ (23.8) 1,163.5
=========== =========== ===========
Equipment rental
maintenance capital
expenditures, net (194.2)
Non-fleet capital
expenditures, net (130.7)
Changes in working
capital 56.9
Changes in other
assets and liabilities (4.8)
-----------
Unlevered pre-tax cash
flow (c) 890.7
Corporate net cash
interest (300.3)
Corporate cash taxes (18.4)
-----------
Levered after-tax cash
flow before fleet growth (c) 572.0
Equipment rental fleet
growth capital
expenditures (297.4)
Car rental net fleet
equity requirement (308.8)
-----------
Levered after-tax cash
flow after fleet growth (c) $ (34.2)
===========
(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:
NON-CASH EXPENSES AND
CHARGES Three Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Non-cash amortization
of debt costs included
in car rental fleet
interest $ 13.7 $ - $ - $ 13.7
Non-cash stock-based
employee compensation
charges - - 6.8 6.8
Non-cash charges for
public liability
and property damage - - 3.4 3.4
Unrealized loss on
derivative 15.0 - - 15.0
----------- ----------- ----------- -----------
Total non-cash
expenses and charges $ 28.7 $ - $ 10.2 $ 38.9
=========== =========== =========== ===========
NON-CASH EXPENSES AND
CHARGES Three Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Non-cash amortization
of debt costs included
in car rental fleet
interest $ 28.5 $ - $ - $ 28.5
Non-cash stock-based
employee compensation
charges - - 7.0 7.0
Non-cash charges for
pension - - 1.3 1.3
Non-cash charges for
public liability
and property damage - - 2.1 2.1
Unrealized loss on
derivative 7.0 - - 7.0
----------- ----------- ----------- -----------
Total non-cash
expenses and charges $ 35.5 $ - $ 10.4 $ 45.9
=========== =========== =========== ===========
NON-CASH EXPENSES AND
CHARGES Nine Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Non-cash amortization
of debt costs included
in car rental fleet
interest $ 37.3 $ - $ - $ 37.3
Non-cash stock-based
employee compensation
charges - - 20.3 20.3
Unrealized loss on
derivative 12.0 - - 12.0
----------- ----------- ----------- -----------
Total non-cash
expenses and charges $ 49.3 $ - $ 20.3 $ 69.6
=========== =========== =========== ===========
NON-CASH EXPENSES AND
CHARGES Nine Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Non-cash amortization
of debt costs included
in car rental fleet
interest $ 52.2 $ - $ - $ 52.2
Non-cash stock-based
employee compensation
charges - - 20.8 20.8
Non-cash charges for
workers' compensation (0.8) 2.5 0.1 1.8
Non-cash charges for
pension - - 3.0 3.0
Non-cash charges for
public liability
and property damage - - 7.2 7.2
Unrealized gain on
derivative (2.9) - - (2.9)
----------- ----------- ----------- -----------
Total non-cash
expenses and charges $ 48.5 $ 2.5 $ 31.1 $ 82.1
=========== =========== =========== ===========
(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:
EXTRAORDINARY, UNUSUAL
OR NON-RECURRING ITEMS Three Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Restructuring charges $ 36.4 $ 36.6 $ 1.9 $ 74.9
Restructuring related
charges 8.3 0.8 1.0 10.1
Vacation accrual
adjustment (1.8) (0.6) (0.1) (2.5)
----------- ----------- ----------- -----------
Total extraordinary,
unusual or
non-recurring items $ 42.9 $ 36.8 $ 2.8 $ 82.5
=========== =========== =========== ===========
EXTRAORDINARY, UNUSUAL
OR NON-RECURRING ITEMS Three Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Restructuring charges $ 11.9 $ 0.4 $ 3.8 $ 16.1
Vacation accrual
adjustment (6.5) (2.2) (0.5) (9.2)
Management transition
costs - - 7.8 7.8
----------- ----------- ----------- -----------
Total extraordinary,
unusual or
non-recurring items $ 5.4 $ (1.8) $ 11.1 $ 14.7
=========== =========== =========== ===========
EXTRAORDINARY, UNUSUAL
OR NON-RECURRING ITEMS Nine Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Restructuring charges $ 64.7 $ 55.0 $ 7.5 $ 127.2
Restructuring related
charges 16.1 2.0 2.9 21.0
Realized gain on
derivative (14.8) - - (14.8)
Management transition
costs - - 1.3 1.3
----------- ----------- ----------- -----------
Total extraordinary,
unusual or
non-recurring items $ 66.0 $ 57.0 $ 11.7 $ 134.7
=========== =========== =========== ===========
EXTRAORDINARY, UNUSUAL
OR NON-RECURRING ITEMS Nine Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Restructuring charges $ 46.3 $ 3.4 $ 15.7 $ 65.4
Vacation accrual
adjustment (20.4) (7.0) (1.4) (28.8)
Secondary offering
costs - - 2.0 2.0
Management transition
costs - - 11.0 11.0
----------- ----------- ----------- -----------
Total extraordinary,
unusual or
non-recurring items $ 25.9 $ (3.6) $ 27.3 $ 49.6
=========== =========== =========== ===========
(c) Amounts include the effect of fluctuations in foreign currency.
Table 7
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF NON-GAAP EARNINGS MEASURES
(In millions)
Unaudited
RECONCILIATION FROM ADJUSTED PRE-TAX INCOME (LOSS) TO CORPORATE EBITDA
Three Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) (a) $ 167.1 $ 81.1 $ (79.1) $ 169.1
Depreciation of
property and
equipment 30.0 11.2 1.5 42.7
Amortization of other
intangible assets 8.4 8.1 - 16.5
Equipment rental fleet
depreciation - 90.8 - 90.8
Interest, net of
interest income 117.3 25.9 71.4 214.6
Car rental fleet
interest (119.9) - - (119.9)
Non-cash debt charges (13.5) (2.6) (4.1) (20.2)
Non-cash amortization
of debt costs
included in car
rental fleet interest 13.7 - - 13.7
Purchase accounting (9.9) (14.8) (0.5) (25.2)
Non-cash stock-based
employee
compensation charges - - 6.8 6.8
Non-cash charges for
public liability
and property damage - - 3.4 3.4
Minority interest - - (5.6) (5.6)
----------- ----------- ----------- -----------
Corporate EBITDA (a) $ 193.2 $ 199.7 $ (6.2) $ 386.7
=========== =========== =========== ===========
Three Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) (a) $ 301.1 $ 109.2 $ (75.4) $ 334.9
Depreciation of
property and
equipment 31.8 10.0 1.6 43.4
Amortization of other
intangible assets 7.6 8.1 - 15.7
Equipment rental fleet
depreciation - 78.1 - 78.1
Interest, net of
interest income 135.4 37.8 67.0 240.2
Car rental fleet
interest (132.5) - - (132.5)
Non-cash debt charges (29.1) (2.8) (2.9) (34.8)
Non-cash amortization
of debt costs
included in car
rental fleet interest 28.5 - - 28.5
Purchase accounting (9.1) (13.8) (0.4) (23.3)
Non-cash stock-based
employee
compensation charges - - 7.0 7.0
Non-cash charges for
pension - - 1.3 1.3
Non-cash charges for
public liability
and property damage - - 2.1 2.1
Minority interest - - (5.5) (5.5)
----------- ----------- ----------- -----------
Corporate EBITDA (a) $ 333.7 $ 226.6 $ (5.2) $ 555.1
=========== =========== =========== ===========
Nine Months Ended September 30, 2008
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) (a) $ 355.8 $ 225.9 $ (240.9) $ 340.8
Depreciation of
property and
equipment 94.6 32.3 4.6 131.5
Amortization of other
intangible assets 25.4 24.3 - 49.7
Equipment rental fleet
depreciation - 259.0 - 259.0
Interest, net of
interest income 316.9 87.4 212.4 616.7
Car rental fleet
interest (322.2) - - (322.2)
Non-cash debt charges (37.9) (8.0) (10.5) (56.4)
Non-cash amortization
of debt costs
included in car
rental fleet interest 37.3 - - 37.3
Purchase accounting (30.5) (42.4) (1.5) (74.4)
Non-cash stock-based
employee
compensation charges - - 20.3 20.3
Minority interest - - (16.1) (16.1)
----------- ----------- ----------- -----------
Corporate EBITDA (a) $ 439.4 $ 578.5 $ (31.7) $ 986.2
=========== =========== =========== ===========
Nine Months Ended September 30, 2007
--------------------------------------------------
Other
Car Equipment Reconciling
Rental Rental Items Total
----------- ----------- ----------- -----------
Adjusted pre-tax income
(loss) (a) $ 480.9 $ 271.5 $ (244.2) $ 508.2
Depreciation of
property and
equipment 99.8 29.8 4.8 134.4
Amortization of other
intangible assets 22.2 24.3 - 46.5
Equipment rental fleet
depreciation - 219.2 - 219.2
Interest, net of
interest income 328.6 107.4 225.3 661.3
Car rental fleet
interest (320.7) - - (320.7)
Non-cash debt charges (53.9) (8.3) (25.1) (87.3)
Non-cash amortization
of debt costs
included in car
rental fleet interest 52.2 - - 52.2
Purchase accounting (25.1) (42.6) (1.3) (69.0)
Non-cash stock-based
employee
compensation charges - - 20.8 20.8
Non-cash charges for
workers'
compensation (0.8) 2.5 0.1 1.8
Non-cash charges for
pension - - 3.0 3.0
Non-cash charges for
public liability
and property damage - - 7.2 7.2
Unrealized loss on
derivative 0.3 - - 0.3
Minority interest - - (14.4) (14.4)
----------- ----------- ----------- -----------
Corporate EBITDA (a) $ 583.5 $ 603.8 $ (23.8) $ 1,163.5
=========== =========== =========== ===========
(a) Represents a non-GAAP measure, see the accompanying reconciliations and
definitions.
Table 8
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except as noted)
Unaudited
Three Months Ended
September 30,
RECONCILIATION FROM OPERATING --------------------------
CASH FLOWS TO EBITDA: 2008 2007
------------ ------------
Net cash provided by (used in)
operating activities $ (261.7) $ 9.0
Amortization of debt and
debt modification costs (17.2) (17.1)
Provision for losses on doubtful
accounts (8.4) (4.1)
Unrealized loss on derivative (15.0) (7.0)
Gain on sale of property and
equipment 1.8 11.4
Loss on ineffectiveness
of interest rate swaps (2.8) (17.7)
Stock-based employee
compensation charges (6.8) (10.5)
Asset writedowns (23.5) -
Minority interest (5.6) (5.5)
Deferred income taxes 15.8 (42.2)
Provision for taxes on income 2.9 86.9
Interest, net of interest income 214.6 240.2
Net changes in assets and
liabilities 995.3 840.5
------------ ------------
EBITDA $ 889.4 $ 1,083.9
============ ============
Nine Months Ended
September 30,
--------------------------
2008 2007
------------ ------------
Net cash provided by operating
activities $ 1,574.8 $ 2,208.5
Amortization of debt and
debt modification costs (48.4) (69.5)
Provision for losses on doubtful
accounts (21.7) (10.4)
Unrealized (loss) gain on
derivative (12.0) 3.0
Gain on sale of property and
equipment 9.4 14.4
Loss on ineffectiveness
of interest rate swaps (7.8) (17.7)
Stock-based employee
compensation charges (20.3) (24.3)
Asset writedowns (34.1) -
Minority interest (16.1) (14.4)
Deferred income taxes (5.0) (58.1)
Provision for taxes on income 36.0 107.3
Interest, net of interest income 616.7 661.3
Net changes in assets and
liabilities 432.3 (167.9)
------------ ------------
EBITDA $ 2,503.8 $ 2,632.2
============ ============
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except as noted)
NET CORPORATE DEBT AND NET FLEET DEBT
September 30, June 30, December 31,
2008 2008 2007
------------ ------------ ------------
Corporate Debt
Debt, less: (a) $ 12,844.2 $ 12,693.8 $ 11,960.1
U.S. Fleet Debt and
Pre-Acquisition Notes 4,745.8 4,698.0 4,603.5
International Fleet Debt 1,377.6 2,338.4 1,912.4
U.K. Leveraged Financing 278.8 311.1 222.7
Fleet Financing Facility 154.2 158.1 170.4
Canadian Fleet Financing
Facility 268.7 245.0 155.4
International ABS Fleet
Financing Facility 711.9 - -
Other International Facilities 102.4 116.4 92.9
------------ ------------ ------------
Fleet Debt $ 7,639.4 $ 7,867.0 $ 7,157.3
============ ============ ============
Corporate Debt $ 5,204.8 $ 4,826.8 $ 4,802.8
============ ============ ============
Corporate Restricted Cash
Restricted Cash, less: $ 514.0 $ 161.4 $ 661.0
Restricted Cash Associated
with Fleet Debt (288.2) (58.4) (573.1)
------------ ------------ ------------
Corporate Restricted Cash $ 225.8 $ 103.0 $ 87.9
============ ============ ============
Net Corporate Debt
Corporate Debt, less: $ 5,204.8 $ 4,826.8 $ 4,802.8
Cash and Equivalents (731.5) (811.4) (730.2)
Corporate Restricted Cash (225.8) (103.0) (87.9)
------------ ------------ ------------
Net Corporate Debt $ 4,247.5 $ 3,912.4 $ 3,984.7
============ ============ ============
Net Fleet Debt
Fleet Debt, less: $ 7,639.4 $ 7,867.0 $ 7,157.3
Restricted Cash Associated
with Fleet Debt (288.2) (58.4) (573.1)
------------ ------------ ------------
Net Fleet Debt $ 7,351.2 $ 7,808.6 $ 6,584.2
============ ============ ============
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except as noted)
September 30, June 30, September 30,
2007 2007 2006
------------ ------------ ------------
Corporate Debt
Debt, less: (a) $ 13,035.0 $ 12,452.5 $ 12,959.3
U.S. Fleet Debt and
Pre-Acquisition Notes 5,099.6 5,198.2 4,969.1
International Fleet Debt 2,398.8 1,937.4 2,438.6
U.K. Leveraged Financing - - -
Fleet Financing Facility 166.3 178.1 121.8
Canadian Fleet Financing
Facility 272.7 223.4 -
International ABS Fleet
Financing Facility - - -
Other International Facilities 88.6 81.6 -
------------ ------------ ------------
Fleet Debt $ 8,026.0 $ 7,618.7 $ 7,529.5
============ ============ ============
Corporate Debt $ 5,009.0 $ 4,833.8 $ 5,429.8
============ ============ ============
Corporate Restricted Cash
Restricted Cash, less: $ 430.2 $ 212.2 $ 640.6
Restricted Cash Associated
with Fleet Debt (390.0) (148.3) (577.1)
------------ ------------ ------------
Corporate Restricted Cash $ 40.2 $ 63.9 $ 63.5
============ ============ ============
Net Corporate Debt
Corporate Debt, less: $ 5,009.0 $ 4,833.8 $ 5,429.8
Cash and Equivalents (397.3) (401.6) (440.7)
Corporate Restricted Cash (40.2) (63.9) (63.5)
------------ ------------ ------------
Net Corporate Debt $ 4,571.5 $ 4,368.3 $ 4,925.6
============ ============ ============
Net Fleet Debt
Fleet Debt, less: $ 8,026.0 $ 7,618.7 $ 7,529.5
Restricted Cash Associated
with Fleet Debt (390.0) (148.3) (577.1)
------------ ------------ ------------
Net Fleet Debt $ 7,636.0 $ 7,470.4 $ 6,952.4
============ ============ ============
CAR RENTAL RATE REVENUE PER TRANSACTION DAY (b)
Three Months Ended
September 30,
--------------------------
2008 2007
------------ ------------
Car rental revenue per
statement of operations (b) $ 1,946.1 $ 1,944.4
Non-rental rate revenue (d) (276.0) (260.6)
Foreign currency adjustment (10.1) 42.0
------------ ------------
Rental rate revenue $ 1,660.0 $ 1,725.8
============ ============
Transactions days (in thousands) 35,525 36,626
Rental rate revenue per
transaction day
(in whole dollars) $ 46.73 $ 47.12
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions, except as noted)
Nine Months Ended
September 30,
--------------------------
2008 2007
------------ ------------
Car rental revenue per
statement of operations (b) $ 5,340.0 $ 5,161.2
Non-rental rate revenue (d) (775.0) (731.5)
Foreign currency adjustment (50.6) 134.7
------------ ------------
Rental rate revenue $ 4,514.4 $ 4,564.4
============ ============
Transactions days (in thousands) 99,042 98,355
Rental rate revenue per
transaction day
(in whole dollars) $ 45.58 $ 46.41
EQUIPMENT RENTAL AND RENTAL RELATED REVENUE (b)
Three Months Ended
September 30,
--------------------------
2008 2007
------------ ------------
Equipment rental revenue per
statement of operations $ 432.9 $ 464.8
Equipment sales and other revenue (44.8) (49.3)
Foreign currency adjustment (3.3) 7.3
------------ ------------
Rental and rental related revenue $ 384.8 $ 422.8
============ ============
Nine Months Ended
September 30,
--------------------------
2008 2007
------------ ------------
Equipment rental revenue per
statement of operations $ 1,286.8 $ 1,287.4
Equipment sales and other revenue (137.4) (140.6)
Foreign currency adjustment (9.6) 30.3
------------ ------------
Rental and rental related revenue $ 1,139.8 $ 1,177.1
============ ============
(a) Total debt as of September 30, 2006 excludes the Hertz Global Holdings,
Inc. loan facility of $996 million, net of a $4 million discount.
(b) Based on 12/31/07 foreign exchange rates.
(c) Includes U.S. off-airport revenues of $278.5 million and $277.2 million
for the three months ended September 30, 2008 and 2007, respectively,
and $755.0 million and $733.7 million for the nine months ended
September 30, 2008 and 2007, respectively.
(d) Consists of domestic revenues of $185.8 million and $171.6 million and
international revenues of $90.2 million and $89.0 million for the
three months ended September 30, 2008 and 2007, respectively, and
domestic revenues of $528.8 million and $495.9 million and
international revenues of $246.2 million and $235.6 million for the
nine months ended September 30, 2008 and 2007, respectively.
Table 9
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions)
Unaudited
EBITDA, CORPORATE EBITDA, UNLEVERED PRE-TAX CASH FLOW, LEVERED
AFTER-TAX CASH FLOW BEFORE FLEET GROWTH AND AFTER FLEET GROWTH
A+B A B
-------------
Last Twelve Nine Three
Months Ended Months Ended Months Ended
September 30, September 30, December 31,
2008 2008 2007
------------- ------------- -------------
Income before income taxes
and minority interest $ 144.6 $ 63.3 $ 81.3
Depreciation and amortization 2,403.2 1,839.9 563.3
Interest, net of interest
income 830.8 616.7 214.1
Minority interest (21.4) (16.1) (5.3)
------------- ------------- -------------
EBITDA 3,357.2 2,503.8 853.4
Adjustments:
Car rental fleet interest (429.3) (322.2) (107.1)
Car rental fleet depreciation (1,815.4) (1,399.7) (415.7)
Non-cash expenses and charges 96.9 69.6 27.3
Non-cash expenses and charges
to arrive at LTM (a) (2.9) - -
Extraordinary, unusual or
non-recurring gains and
losses 162.0 134.7 27.3
------------- ------------- -------------
Corporate EBITDA 1,368.5 986.2 385.2
Equipment rental maintenance
capital expenditures, net (310.7) (232.0) (78.7)
Non-fleet capital
expenditures, net (130.4) (106.5) (23.9)
Changes in working capital
(b) (146.5) (323.1) 176.6
Changes in other assets
and liabilities (b) (322.2) (288.3) (33.9)
Changes in other assets and
liabilities to arrive at
LTM (a) 2.9 - -
------------- ------------- -------------
Unlevered pre-tax cash flow
(c) 461.6 36.3 425.3
Corporate net cash interest (368.8) (269.5) (99.3)
Corporate cash taxes (32.5) (22.6) (9.9)
------------- ------------- -------------
Levered after-tax cash flow
before fleet growth (c) 60.3 (255.8) 316.1
Equipment rental fleet
growth capital expenditures 293.3 277.6 15.7
Car rental net fleet
equity requirement (29.6) (284.6) 255.0
------------- ------------- -------------
Levered after-tax cash flow
after fleet growth (c) $ 324.0 $ (262.8) $ 586.8
============= ============= =============
A+B A B
-------------
Last Twelve Nine Three
Months Ended Months Ended Months Ended
September 30, September 30, December 31,
2007 2007 2006
------------- ------------- -------------
Income before income taxes
and minority interest $ 348.2 $ 305.5 $ 42.7
Depreciation and amortization 2,190.2 1,679.8 510.4
Interest, net of interest
income 889.4 661.3 228.1
Minority interest (18.8) (14.4) (4.4)
------------- ------------- -------------
EBITDA 3,409.0 2,632.2 776.8
Adjustments:
Car rental fleet interest (416.6) (320.7) (95.9)
Car rental fleet depreciation (1,649.2) (1,279.7) (369.5)
Non-cash expenses and charges 111.1 82.1 29.0
Non-cash expenses and charges
to arrive at LTM (a) (7.7) - -
Extraordinary, unusual or
non-recurring gains and
losses 74.6 49.6 25.0
Sponsors' fees 0.7 - 0.7
------------- ------------- -------------
Corporate EBITDA 1,521.9 1,163.5 366.1
Equipment rental maintenance
capital expenditures, net (257.4) (194.2) (63.2)
Non-fleet capital
expenditures, net (164.3) (130.7) (33.6)
Changes in working capital 157.5 56.9 100.6
Changes in other assets
and liabilities (99.5) (4.8) (94.7)
Changes in other assets and
liabilities to arrive at
LTM (a) 7.7 - -
------------- ------------- -------------
Unlevered pre-tax cash flow
(c) 1,165.9 890.7 275.2
Corporate net cash interest (407.9) (300.3) (107.6)
Corporate cash taxes (35.5) (18.4) (17.1)
------------- ------------- -------------
Levered after-tax cash flow
before fleet growth (c) 722.5 572.0 150.5
Equipment rental fleet
growth capital expenditures (222.9) (297.4) 74.5
Car rental net fleet
equity requirement (145.5) (308.8) 163.3
------------- ------------- -------------
Levered after-tax cash flow
after fleet growth (c) $ 354.1 $ (34.2) $ 388.3
============= ============= =============
(a) Adjustment necessary due to the nature of the calculation of non-cash
expenses and charges where, on a quarterly basis the cash payments for
a specific liability may exceed the related non-cash expense, but not
on a cumulative last twelve month basis. The offsetting adjustment goes
into the "changes in other assets and liabilities" line.
(b) In 2008, the Company has reclassified its December 31, 2007 interest
rate swap liability from "changes in working capital" to "changes in
other assets and liabilities." All prior period interest rate swap
balances were assets and already included within "changes in other
assets and liabilities."
(c) Amounts include the effect of fluctuations in foreign currency.
Table 10
HERTZ GLOBAL HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES
(In millions)
Unaudited
TOTAL NET CASH FLOW
A+B A B
-------------
Last Twelve Nine Three
Months Ended Months Ended Months Ended
September 30, September 30, December 31,
2008 2008 2007
------------- ------------- -------------
Net cash used in (provided
by) financing activities $ 208.8 $ (999.2) $ 1,208.0
Payment of financing costs (49.4) (33.8) (15.6)
Exercise of stock options 8.1 6.8 1.3
Proceeds from disgorgement
of stockholder short-swing
profits 0.1 0.1 -
Distributions to minority
interest (20.7) (13.0) (7.7)
Cash overdraft reclass (14.8) (25.8) 11.0
Net change in restricted cash 83.8 (146.1) 229.9
Net increase in cash and cash
equivalents during the
period 334.2 1.3 332.9
Effect of foreign exchange
rate changes on cash and
equivalents 5.1 35.8 (30.7)
------------- ------------- -------------
Total net cash flow $ 555.2 $ (1,173.9) $ 1,729.1
============= ============= =============
Three Three
Months Ended Months Ended
September 30, September 30,
2008 2007
------------- -------------
Net cash provided by financing
activities $ (442.1) $ (371.0)
Payment of financing costs (23.3) (11.3)
Exercise of stock options 1.2 0.8
Proceeds from disgorgement
of stockholder short-swing
profits - -
Distributions to minority
interest (7.0) (2.3)
Cash overdraft reclass (6.2) (15.0)
Net change in restricted cash 355.5 216.7
Net decrease in cash and cash
equivalents during the
period (79.9) (4.3)
Effect of foreign exchange
rate changes on cash and
equivalents 44.1 (13.6)
------------- -------------
Total net cash flow $ (157.7) $ (200.0)
============= =============
A+B A B
-------------
Last Twelve Nine Three
Months Ended Months Ended Months Ended
September 30, September 30, December 31,
2007 2007 2006
------------- ------------- -------------
Net cash used in (provided by)
financing activities $ 299.1 $ (473.9) $ 773.0
Payment of financing costs (17.9) (24.3) 6.4
Exercise of stock options 4.3 4.3 -
Proceeds from disgorgement
of stockholder short-swing
profits 4.7 4.7 -
Distributions to minority
interest (11.4) (5.8) (5.6)
Cash overdraft reclass 50.3 28.0 22.3
Net change in restricted cash (213.3) (124.1) (89.2)
Net (decrease) increase in
cash and cash equivalents
during the period (43.5) (277.3) 233.8
Effect of foreign exchange
rate changes on cash and
equivalents (55.1) (13.2) (41.9)
------------- ------------- -------------
Total net cash flow $ 17.2 $ (881.6) $ 898.8
============= ============= =============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' November 5, 2008 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; 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 beginning 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 September 30, 2008, 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 and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess the operational performance of the Company on the same basis that management uses internally. 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. The normalized income tax rate is management's estimate of our long-term tax rate. Adjusted net income is important to management and investors because it represents 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, for 2008, the actual diluted weighted average number of shares outstanding for the year ended December 31, 2007, and for 2007, the pro forma post-IPO 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, non-cash debt charges, one-time charges and items that are not operational in nature or comparable to those of our competitors. Utilizing the pro forma post-IPO number of shares outstanding in 2007 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 in 2007. 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 in the U.S. and certain ancillary revenue. Rental rate revenue per transaction day is calculated as total rental rate revenue, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to management and investors as it represents the best measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control. The optional insurance products are packaged within certain negotiated corporate, government and membership programs and within certain retail rates being charged. Based upon these existing programs and rate packages, management believes that these optional insurance products should be consistently included in the daily pricing of car rental transactions. On the other hand, non-rental rate revenue items such as refueling and concession pass-through expense items are driven by factors beyond the control of management (i.e. the price of fuel and the concession fees charged by airports). Additionally, NeverLost units are an option revenue product which management does not consider to be part of their daily pricing of car rental transactions. 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. 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. 12. 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. 13. 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. 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 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 International ABS Fleet Financing Facility, the Belgian Fleet Financing Facility, the Brazilian Fleet Financing Facility, the Canadian Fleet Financing Facility, the U.K. Leveraged Financing 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 purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities, 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) Restricted cash associated with fleet debt is restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities and our car rental like-kind exchange program. 18. Total Net Cash Flow Total net cash flow is calculated as the change in the cash and equivalents, restricted cash and debt balances, adjusted for the effects of foreign currency. Total net cash flow is important to management and investors as it represents funds available to grow our fleet or reduce our total debt. Contact: CONTACT:
Investor Relations and Media:
Richard Broome
201-307-2486
rbroome@hertz.com
Source: The Hertz Corporation
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