Price Graph
Price
Yield
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2015
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction of
incorporation or organization)
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20-3530539
(I.R.S. Employer
Identification Number)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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(Do not check if a smaller
reporting company) |
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Class
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Shares Outstanding at
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November 2, 2015
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Common Stock, par value $0.01 per share
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444,358,703
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Page
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September 30,
2015 |
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December 31, 2014
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||||
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ASSETS
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||||
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Cash and cash equivalents
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$
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509
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$
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490
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Restricted cash and cash equivalents
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280
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571
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Receivables, net of allowance of $68 and $67, respectively
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1,623
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1,597
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Inventories, net
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62
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67
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Prepaid expenses and other assets
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934
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917
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Revenue earning equipment:
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||||
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Vehicles
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15,012
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14,622
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Less accumulated depreciation - vehicles
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(2,862
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)
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(3,411
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)
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Equipment
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3,582
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3,613
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Less accumulated depreciation - equipment
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(1,106
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)
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(1,171
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)
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Revenue earning equipment, net
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14,626
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13,653
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Property and other equipment:
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||||
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Land, buildings and leasehold improvements
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1,302
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1,268
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Service equipment and other
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1,058
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1,148
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Less accumulated depreciation
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(1,083
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)
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(1,094
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)
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Property and other equipment, net
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1,277
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1,322
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Other intangible assets, net
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3,900
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4,009
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Goodwill
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1,358
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1,359
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Total assets
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$
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24,569
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$
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23,985
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LIABILITIES AND EQUITY
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Accounts payable
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$
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917
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$
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1,008
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Accrued liabilities
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1,216
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1,148
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Accrued taxes, net
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136
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134
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Debt
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16,609
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15,993
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Public liability and property damage
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391
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385
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Deferred taxes on income, net
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2,962
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2,853
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Total liabilities
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22,231
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21,521
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Commitments and contingencies
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Equity:
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Preferred Stock, $0.01 par value, 200 shares authorized, no shares issued and outstanding
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—
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—
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Common Stock, $0.01 par value, 2,000 shares authorized, 463 and 463 shares issued and 444 and 459 shares outstanding
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4
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5
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Additional paid-in capital
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3,334
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3,325
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Accumulated deficit
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(461
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)
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(664
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)
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Accumulated other comprehensive income (loss)
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(190
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)
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(115
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)
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2,687
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2,551
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Treasury Stock, at cost, 19 shares and 4 shares
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(349
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)
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(87
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)
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Total equity
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2,338
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2,464
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Total liabilities and equity
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$
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24,569
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$
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23,985
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Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2015
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2014
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2015
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2014
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||||||||
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Revenues:
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Worldwide car rental
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$
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2,426
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$
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2,563
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$
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6,552
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$
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6,907
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Worldwide equipment rental
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401
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413
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1,131
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1,155
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All other operations
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149
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145
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439
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425
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Total revenues
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2,976
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3,121
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8,122
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8,487
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Expenses:
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Direct operating
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1,564
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1,702
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4,475
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4,738
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Depreciation of revenue earning equipment and lease charges, net
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717
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746
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2,102
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2,180
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Selling, general and administrative
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259
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303
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821
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845
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Interest expense, net
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158
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164
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467
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484
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||||
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Other (income) expense, net
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(29
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)
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3
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(34
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)
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(21
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)
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||||
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Total expenses
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2,669
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2,918
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7,831
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8,226
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||||
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Income (loss) before income taxes
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307
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203
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291
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261
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||||
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(Provision) benefit for taxes on income (loss)
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(70
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)
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(54
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)
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(88
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)
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(109
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)
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||||
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Net income (loss)
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$
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237
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$
|
149
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$
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203
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$
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152
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Weighted average shares outstanding:
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||||||||
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Basic
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454
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459
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457
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453
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||||
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Diluted
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457
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464
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460
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465
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||||
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Earnings (loss) per share:
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Basic
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$
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0.52
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$
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0.32
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$
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0.44
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$
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0.34
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Diluted
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$
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0.52
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$
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0.32
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$
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0.44
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$
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0.33
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|
|
Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
||||||||||||
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2015
|
|
2014
|
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2015
|
|
2014
|
||||||||
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Net income (loss)
|
$
|
237
|
|
|
$
|
149
|
|
|
$
|
203
|
|
|
$
|
152
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
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Foreign currency translation adjustments
|
(43
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)
|
|
(38
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)
|
|
(82
|
)
|
|
(21
|
)
|
||||
|
Unrealized holding gains (losses) on securities
|
—
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|
|
—
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|
|
—
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|
|
(14
|
)
|
||||
|
Reclassification of net unrealized gains on securities to prepaid expense and other assets
|
—
|
|
|
—
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|
|
—
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|
|
(7
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)
|
||||
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Reclassification from other comprehensive income (loss) to selling, general and administrative expense for amortization of actuarial losses on defined benefit pension plans
|
3
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|
|
3
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|
9
|
|
|
2
|
|
||||
|
Total other comprehensive income (loss) before income taxes
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(40
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)
|
|
(35
|
)
|
|
(73
|
)
|
|
(40
|
)
|
||||
|
Income tax (provision) benefit related to items of other comprehensive income (loss)
|
—
|
|
|
(2
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)
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(2
|
)
|
|
(4
|
)
|
||||
|
Total other comprehensive income (loss)
|
(40
|
)
|
|
(37
|
)
|
|
(75
|
)
|
|
(44
|
)
|
||||
|
Total comprehensive income (loss)
|
$
|
197
|
|
|
$
|
112
|
|
|
$
|
128
|
|
|
$
|
108
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2015
|
|
2014
|
||||
|
Cash flows from operating activities:
|
|
|
|
||||
|
Net income (loss)
|
$
|
203
|
|
|
$
|
152
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
|
Depreciation of revenue earning equipment, net
|
2,047
|
|
|
2,119
|
|
||
|
Depreciation and amortization, non-fleet
|
265
|
|
|
272
|
|
||
|
Amortization and write-off of deferred financing costs
|
45
|
|
|
41
|
|
||
|
Amortization and write-off of debt discount (premium)
|
(2
|
)
|
|
(6
|
)
|
||
|
Stock-based compensation charges
|
14
|
|
|
14
|
|
||
|
Provision for receivables allowance
|
54
|
|
|
47
|
|
||
|
Deferred taxes on income
|
88
|
|
|
31
|
|
||
|
Impairment charges and asset write-downs
|
26
|
|
|
25
|
|
||
|
(Gain) loss on sale of shares in equity method investment
|
(56
|
)
|
|
—
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|
||
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Other
|
(7
|
)
|
|
(11
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)
|
||
|
Changes in assets and liabilities
|
|
|
|
||||
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Receivables
|
(102
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)
|
|
(187
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)
|
||
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Inventories, prepaid expenses and other assets
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(10
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)
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|
(58
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)
|
||
|
Accounts payable
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(11
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)
|
|
34
|
|
||
|
Accrued liabilities
|
95
|
|
|
152
|
|
||
|
Accrued taxes
|
15
|
|
|
57
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|
||
|
Public liability and property damage
|
19
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|
|
47
|
|
||
|
Net cash provided by (used in) operating activities
|
2,683
|
|
|
2,729
|
|
||
|
Cash flows from investing activities:
|
|
|
|
||||
|
Net change in restricted cash and cash equivalents
|
284
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|
|
107
|
|
||
|
Revenue earning equipment expenditures
|
(10,010
|
)
|
|
(8,442
|
)
|
||
|
Proceeds from disposal of revenue earning equipment
|
6,788
|
|
|
5,316
|
|
||
|
Capital asset expenditures, non-fleet
|
(250
|
)
|
|
(232
|
)
|
||
|
Proceeds from disposal of property and other equipment
|
69
|
|
|
67
|
|
||
|
Acquisitions, net of cash acquired
|
(95
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)
|
|
(69
|
)
|
||
|
Sales of (investment in) shares in equity method investment
|
100
|
|
|
(30
|
)
|
||
|
Net cash provided by (used in) investing activities
|
(3,114
|
)
|
|
(3,283
|
)
|
||
|
|
Nine Months Ended
September 30, |
||||||
|
|
2015
|
|
2014
|
||||
|
Cash flows from financing activities:
|
|
|
|
||||
|
Proceeds from issuance of long-term debt
|
1,076
|
|
|
400
|
|
||
|
Repayments of long-term debt
|
(1,100
|
)
|
|
(207
|
)
|
||
|
Short-term borrowings:
|
|
|
|
||||
|
Proceeds
|
543
|
|
|
528
|
|
||
|
Payments
|
(434
|
)
|
|
(537
|
)
|
||
|
Proceeds under the revolving lines of credit
|
5,906
|
|
|
4,018
|
|
||
|
Payments under the revolving lines of credit
|
(5,243
|
)
|
|
(3,405
|
)
|
||
|
Purchase of treasury shares
|
(262
|
)
|
|
—
|
|
||
|
Payment of financing costs
|
(11
|
)
|
|
(12
|
)
|
||
|
Other
|
(4
|
)
|
|
5
|
|
||
|
Net cash provided by (used in) financing activities
|
471
|
|
|
790
|
|
||
|
Effect of foreign exchange rate changes on cash and cash equivalents
|
(21
|
)
|
|
(18
|
)
|
||
|
Net increase (decrease) in cash and cash equivalents during the period
|
19
|
|
|
218
|
|
||
|
Cash and cash equivalents at beginning of period
|
490
|
|
|
411
|
|
||
|
Cash and cash equivalents at end of period
|
$
|
509
|
|
|
$
|
629
|
|
|
|
|
|
|
||||
|
Supplemental disclosures of cash information:
|
|
|
|
||||
|
Cash paid during the period for:
|
|
|
|
||||
|
Interest, net of amounts capitalized
|
$
|
393
|
|
|
$
|
388
|
|
|
Income taxes, net of refunds
|
31
|
|
|
47
|
|
||
|
Supplemental disclosures of non-cash information:
|
|
|
|
||||
|
Purchases of revenue earning equipment included in accounts payable and accrued liabilities
|
$
|
203
|
|
|
$
|
241
|
|
|
Sales of revenue earning equipment included in receivables
|
605
|
|
|
464
|
|
||
|
Purchases of property and other equipment included in accounts payable
|
60
|
|
|
71
|
|
||
|
Sales of property and other equipment included in receivables
|
28
|
|
|
27
|
|
||
|
Conversion of Convertible Senior Notes included in debt, common stock and additional paid-in capital
|
—
|
|
|
84
|
|
||
|
Revenue earning equipment and property and equipment acquired through capital lease
|
11
|
|
|
16
|
|
||
|
(In millions)
|
U.S. Car Rental
|
||
|
Revenue earning equipment
|
$
|
71
|
|
|
Property and other equipment
|
6
|
|
|
|
Other intangible assets
|
9
|
|
|
|
Goodwill
|
1
|
|
|
|
Total
|
$
|
87
|
|
|
(In millions)
|
September 30, 2015
|
||
|
ASSETS
|
|
||
|
Receivables, net of allowance
|
$
|
21
|
|
|
Inventories, net
|
4
|
|
|
|
Prepaid expenses and other assets
|
3
|
|
|
|
Revenue earning equipment, net
|
97
|
|
|
|
Property and other equipment, net
|
12
|
|
|
|
Goodwill
|
2
|
|
|
|
Total assets held for sale
|
$
|
139
|
|
|
LIABILITIES
|
|
||
|
Accounts payable
|
$
|
11
|
|
|
Accrued liabilities
|
10
|
|
|
|
Accrued taxes, net
|
2
|
|
|
|
Deferred taxes on income, net
|
2
|
|
|
|
Total liabilities held for sale
|
$
|
25
|
|
|
(In millions)
|
September 30, 2015
|
|
December 31, 2014
|
||||
|
Revenue earning equipment
|
$
|
18,279
|
|
|
$
|
17,837
|
|
|
Less: Accumulated depreciation
|
(3,877
|
)
|
|
(4,427
|
)
|
||
|
|
14,402
|
|
|
13,410
|
|
||
|
Revenue earning equipment held for sale, net
|
224
|
|
|
243
|
|
||
|
Revenue earning equipment, net
|
$
|
14,626
|
|
|
$
|
13,653
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Depreciation of revenue earning equipment
|
$
|
669
|
|
|
$
|
701
|
|
|
$
|
2,005
|
|
|
$
|
2,054
|
|
|
(Gain) loss on disposal of revenue earning equipment
(a)
|
30
|
|
|
25
|
|
|
42
|
|
|
65
|
|
||||
|
Rents paid for vehicles leased
|
18
|
|
|
20
|
|
|
55
|
|
|
61
|
|
||||
|
Depreciation of revenue earning equipment and lease charges, net
|
$
|
717
|
|
|
$
|
746
|
|
|
$
|
2,102
|
|
|
$
|
2,180
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
U.S. Car Rental
|
$
|
34
|
|
|
$
|
30
|
|
|
$
|
59
|
|
|
$
|
84
|
|
|
International Car Rental
|
(2
|
)
|
|
1
|
|
|
(3
|
)
|
|
(2
|
)
|
||||
|
Worldwide Equipment Rental
|
(2
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|
(17
|
)
|
||||
|
Total
|
$
|
30
|
|
|
$
|
25
|
|
|
$
|
42
|
|
|
$
|
65
|
|
|
Increase (decrease)
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
U.S. Car Rental
(a)
|
$
|
26
|
|
|
$
|
36
|
|
|
$
|
83
|
|
|
$
|
112
|
|
|
International Car Rental
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
||||
|
Worldwide Equipment Rental
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
|
Total
|
$
|
27
|
|
|
$
|
34
|
|
|
$
|
84
|
|
|
$
|
111
|
|
|
(a)
|
The depreciation rate changes in the U.S. car rental operations for the three and nine months ended September 30, 2015 include a net increase in depreciation expense of
$11 million
based on the review completed during the
third
quarter of 2015. The depreciation rate changes in the U.S. car rental operations for the
three and nine
months ended September 30, 2014 include a net increase in depreciation expense of
$17 million
based on the review completed during the
third
quarter of 2014.
|
|
Facility
|
|
Average Interest Rate at September 30, 2015
|
|
Fixed or
Floating Interest Rate |
|
Maturity
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
Corporate Debt
|
|
|
|
|
|
|
|
|
|
|
||||
|
Senior Term Facility
|
|
3.26%
|
|
Floating
|
|
3/2018
|
|
$
|
2,067
|
|
|
$
|
2,083
|
|
|
Senior ABL Facility
|
|
2.73%
|
|
Floating
|
|
3/2016–3/2017
|
|
253
|
|
|
344
|
|
||
|
Senior Notes
(1)
|
|
6.58%
|
|
Fixed
|
|
4/2018–10/2022
|
|
3,900
|
|
|
3,900
|
|
||
|
Promissory Notes
|
|
7.00%
|
|
Fixed
|
|
1/2028
|
|
27
|
|
|
27
|
|
||
|
Other Corporate Debt
|
|
3.94%
|
|
Floating
|
|
Various
|
|
68
|
|
|
74
|
|
||
|
Unamortized Net (Discount) Premium (Corporate)
|
|
|
|
|
|
|
|
3
|
|
|
3
|
|
||
|
Total Corporate Debt
|
|
|
|
|
|
|
|
6,318
|
|
|
6,431
|
|
||
|
Fleet Debt
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF U.S. Fleet Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF Series 2009-2
(2)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
404
|
|
||
|
HVF Series 2010-1
(2)
|
|
4.26%
|
|
Fixed
|
|
2/2014–2/2018
|
|
428
|
|
|
490
|
|
||
|
HVF Series 2011-1
(2)
|
|
3.51%
|
|
Fixed
|
|
3/2015–3/2017
|
|
230
|
|
|
414
|
|
||
|
HVF Series 2013-1
(2)
|
|
1.68%
|
|
Fixed
|
|
8/2016–8/2018
|
|
950
|
|
|
950
|
|
||
|
|
|
|
|
|
|
|
|
1,608
|
|
|
2,258
|
|
||
|
RCFC U.S. ABS Program
|
|
|
|
|
|
|
|
|
|
|
||||
|
RCFC U.S. Fleet Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
RCFC Series 2011-1 Notes
(2)(3)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
167
|
|
||
|
RCFC Series 2011-2 Notes
(2)(3)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
266
|
|
||
|
|
|
|
|
|
|
|
|
—
|
|
|
433
|
|
||
|
HVF II U.S. ABS Program
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF II U.S. Fleet Variable Funding Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF II Series 2013-A
(2)
|
|
1.16%
|
|
Floating
|
|
10/2016
|
|
1,129
|
|
|
1,999
|
|
||
|
HVF II Series 2013-B
(2)
|
|
1.16%
|
|
Floating
|
|
10/2016
|
|
1,345
|
|
|
976
|
|
||
|
HVF II Series 2014-A
(2)
|
|
1.70%
|
|
Floating
|
|
10/2016
|
|
2,011
|
|
|
869
|
|
||
|
|
|
|
|
|
|
|
|
4,485
|
|
|
3,844
|
|
||
|
HVF II U.S. Fleet Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HVF II Series 2015-1
(2)
|
|
2.93%
|
|
Fixed
|
|
3/2020
|
|
780
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
780
|
|
|
—
|
|
||
|
Donlen ABS Program
|
|
|
|
|
|
|
|
|
|
|
||||
|
HFLF Variable Funding Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HFLF Series 2013-2 Notes
(2)
|
|
1.22%
|
|
Floating
|
|
9/2017
|
|
244
|
|
|
247
|
|
||
|
|
|
|
|
|
|
|
|
244
|
|
|
247
|
|
||
|
Facility
|
|
Average Interest Rate at September 30, 2015
|
|
Fixed or
Floating Interest Rate |
|
Maturity
|
|
September 30,
2015 |
|
December 31,
2014 |
||||
|
HFLF Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
||||
|
HFLF Series 2013-3 Notes
(2)
|
|
0.87%
|
|
Floating
|
|
9/2016–11/2016
|
|
321
|
|
|
500
|
|
||
|
HFLF Series 2014-1 Notes
(2)
|
|
0.74%
|
|
Floating
|
|
12/2016–3/2017
|
|
330
|
|
|
400
|
|
||
|
HFLF Series 2015-1 Notes
(2)
|
|
0.87%
|
|
Floating
|
|
3/2018–5/2018
|
|
295
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
|
946
|
|
|
900
|
|
||
|
Other Fleet Debt
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. Fleet Financing Facility
|
|
2.95%
|
|
Floating
|
|
3/2017
|
|
190
|
|
|
164
|
|
||
|
European Revolving Credit Facility
|
|
2.38%
|
|
Floating
|
|
10/2017
|
|
382
|
|
|
304
|
|
||
|
European Fleet Notes
|
|
4.375%
|
|
Fixed
|
|
1/2019
|
|
478
|
|
|
517
|
|
||
|
European Securitization
(2)
|
|
1.88%
|
|
Floating
|
|
10/2016
|
|
396
|
|
|
270
|
|
||
|
Canadian Securitization
(2)
|
|
1.78%
|
|
Floating
|
|
1/2018
|
|
224
|
|
|
—
|
|
||
|
Hertz-Sponsored Canadian Securitization
(2)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
105
|
|
||
|
Dollar Thrifty-Sponsored Canadian Securitization
(2)(3)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
40
|
|
||
|
Australian Securitization
(2)
|
|
3.68%
|
|
Floating
|
|
12/2016
|
|
87
|
|
|
112
|
|
||
|
Brazilian Fleet Financing Facility
|
|
18.04%
|
|
Floating
|
|
10/2015
|
|
7
|
|
|
11
|
|
||
|
Capitalized Leases
|
|
3.03%
|
|
Floating
|
|
2/2015–10/2017
|
|
472
|
|
|
364
|
|
||
|
Unamortized Net (Discount) Premium (Fleet)
|
|
|
|
|
|
|
|
(8
|
)
|
|
(7
|
)
|
||
|
|
|
|
|
|
|
|
|
2,228
|
|
|
1,880
|
|
||
|
Total Fleet Debt
|
|
|
|
|
|
|
|
10,291
|
|
|
9,562
|
|
||
|
Total Debt
|
|
|
|
|
|
|
|
$
|
16,609
|
|
|
$
|
15,993
|
|
|
(1)
|
References to the "Senior Notes" include the series of Hertz's unsecured senior notes set forth on the table below. Outstanding principal amounts for each such series of the Senior Notes is also specified below:
|
|
(In millions)
|
Outstanding Principal
|
||||||
|
Senior Notes
|
September 30, 2015
|
|
December 31, 2014
|
||||
|
4.25% Senior Notes due April 2018
|
$
|
250
|
|
|
$
|
250
|
|
|
7.50% Senior Notes due October 2018
|
700
|
|
|
700
|
|
||
|
6.75% Senior Notes due April 2019
|
1,250
|
|
|
1,250
|
|
||
|
5.875% Senior Notes due October 2020
|
700
|
|
|
700
|
|
||
|
7.375% Senior Notes due January 2021
|
500
|
|
|
500
|
|
||
|
6.25% Senior Notes due October 2022
|
500
|
|
|
500
|
|
||
|
|
$
|
3,900
|
|
|
$
|
3,900
|
|
|
(2)
|
Maturity reference is to the "expected final maturity date" as opposed to the subsequent "legal maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness expect the relevant indebtedness to be repaid, which in the case of the HFLF Medium Term Notes was based upon various assumptions made at the time of the pricing of such notes. The legal final maturity date is the date on which the relevant indebtedness is legally due and payable.
|
|
(3)
|
RCFC U.S. ABS Program and the Dollar Thrifty-Sponsored Canadian Securitization represent fleet debt assumed in connection with the Dollar Thrifty acquisition on November 19, 2012.
|
|
(In millions)
|
Remaining
Capacity
|
|
Availability Under
Borrowing Base
Limitation
|
||||
|
Corporate Debt
|
|
|
|
||||
|
Senior ABL Facility
|
$
|
1,373
|
|
|
$
|
1,334
|
|
|
Total Corporate Debt
|
1,373
|
|
|
1,334
|
|
||
|
Fleet Debt
|
|
|
|
||||
|
HVF II U.S. Fleet Variable Funding Notes
|
2,090
|
|
|
—
|
|
||
|
HFLF Variable Funding Notes
|
256
|
|
|
—
|
|
||
|
European Revolving Credit Facility
|
—
|
|
|
—
|
|
||
|
European Securitization
|
54
|
|
|
7
|
|
||
|
Canadian Securitization
|
37
|
|
|
—
|
|
||
|
Australian Securitization
|
88
|
|
|
—
|
|
||
|
Capitalized Leases
|
35
|
|
|
5
|
|
||
|
Total Fleet Debt
|
2,560
|
|
|
12
|
|
||
|
Total
|
$
|
3,933
|
|
|
$
|
1,346
|
|
|
|
Pension Benefits
|
||||||||||||||
|
|
U.S.
|
|
Non-U.S.
|
||||||||||||
|
|
Three Months Ended September 30,
|
||||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Components of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
||||||||
|
Service cost
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Interest cost
|
6
|
|
|
8
|
|
|
3
|
|
|
3
|
|
||||
|
Expected return on plan assets
|
(11
|
)
|
|
(10
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
|
Net amortizations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Settlement loss
|
1
|
|
|
2
|
|
|
2
|
|
|
—
|
|
||||
|
Special termination cost
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
|
Net periodic pension expense (benefit)
|
$
|
(3
|
)
|
|
$
|
11
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
|
Pension Benefits
|
||||||||||||||
|
|
U.S.
|
|
Non-U.S.
|
||||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Components of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
||||||||
|
Service cost
|
$
|
3
|
|
|
$
|
21
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
Interest cost
|
20
|
|
|
24
|
|
|
7
|
|
|
7
|
|
||||
|
Expected return on plan assets
|
(31
|
)
|
|
(30
|
)
|
|
(11
|
)
|
|
(12
|
)
|
||||
|
Net amortizations
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||
|
Settlement loss
|
3
|
|
|
2
|
|
|
2
|
|
|
—
|
|
||||
|
Special termination cost
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
|
Net periodic pension expense (benefit)
|
$
|
(3
|
)
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Compensation expense
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
14
|
|
|
Income tax benefit
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||
|
Total
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
By Type:
|
|
|
|
|
|
|
|
||||||||
|
Termination benefits
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
Impairments and asset write-downs
|
1
|
|
|
13
|
|
|
2
|
|
|
23
|
|
||||
|
Facility closure and lease obligation costs
|
1
|
|
|
4
|
|
|
16
|
|
|
13
|
|
||||
|
Other
|
(2
|
)
|
|
3
|
|
|
(4
|
)
|
|
11
|
|
||||
|
Total
|
$
|
6
|
|
|
$
|
23
|
|
|
$
|
32
|
|
|
$
|
68
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
By Caption:
|
|
|
|
|
|
|
|
||||||||
|
Direct operating
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
17
|
|
|
$
|
31
|
|
|
Selling, general and administrative
|
5
|
|
|
18
|
|
|
15
|
|
|
37
|
|
||||
|
Total
|
$
|
6
|
|
|
$
|
23
|
|
|
$
|
32
|
|
|
$
|
68
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
By Segment:
|
|
|
|
|
|
|
|
||||||||
|
U.S. Car Rental
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
18
|
|
|
$
|
22
|
|
|
International Car Rental
|
4
|
|
|
1
|
|
|
11
|
|
|
16
|
|
||||
|
Worldwide Equipment Rental
|
2
|
|
|
1
|
|
|
3
|
|
|
4
|
|
||||
|
Corporate
|
(2
|
)
|
|
17
|
|
|
—
|
|
|
26
|
|
||||
|
Total
|
$
|
6
|
|
|
$
|
23
|
|
|
$
|
32
|
|
|
$
|
68
|
|
|
(In millions)
|
Termination
Benefits |
|
Other
|
|
Total
|
||||||
|
Balance as of January 1, 2015
|
$
|
21
|
|
|
$
|
22
|
|
|
$
|
43
|
|
|
Charges incurred
|
14
|
|
|
18
|
|
|
32
|
|
|||
|
Cash payments
|
(12
|
)
|
|
(12
|
)
|
|
(24
|
)
|
|||
|
Other non-cash changes
|
(9
|
)
|
|
(7
|
)
|
|
(16
|
)
|
|||
|
Balance as of September 30, 2015
|
$
|
14
|
|
|
$
|
21
|
|
|
$
|
35
|
|
|
|
Fair Value of Financial Instruments
|
||||||||||||||
|
|
Asset Derivatives
(1)
|
|
Liability Derivatives
(1)
|
||||||||||||
|
(In millions)
|
September 30,
2015 |
|
December 31,
2014 |
|
September 30,
2015 |
|
December 31,
2014 |
||||||||
|
Interest rate caps
|
$
|
3
|
|
|
$
|
25
|
|
|
$
|
3
|
|
|
$
|
25
|
|
|
Foreign currency forward contracts
|
6
|
|
|
6
|
|
|
2
|
|
|
2
|
|
||||
|
Total
|
$
|
9
|
|
|
$
|
31
|
|
|
$
|
5
|
|
|
$
|
27
|
|
|
(1)
|
All asset derivatives are recorded in "Prepaid expenses and other assets" and all liability derivatives are recorded in "Accrued liabilities" in the condensed consolidated balance sheets.
|
|
|
Location of Gain or (Loss) Recognized on Derivatives
|
|
Amount of Gain or (Loss) Recognized
on Derivatives
|
||||||
|
|
|
|
Three Months Ended
September 30, |
||||||
|
(In millions)
|
|
|
2015
|
|
2014
|
||||
|
Foreign currency forward contracts
|
Selling, general and administrative
|
|
$
|
(18
|
)
|
|
$
|
(2
|
)
|
|
|
Location of Gain or (Loss) Recognized on Derivatives
|
|
Amount of Gain or (Loss) Recognized
on Derivatives |
||||||
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
(In millions)
|
|
|
2015
|
|
2014
|
||||
|
Foreign currency forward contracts
|
Selling, general and administrative
|
|
$
|
(22
|
)
|
|
$
|
(2
|
)
|
|
|
|
September 30, 2015
|
|
December 31, 2014
|
||||||||||||||||||||||||||||
|
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
|
Money market funds
|
|
$
|
109
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
109
|
|
|
$
|
146
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
146
|
|
|
Equity and other securities
|
|
—
|
|
|
130
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
||||||||
|
Total
|
|
$
|
109
|
|
|
$
|
130
|
|
|
$
|
—
|
|
|
$
|
239
|
|
|
$
|
146
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
242
|
|
|
|
|
Nine Months Ended
September 30, 2014 |
||
|
Balance at the beginning of period, January 1, 2014
|
|
$
|
151
|
|
|
Reclassification of net unrealized gain on securities to prepaid expenses and other assets
|
|
(7
|
)
|
|
|
Unrealized losses related to investments
|
|
(14
|
)
|
|
|
Settlements
|
|
(130
|
)
|
|
|
Balance at the end of period, September 30, 2014
|
|
$
|
—
|
|
|
|
As of September 30, 2015
|
|
As of December 31, 2014
|
||||||||||||
|
(in millions)
|
Nominal Unpaid Principal Balance
|
|
Aggregate Fair Value
|
|
Nominal Unpaid Principal Balance
|
|
Aggregate Fair Value
|
||||||||
|
Corporate Debt
|
$
|
6,315
|
|
|
$
|
6,329
|
|
|
$
|
6,428
|
|
|
$
|
6,468
|
|
|
Fleet Debt
|
10,299
|
|
|
10,317
|
|
|
9,569
|
|
|
9,595
|
|
||||
|
Total
|
$
|
16,614
|
|
|
$
|
16,646
|
|
|
$
|
15,997
|
|
|
$
|
16,063
|
|
|
(In millions)
|
Balance as of September 30, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Loss Adjustments
|
||||||||||
|
Long-lived assets held for sale
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
11
|
|
|
•
|
U.S. Car Rental - rental of cars, crossovers and light trucks, as well as ancillary products and services, in the United States and consists of the Company's United States operating segment;
|
|
•
|
International Car Rental - rental of cars, crossovers and light trucks, as well as ancillary products and services, internationally and consists of the Company's Europe and Other International operating segments, which are aggregated into a reportable segment based primarily upon similar economic characteristics, products and services, customers, delivery methods and general regulatory environments;
|
|
•
|
Worldwide Equipment Rental - rental of industrial, construction, material handling and other equipment and consists of the Company's worldwide equipment rental operating segment; and
|
|
•
|
All Other Operations - includes the Company's Donlen operating segment which provides fleet leasing and management services and is not considered a separate reportable segment in accordance with applicable accounting standards, together with other business activities, such as its claim management services.
|
|
|
Three Months Ended September 30,
|
||||||||||||||
|
|
Revenues
|
|
Adjusted Pre-Tax Income (Loss)
|
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
U.S. Car Rental
|
$
|
1,739
|
|
|
$
|
1,768
|
|
|
$
|
246
|
|
|
$
|
209
|
|
|
International Car Rental
|
687
|
|
|
795
|
|
|
151
|
|
|
136
|
|
||||
|
Worldwide Equipment Rental
|
401
|
|
|
413
|
|
|
54
|
|
|
79
|
|
||||
|
All Other Operations
|
149
|
|
|
145
|
|
|
18
|
|
|
17
|
|
||||
|
Total reportable segments
|
$
|
2,976
|
|
|
$
|
3,121
|
|
|
469
|
|
|
441
|
|
||
|
Corporate
(1)
|
|
|
|
|
(110
|
)
|
|
(119
|
)
|
||||||
|
Consolidated adjusted pre-tax income (loss)
|
|
|
|
|
359
|
|
|
322
|
|
||||||
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
|
Acquisition accounting
(2)
|
|
|
|
|
(32
|
)
|
|
(32
|
)
|
||||||
|
Debt-related charges
(3)
|
|
|
|
|
(15
|
)
|
|
(13
|
)
|
||||||
|
Restructuring and restructuring related charges
(4)
|
|
|
|
|
(18
|
)
|
|
(55
|
)
|
||||||
|
Acquisition related costs and charges
(5)
|
|
|
|
|
—
|
|
|
(1
|
)
|
||||||
|
Equipment rental spin-off costs
(6)
|
|
|
|
|
(6
|
)
|
|
(14
|
)
|
||||||
|
Impairment charges and asset write-downs
(7)
|
|
|
|
|
(6
|
)
|
|
—
|
|
||||||
|
Integration expenses
(8)
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
||||||
|
Relocation costs
(9)
|
|
|
|
|
—
|
|
|
(3
|
)
|
||||||
|
Other
(10)
|
|
|
|
|
26
|
|
|
—
|
|
||||||
|
Income (loss) before income taxes
|
|
|
|
|
$
|
307
|
|
|
$
|
203
|
|
||||
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
|
Revenues
|
|
Adjusted Pre-Tax Income (Loss)
|
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
U.S. Car Rental
|
$
|
4,873
|
|
|
$
|
4,989
|
|
|
$
|
509
|
|
|
$
|
515
|
|
|
International Car Rental
|
1,679
|
|
|
1,918
|
|
|
203
|
|
|
154
|
|
||||
|
Worldwide Equipment Rental
|
1,131
|
|
|
1,155
|
|
|
130
|
|
|
197
|
|
||||
|
All Other Operations
|
439
|
|
|
425
|
|
|
52
|
|
|
47
|
|
||||
|
Total reportable segments
|
$
|
8,122
|
|
|
$
|
8,487
|
|
|
894
|
|
|
913
|
|
||
|
Corporate
(1)
|
|
|
|
|
(357
|
)
|
|
(351
|
)
|
||||||
|
Consolidated adjusted pre-tax income (loss)
|
|
|
|
|
537
|
|
|
562
|
|
||||||
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
|
Acquisition accounting
(2)
|
|
|
|
|
(94
|
)
|
|
(98
|
)
|
||||||
|
Debt-related charges
(3)
|
|
|
|
|
(47
|
)
|
|
(38
|
)
|
||||||
|
Restructuring and restructuring related charges
(4)
|
|
|
|
|
(87
|
)
|
|
(126
|
)
|
||||||
|
Acquisition related costs and charges
(5)
|
|
|
|
|
—
|
|
|
(10
|
)
|
||||||
|
Equipment rental spin-off costs
(6)
|
|
|
|
|
(23
|
)
|
|
(27
|
)
|
||||||
|
Impairment charges and asset write-downs
(7)
|
|
|
|
|
(15
|
)
|
|
(10
|
)
|
||||||
|
Integration expenses
(8)
|
|
|
|
|
(5
|
)
|
|
(7
|
)
|
||||||
|
Relocation costs
(9)
|
|
|
|
|
(4
|
)
|
|
(7
|
)
|
||||||
|
Other
(10)
|
|
|
|
|
29
|
|
|
22
|
|
||||||
|
Income (loss) before income taxes
|
|
|
|
|
$
|
291
|
|
|
$
|
261
|
|
||||
|
(1)
|
Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as other business activities.
|
|
(2)
|
Represents the increase in amortization of other intangible assets, depreciation of property and other equipment and accretion of revalued liabilities relating to acquisition accounting.
|
|
(3)
|
Represents debt-related charges relating to the amortization of deferred debt financing costs and debt discounts and premiums.
|
|
(4)
|
Represents expenses incurred under restructuring actions as defined in U.S. GAAP. For further information on restructuring costs, see
Note 8
, "
Restructuring
." Also represents incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes, consulting costs and legal fees related to the accounting review and investigation and costs associated with the separation of certain executives.
|
|
(5)
|
Represents costs related to acquisitions and strategic initiatives.
|
|
(6)
|
Represents expenses associated with the anticipated HERC spin-off transaction announced in March 2014.
|
|
(7)
|
In 2015, primarily represents first quarter impairments of the former Dollar Thrifty headquarters and a corporate asset and a third quarter impairment of a building in the U.S. Car Rental segment. In 2014, primarily represents a second quarter write-down of assets associated with a terminated business relationship.
|
|
(8)
|
Primarily represents Dollar Thrifty integration related expenses.
|
|
(9)
|
Represents non-recurring costs incurred in connection with the relocation of the Company's corporate headquarters to Estero, Florida that were not included in restructuring expenses. Such expenses primarily include duplicate facility rent, certain moving expenses, and other costs that are direct and incremental due to the relocation.
|
|
(10)
|
Includes miscellaneous non-recurring or non-cash items. For 2015, primarily represents the gain on the sale of common stock of CAR Inc, offset by a legal reserve in the International Car Rental segment. For 2014, primarily represents a litigation settlement received in relation to a class action lawsuit filed against an original equipment manufacturer stemming from recalls of their vehicles in previous years.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
U.S. Car Rental
|
$
|
399
|
|
|
$
|
409
|
|
|
$
|
1,200
|
|
|
$
|
1,224
|
|
|
International Car Rental
|
114
|
|
|
143
|
|
|
310
|
|
|
381
|
|
||||
|
Worldwide Equipment Rental
|
86
|
|
|
78
|
|
|
243
|
|
|
235
|
|
||||
|
All Other Operations
|
118
|
|
|
116
|
|
|
$
|
349
|
|
|
340
|
|
|||
|
Total
|
$
|
717
|
|
|
$
|
746
|
|
|
$
|
2,102
|
|
|
$
|
2,180
|
|
|
(In millions)
|
September 30, 2015
|
|
December 31, 2014
|
||||
|
U.S. Car Rental
|
$
|
13,828
|
|
|
$
|
13,712
|
|
|
International Car Rental
|
3,853
|
|
|
3,358
|
|
||
|
Worldwide Equipment Rental
|
4,021
|
|
|
3,836
|
|
||
|
All Other Operations
|
1,507
|
|
|
1,458
|
|
||
|
Corporate
|
1,360
|
|
|
1,621
|
|
||
|
Total
|
$
|
24,569
|
|
|
$
|
23,985
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions, except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Basic and diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
|
Numerator:
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss), basic
|
$
|
237
|
|
|
$
|
149
|
|
|
$
|
203
|
|
|
$
|
152
|
|
|
Interest on Convertible Senior Notes, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
Net income (loss), diluted
|
$
|
237
|
|
|
$
|
149
|
|
|
$
|
203
|
|
|
$
|
153
|
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
|
Basic weighted average common shares
|
454
|
|
|
459
|
|
|
457
|
|
|
453
|
|
||||
|
Stock options, RSUs and PSUs
|
3
|
|
|
5
|
|
|
3
|
|
|
7
|
|
||||
|
Issuance of common stock upon conversion of Convertible Senior Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
|
Weighted average shares used to calculate diluted earnings per share
|
457
|
|
|
464
|
|
|
460
|
|
|
465
|
|
||||
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
0.52
|
|
|
$
|
0.32
|
|
|
$
|
0.44
|
|
|
$
|
0.34
|
|
|
Diluted
|
$
|
0.52
|
|
|
$
|
0.32
|
|
|
$
|
0.44
|
|
|
$
|
0.33
|
|
|
Antidilutive stock options, RSUs and PSUs
|
5
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
•
|
Adjusted Pre-Tax Income - important to management because it allows management to assess the operational performance of our business, exclusive of certain items and allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally.
|
|
•
|
Total Revenue Per Day ("Total RPD") - important to management and investors as it represents a 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.
|
|
•
|
Revenue Per Available Car Day ("RACD") - important to management and investors as it represents a 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 and provides a measure of revenue production relative to overall capacity.
|
|
•
|
Transaction Days - important to management and investors as it represents the number of revenue generating days. It is used as a component to measure Total RPD and fleet efficiency. Transaction days represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period. Late in the third quarter of 2015 the Company fully integrated the Dollar Thrifty and Hertz counter systems and as a result aligned the transaction day calculation in the Hertz system. As a result of this alignment, Hertz determined that there was an impact to the calculation. The impact to the third quarter of 2015 is negligible, however Hertz expects that transaction days for the US RAC segment will increase by approximately 1% prospectively relative to the historic calculation.
|
|
•
|
Fleet Efficiency - important to management and investors because it is the measurement of the proportion of our car rental fleet that is being used to generate revenues relative to the total amount of available fleet capacity. Higher fleet efficiency means more of the fleet is being utilized to generate revenue.
|
|
•
|
Net Depreciation Per Unit Per Month - important to management and investors as depreciation of revenue earning equipment and lease charges, is one of our largest expenses for the car rental business and is driven by the number of vehicles, expected residual values at the time of disposal and expected hold period of the vehicles. Net depreciation per unit per month is reflective of how we are managing the costs of our fleet and facilitates comparison with other participants in the car rental industry.
|
|
•
|
Dollar Utilization -
important to management and investors because
it is the measurement of the proportion of our equipment rental revenue earning equipment, including additional capitalized refurbishment costs (with the basis for refurbished assets reset at the refurbishment date), that is being used to generate revenues relative to the total amount of available equipment fleet capacity.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
Time Utilization - important to management and investors as it measures the extent to which the equipment rental fleet is on rent compared to total operated fleet and is an efficiency measurement utilized by participants in the equipment rental industry.
|
|
•
|
Car rental revenues - revenues from all company-operated car rental operations, including charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and revenues associated with ancillary products associated with car rentals, including the sale of loss or collision damage waivers, liability insurance coverage, parking and other products and fees, ancillary products associated with the retail car sales channel and certain royalty fees from our franchisees;
|
|
•
|
Equipment rental revenues - revenues from all company-operated equipment rental operations, including amounts charged to customers for the fueling and delivery of equipment and sale of loss damage waivers, as well as revenues from the sale of new equipment and consumables; and
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
All other operations revenues - revenues from fleet leasing and management services and other business activities.
|
|
•
|
Direct operating expenses (primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservation costs; the cost of new equipment and consumables purchased for resale; and other costs relating to the operation and rental of revenue earning equipment, such as damage, maintenance and fuel costs);
|
|
•
|
Depreciation expense and lease charges, net relating to revenue earning equipment (including net gains or losses on the disposal of such equipment). Revenue earning equipment includes cars and rental equipment;
|
|
•
|
Selling, general and administrative expenses; and
|
|
•
|
Interest expense, net.
|
|
•
|
U.S. Car Rental - Rental of cars, crossovers and light trucks, as well as sales of ancillary products and services, in the U.S.;
|
|
•
|
International Car Rental - Rental of cars, crossovers and light trucks, as well as sales of ancillary products and services, internationally;
|
|
•
|
Worldwide Equipment Rental - Rental of industrial, construction, material handling and other equipment; and
|
|
•
|
All Other Operations - Comprised of our Donlen business, which provides fleet leasing and management services, and other business activities, such as our claim management services
.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
During the quarter, we monetized a portion of our investment in the common stock of CAR Inc., a publicly traded company on the Hong Kong Stock Exchange, by selling approximately
60 million
shares for net proceeds of
$100 million
which resulted in a pre-tax gain of
$56 million
.
|
|
•
|
We have successfully executed on our previously announced fleet refresh strategy in the U.S. Car Rental segment. The fleet has been substantially renewed, with approximately
335,000
model year 2015 vehicles added to the fleet through
September 30, 2015
. The completion of this refresh has resulted in an improvement of approximately
70%
in the mix of vehicles under 30,000 miles;
|
|
•
|
We sold
69%
and
85%
more non-program cars in our U.S. Car Rental segment in the
three and nine
months of 2015, respectively, compared with the
three and nine
months of 2014;
|
|
•
|
Total revenue for the U.S. Car Rental segment for the
third
quarter of 2015
decrease
d by
2%
. This decline was driven primarily by a
2%
reduction in Total RPD, predominantly driven by lower rental rates resulting from competitive pressure in the industry and lower fuel revenues, while transaction days remained flat period over period. Total revenue for the U.S. Car Rental segment for the
nine months
of 2015
decrease
d by
2%
. This decline was driven primarily by a
1%
reduction in transaction days and a
2%
reduction in Total RPD, predominantly driven by lower rental rates resulting from competitive pressure in the industry and lower fuel revenues;
|
|
•
|
Net depreciation per unit per month in the U.S. Car Rental segment was up
1%
to
$267
from
$265
for the three months ended September 30, 2015 versus 2014 and down
1%
to
$267
from
$270
for the nine months ended September 30, 2015 versus 2014;
|
|
•
|
Excluding the impact of foreign currency, results in the International Car Rental segment are strong for the three and nine months of 2015, as compared to 2014, with increases in revenues, transactions days and Total RPD and decreases in direct operating expenses and depreciation of revenue earning equipment and lease charge, net;
|
|
•
|
On a constant currency basis, net depreciation per unit per month in the International Car Rental segment was down
6%
to
$207
from
$220
for the three months ended September 30, 2015 versus 2014 and down
4%
to
$214
from
$224
for the nine months ended September 30, 2015 versus 2014;
|
|
•
|
Excluding the impact of foreign currency, Worldwide Equipment Rental segment revenues
increase
d
1%
for both the
three and nine
months of 2015, as compared to 2014, due to increased volume. Despite decreased volumes in the oil and gas customer base, volume increased 3% in the three and nine month periods due to new account growth predominantly derived from small local contractors and specialty segments as we diversify our business;
|
|
•
|
Excluding the impact of foreign currency, maintenance costs increased in the Worldwide Equipment Rental segment due to the investment made to improve the fleet available to rent and sales costs due to an increase in sales force personnel to focus on winning new accounts and diversifying the customer base;
|
|
•
|
Incurred approximately
$6 million
and
$23 million
during the
three and nine
months of 2015, respectively, in costs associated with the anticipated separation of the Worldwide Equipment Rental business, as compared to
$14 million
and
$27 million
during the
three and nine
months of 2014, respectively; and
|
|
•
|
During the quarter, following an adverse decision against another industry participant in a similar action, we established an additional reserve with respect to a French road tax matter of approximately
$24 million
.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
The Company recorded
$24 million
and
$113 million
in impairments, asset write-downs and restructuring and restructuring related expenses during the three and nine months ended September 30, 2015, respectively, compared to
$70 million
and
$151 million
in the three and nine months ended September 30, 2014. Included in these amounts were
$9 million
and
$32 million
during the
three and nine
months of 2015, respectively, in consulting, audit and legal costs associated with the restatement and investigation activities, as compared to
$8 million
and
$17 million
during the
three and nine
months of 2014, respectively.
|
|
•
|
During the quarter, we recorded approximately
$18 million
in expenses that related to prior periods comprised of adjustments of
$4 million
related to the accounting for the post-acquisition sale of land that was revalued as part of the December 2005 acquisition,
$4 million
of additional accruals for the periods 2009 through 2014 resulting from concession audits at four airport locations, a
$4 million
obligation to a jurisdiction for customer transaction fees,
$3 million
of additional write-offs of assets that were incorrectly capitalized and
$3 million
of other miscellaneous adjustments.
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
||||||||||||||
|
($ in millions)
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
||||||||||||
|
Total revenues
|
$
|
2,976
|
|
|
$
|
3,121
|
|
|
(5
|
)%
|
|
$
|
8,122
|
|
|
$
|
8,487
|
|
|
(4
|
)%
|
|
Direct operating expenses
|
1,564
|
|
|
1,702
|
|
|
(8
|
)
|
|
4,475
|
|
|
4,738
|
|
|
(6
|
)
|
||||
|
Depreciation of revenue earning equipment and lease charges, net
|
717
|
|
|
746
|
|
|
(4
|
)
|
|
2,102
|
|
|
2,180
|
|
|
(4
|
)
|
||||
|
Selling, general and administrative expenses
|
259
|
|
|
303
|
|
|
(15
|
)
|
|
821
|
|
|
845
|
|
|
(3
|
)
|
||||
|
Interest expense, net
|
158
|
|
|
164
|
|
|
(4
|
)
|
|
467
|
|
|
484
|
|
|
(4
|
)
|
||||
|
Other (income) expense, net
|
(29
|
)
|
|
3
|
|
|
NM
|
|
|
(34
|
)
|
|
(21
|
)
|
|
62
|
|
||||
|
Income (loss) before income taxes
|
307
|
|
|
203
|
|
|
51
|
|
|
291
|
|
|
261
|
|
|
11
|
|
||||
|
(Provision) benefit for taxes on income (loss)
|
(70
|
)
|
|
(54
|
)
|
|
30
|
|
|
(88
|
)
|
|
(109
|
)
|
|
(19
|
)
|
||||
|
Net income (loss)
|
$
|
237
|
|
|
$
|
149
|
|
|
59
|
|
|
$
|
203
|
|
|
$
|
152
|
|
|
34
|
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
359
|
|
|
$
|
322
|
|
|
11
|
|
|
$
|
537
|
|
|
$
|
562
|
|
|
(4
|
)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
September 30, |
|
Percent Increase/(Decrease)
|
|
Nine Months Ended
September 30, |
|
Percent Increase/(Decrease)
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
||||||||||||
|
Total revenues
|
$
|
1,739
|
|
|
$
|
1,768
|
|
|
(2
|
)%
|
|
$
|
4,873
|
|
|
$
|
4,989
|
|
|
(2
|
)%
|
|
Direct operating expenses
|
$
|
988
|
|
|
$
|
1,041
|
|
|
(5
|
)
|
|
$
|
2,856
|
|
|
$
|
2,939
|
|
|
(3
|
)
|
|
Depreciation of revenue earning equipment and lease charges, net
|
$
|
399
|
|
|
$
|
409
|
|
|
(2
|
)
|
|
$
|
1,200
|
|
|
$
|
1,224
|
|
|
(2
|
)
|
|
Income (loss) before income taxes
|
$
|
212
|
|
|
$
|
160
|
|
|
33
|
|
|
$
|
399
|
|
|
$
|
422
|
|
|
(5
|
)
|
|
Adjusted pre-tax income
(loss)
(a)
|
$
|
246
|
|
|
$
|
209
|
|
|
18
|
%
|
|
$
|
509
|
|
|
$
|
515
|
|
|
(1
|
)
|
|
Transaction days (in thousands)
(b)
|
37,946
|
|
|
37,901
|
|
|
—
|
|
|
104,960
|
|
|
106,111
|
|
|
(1
|
)
|
||||
|
Total RPD (in whole dollars)
(c)
|
$
|
45.41
|
|
|
$
|
46.41
|
|
|
(2
|
)
|
|
$
|
46.04
|
|
|
$
|
46.80
|
|
|
(2
|
)
|
|
Revenue per available car day (in whole dollars)
(e)
|
$
|
37.63
|
|
|
$
|
37.25
|
|
|
1
|
|
|
$
|
35.43
|
|
|
$
|
36.62
|
|
|
(3
|
)
|
|
Average fleet
(d)
|
497,700
|
|
|
515,300
|
|
|
(3
|
)
|
|
499,600
|
|
|
503,300
|
|
|
(1
|
)
|
||||
|
Fleet efficiency
(d)
|
83
|
%
|
|
80
|
%
|
|
N/A
|
|
|
77
|
%
|
|
78
|
%
|
|
N/A
|
|
||||
|
Net depreciation per unit per month (in whole dollars)
(f)
|
$
|
267
|
|
|
$
|
265
|
|
|
1
|
|
|
$
|
267
|
|
|
$
|
270
|
|
|
(1
|
)
|
|
Program cars as a percentage of average fleet at period end
|
28
|
%
|
|
15
|
%
|
|
N/A
|
|
|
28
|
%
|
|
15
|
%
|
|
N/A
|
|
||||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
Fleet related expenses decreased $13 million year over year primarily due to a $17 million decline in fuel costs as a result of the lower price of gasoline and a decrease of $7 million in maintenance expenses due to a younger fleet as compared to the third quarter 2014. This was partially offset by an increase in other vehicle operating costs and higher amortization expense on vehicle registration tags.
|
|
•
|
Personnel related expenses decreased $10 million from the third quarter of 2014 due primarily to a reduction in headcount and the discontinuation of future benefit accruals and participation under certain of our pension plans.
|
|
•
|
Other direct operating expenses decreased $30 million from third quarter of 2014 due in part to decreased restructuring and restructuring related costs and declines in net field administration and other direct operating costs of our rental locations.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
Fleet related expenses decreased $36 million year over year primarily due to a $60 million decline in fuel costs, partially offset by increases in collision and short term maintenance expenses due to a larger number of program cars returned to the original equipment manufacturer period over period, other vehicle operating costs and higher amortization expense on vehicle registration tags.
|
|
•
|
Personnel related expenses increased $6 million from the nine months of 2014 due primarily to first quarter 2015 increases in salaries and benefits for incremental headcount for our off airport locations, net of the impact of the closures in the second quarter of 2015, incremental headcount in maintenance personnel to reduce vehicle downtime and incremental headcount in customer facing service personnel. These increases were partially offset by the discontinuation of future benefit accruals and participation under certain of our pension plans as well as a reduction in other employee incentives period over period.
|
|
•
|
Other direct operating expenses decreased $53 million from the nine months of 2014 due in part to decreased restructuring and restructuring related costs and a decline in net field administration and other direct operating costs of our rental locations partially driven by the off airport closures in 2015.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended
September 30, |
|
Percent Increase/(Decrease)
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
||||||||||||
|
Total revenues
|
$
|
687
|
|
|
$
|
795
|
|
|
(14
|
)%
|
|
$
|
1,679
|
|
|
$
|
1,918
|
|
|
(12
|
)%
|
|
Direct operating expenses
|
$
|
351
|
|
|
$
|
427
|
|
|
(18
|
)
|
|
$
|
950
|
|
|
$
|
1,150
|
|
|
(17
|
)
|
|
Depreciation of revenue earning equipment and lease charges, net
|
$
|
114
|
|
|
$
|
143
|
|
|
(20
|
)
|
|
$
|
310
|
|
|
$
|
381
|
|
|
(19
|
)
|
|
Income (loss) before income taxes
|
$
|
121
|
|
|
$
|
130
|
|
|
(7
|
)
|
|
$
|
159
|
|
|
$
|
117
|
|
|
36
|
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
151
|
|
|
$
|
136
|
|
|
11
|
|
|
$
|
203
|
|
|
$
|
154
|
|
|
32
|
|
|
Transaction days (in thousands)
(b)
|
14,814
|
|
|
14,695
|
|
|
1
|
|
|
37,112
|
|
|
36,186
|
|
|
3
|
|
||||
|
Total RPD (in whole dollars)
(c)
|
$
|
50.43
|
|
|
$
|
49.47
|
|
|
2
|
|
|
$
|
48.53
|
|
|
$
|
48.03
|
|
|
1
|
|
|
Revenue per available car day (in whole dollars)
(e)
|
$
|
40.97
|
|
|
$
|
40.13
|
|
|
2
|
|
|
$
|
38.38
|
|
|
$
|
37.38
|
|
|
3
|
|
|
Average fleet
(d)
|
198,200
|
|
|
196,900
|
|
|
1
|
|
|
171,900
|
|
|
170,300
|
|
|
1
|
|
||||
|
Fleet efficiency
(d)
|
81
|
%
|
|
81
|
%
|
|
N/A
|
|
|
79
|
%
|
|
78
|
%
|
|
N/A
|
|
||||
|
Net depreciation per unit per month (in whole dollars)
(f)
|
$
|
207
|
|
|
$
|
220
|
|
|
(6
|
)
|
|
$
|
214
|
|
|
$
|
224
|
|
|
(4
|
)
|
|
Program cars as a percentage of average fleet at period end
|
44
|
%
|
|
40
|
%
|
|
N/A
|
|
|
44
|
%
|
|
40
|
%
|
|
N/A
|
|
||||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended
September 30, |
|
Percent Increase/(Decrease)
|
||||||||||||||
|
($ in millions)
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
||||||||||||
|
Total revenues
|
$
|
401
|
|
|
$
|
413
|
|
|
(3
|
)%
|
|
$
|
1,131
|
|
|
$
|
1,155
|
|
|
(2
|
)%
|
|
Direct operating expenses
|
$
|
221
|
|
|
$
|
221
|
|
|
—
|
|
|
$
|
643
|
|
|
$
|
631
|
|
|
2
|
|
|
Depreciation of revenue earning equipment and lease charges, net
|
$
|
86
|
|
|
$
|
78
|
|
|
10
|
|
|
$
|
243
|
|
|
$
|
235
|
|
|
3
|
|
|
Income (loss) before income taxes
|
$
|
37
|
|
|
$
|
56
|
|
|
(34
|
)
|
|
$
|
69
|
|
|
$
|
140
|
|
|
(51
|
)
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
54
|
|
|
$
|
79
|
|
|
(32
|
)
|
|
$
|
130
|
|
|
$
|
197
|
|
|
(34
|
)
|
|
Dollar utilization
(g)
|
36
|
%
|
|
37
|
%
|
|
N/A
|
|
|
35
|
%
|
|
36
|
%
|
|
N/A
|
|
||||
|
Time utilization
(h)
|
66
|
%
|
|
66
|
%
|
|
N/A
|
|
|
63
|
%
|
|
64
|
%
|
|
N/A
|
|
||||
|
Rental and rental related revenue
(i)
|
$
|
380
|
|
|
$
|
374
|
|
|
2
|
|
|
$
|
1,069
|
|
|
$
|
1,049
|
|
|
2
|
|
|
Same store revenue growth
(j)
|
—
|
%
|
|
6
|
%
|
|
N/A
|
|
|
—
|
%
|
|
6
|
%
|
|
N/A
|
|
||||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended September 30,
|
|
Percent Increase/(Decrease)
|
|
Nine Months Ended
September 30, |
|
Percent Increase/(Decrease)
|
||||||||||||||
|
($ in millions)
|
2015
|
|
2014
|
|
|
2015
|
|
2014
|
|
||||||||||||
|
Total revenues
|
$
|
149
|
|
|
$
|
145
|
|
|
3
|
%
|
|
$
|
439
|
|
|
$
|
425
|
|
|
3
|
%
|
|
Direct operating expenses
|
$
|
6
|
|
|
$
|
6
|
|
|
—
|
|
|
$
|
17
|
|
|
$
|
18
|
|
|
(6
|
)
|
|
Depreciation of revenue earning equipment and lease charges, net
|
$
|
118
|
|
|
$
|
116
|
|
|
2
|
|
|
$
|
349
|
|
|
$
|
340
|
|
|
3
|
|
|
Income (loss) before income taxes
|
$
|
14
|
|
|
$
|
13
|
|
|
8
|
|
|
$
|
42
|
|
|
$
|
34
|
|
|
24
|
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
18
|
|
|
$
|
17
|
|
|
6
|
|
|
$
|
52
|
|
|
$
|
47
|
|
|
11
|
|
|
Average Fleet - Donlen
|
160,500
|
|
|
169,700
|
|
|
(5
|
)
|
|
164,900
|
|
|
174,800
|
|
|
(6
|
)
|
||||
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(a)
|
Adjusted pre-tax income is a Non-GAAP measure that is calculated as income before income taxes plus certain non-cash purchase accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts and certain one-time charges and nonoperational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally. The contribution of our reportable segments to adjusted pre-tax income and reconciliation to the most comparable consolidated GAAP measure are presented below:
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(In millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Adjusted pre-tax income (loss):
|
|
|
|
|
|
|
|
||||||||
|
U.S. car rental
|
$
|
246
|
|
|
$
|
209
|
|
|
$
|
509
|
|
|
$
|
515
|
|
|
International car rental
|
151
|
|
|
136
|
|
|
203
|
|
|
154
|
|
||||
|
Worldwide equipment rental
|
54
|
|
|
79
|
|
|
130
|
|
|
197
|
|
||||
|
All other operations
|
18
|
|
|
17
|
|
|
52
|
|
|
47
|
|
||||
|
Total reportable segments
|
469
|
|
|
441
|
|
|
894
|
|
|
913
|
|
||||
|
Corporate
(1)
|
(110
|
)
|
|
(119
|
)
|
|
(357
|
)
|
|
(351
|
)
|
||||
|
Consolidated adjusted pre-tax income (loss)
|
359
|
|
|
322
|
|
|
537
|
|
|
562
|
|
||||
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
|
Acquisition accounting
(2)
|
(32
|
)
|
|
(32
|
)
|
|
(94
|
)
|
|
(98
|
)
|
||||
|
Debt-related charges
(3)
|
(15
|
)
|
|
(13
|
)
|
|
(47
|
)
|
|
(38
|
)
|
||||
|
Restructuring and restructuring related charges
(4)
|
(18
|
)
|
|
(55
|
)
|
|
(87
|
)
|
|
(126
|
)
|
||||
|
Acquisition related costs and charges
(5)
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(10
|
)
|
||||
|
Equipment rental spin-off costs
(6)
|
(6
|
)
|
|
(14
|
)
|
|
(23
|
)
|
|
(27
|
)
|
||||
|
Impairment charges and asset write-downs
(7)
|
(6
|
)
|
|
—
|
|
|
(15
|
)
|
|
(10
|
)
|
||||
|
Integration expenses
(8)
|
(1
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
(7
|
)
|
||||
|
Relocation costs
(9)
|
—
|
|
|
(3
|
)
|
|
(4
|
)
|
|
(7
|
)
|
||||
|
Other
(10)
|
26
|
|
|
—
|
|
|
29
|
|
|
22
|
|
||||
|
Income (loss) before income taxes
|
$
|
307
|
|
|
$
|
203
|
|
|
$
|
291
|
|
|
$
|
261
|
|
|
(1)
|
Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as other business activities.
|
|
(2)
|
Represents the increase in amortization of other intangible assets, depreciation of property and other equipment and accretion of revalued liabilities relating to acquisition accounting.
|
|
(3)
|
Represents debt-related charges relating to the amortization of deferred debt financing costs and debt discounts and premiums.
|
|
(4)
|
Represents expenses incurred under restructuring actions as defined in U.S. GAAP. For further information on restructuring costs, see
Note 8
, "
Restructuring
." Also represents incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes, consulting costs and legal fees related to the accounting review and investigation and costs associated with the separation of certain executives.
|
|
(5)
|
Represents costs related to acquisitions and strategic initiatives.
|
|
(6)
|
Represents expenses associated with the anticipated HERC spin-off transaction announced in March 2014.
|
|
(7)
|
In 2015, primarily represents first quarter impairments of the former Dollar Thrifty headquarters and a corporate asset and a third quarter impairment of a building in the U.S. Car Rental segment. In 2014, primarily represents a second quarter write-down of assets associated with a terminated business relationship.
|
|
(8)
|
Primarily represents Dollar Thrifty integration related expenses.
|
|
(9)
|
Represents non-recurring costs incurred in connection with the relocation of the Company's corporate headquarters to Estero, Florida that were not included in restructuring expenses. Such expenses primarily include duplicate facility rent, certain moving expenses, and other costs that are direct and incremental due to the relocation.
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(10)
|
Includes miscellaneous non-recurring or non-cash items. For 2015, primarily represents the gain on the sale of common stock of CAR Inc, offset by a legal reserve in the International Car Rental segment. For 2014, primarily represents a litigation settlement received in relation to a class action lawsuit filed against an original equipment manufacturer stemming from recalls of their vehicles in previous years.
|
|
(b)
|
Transaction days represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period. Late in the third quarter of 2015 the Company fully integrated the Dollar Thrifty and Hertz counter systems and as a result aligned the transaction day calculation in the Hertz system. As a result of this alignment, Hertz determined that there was an impact to the calculation. The impact to the third quarter of 2015 is negligible, however Hertz expects that transaction days for the U.S. Car Rental segment will increase by approximately 1% prospectively relative to the historic calculation.
|
|
(c)
|
Total RPD is a Non-GAAP measure that is calculated as total revenue less ancillary revenue associated with retail car sales, 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 useful in analyzing underlying trends. This statistic is important to our management and investors as it represents a 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.
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||||||
|
|
Three Months Ended September 30,
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Revenues
|
$
|
1,739
|
|
|
$
|
1,768
|
|
|
$
|
687
|
|
|
$
|
795
|
|
|
Ancillary retail car sales revenue
|
(16
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
60
|
|
|
(68
|
)
|
||||
|
Total rental revenue
|
$
|
1,723
|
|
|
$
|
1,759
|
|
|
$
|
747
|
|
|
$
|
727
|
|
|
Transaction days (in thousands)
|
37,946
|
|
|
37,901
|
|
|
14,814
|
|
|
14,695
|
|
||||
|
Total RPD (in whole dollars)
|
$
|
45.41
|
|
|
$
|
46.41
|
|
|
$
|
50.43
|
|
|
$
|
49.47
|
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Revenues
|
$
|
4,873
|
|
|
$
|
4,989
|
|
|
$
|
1,679
|
|
|
$
|
1,918
|
|
|
Ancillary retail car sales revenue
|
(41
|
)
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
122
|
|
|
(180
|
)
|
||||
|
Total rental revenue
|
$
|
4,832
|
|
|
$
|
4,966
|
|
|
$
|
1,801
|
|
|
$
|
1,738
|
|
|
Transaction days (in thousands)
|
104,960
|
|
|
106,111
|
|
|
37,112
|
|
|
36,186
|
|
||||
|
Total RPD (in whole dollars)
|
$
|
46.04
|
|
|
$
|
46.80
|
|
|
$
|
48.53
|
|
|
$
|
48.03
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(d)
|
Average fleet is determined using a simple average of the number of vehicles at the beginning and end of a given period. Among other things, average fleet is used to calculate our fleet efficiency which represents the portion of the Company's fleet that is being utilized to generate revenue. Fleet efficiency is calculated by dividing total transaction days by available car days. In the
three and nine
months of 2014, average fleet used to calculate fleet efficiency in our U.S. Car Rental segment excludes Advantage sublease and Hertz 24/7 vehicles as these vehicles do not have associated transaction days. In the
three and nine
months of 2015, the quantity of Advantage sublease and Hertz 24/7 vehicles rounds to zero. The calculation of fleet efficiency is shown in the tables below.
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||
|
|
Three Months Ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
|
Transaction days (in thousands)
|
37,946
|
|
|
37,901
|
|
|
14,814
|
|
|
14,695
|
|
|
Average fleet
|
497,700
|
|
|
515,300
|
|
|
198,200
|
|
|
196,900
|
|
|
Advantage Sublease vehicles
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|
—
|
|
|
Hertz 24/7 vehicles
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|
—
|
|
|
Average fleet used to calculate fleet efficiency
|
497,700
|
|
|
513,300
|
|
|
198,200
|
|
|
196,900
|
|
|
Number of days in period
|
92
|
|
|
92
|
|
|
92
|
|
|
92
|
|
|
Available car days (in thousands)
|
45,788
|
|
|
47,224
|
|
|
18,234
|
|
|
18,115
|
|
|
Fleet efficiency
|
83
|
%
|
|
80
|
%
|
|
81
|
%
|
|
81
|
%
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||
|
|
Nine Months Ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
|
Transaction days (in thousands)
|
104,960
|
|
|
106,111
|
|
|
37,112
|
|
|
36,186
|
|
|
Average fleet
|
499,600
|
|
|
503,300
|
|
|
171,900
|
|
|
170,300
|
|
|
Advantage Sublease vehicles
|
—
|
|
|
(5,500
|
)
|
|
—
|
|
|
—
|
|
|
Hertz 24/7 vehicles
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|
—
|
|
|
Average fleet used to calculate fleet efficiency
|
499,600
|
|
|
496,800
|
|
|
171,900
|
|
|
170,300
|
|
|
Number of days in period
|
273
|
|
|
273
|
|
|
273
|
|
|
273
|
|
|
Available car days (in thousands)
|
136,391
|
|
|
135,626
|
|
|
46,929
|
|
|
46,492
|
|
|
Fleet efficiency
|
77
|
%
|
|
78
|
%
|
|
79
|
%
|
|
78
|
%
|
|
(e)
|
Revenue per available car day is calculated as total revenues less revenue from fleet subleases and ancillary revenue associated with retail car sales divided by available car 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 metric is important to our management and investors as it represents a 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 and provides a measure of revenue production relative to overall capacity.
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||||||
|
|
Three Months Ended September 30,
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Total rental revenue
|
$
|
1,723
|
|
|
$
|
1,759
|
|
|
$
|
747
|
|
|
$
|
727
|
|
|
Available car days (in thousands)
|
45,788
|
|
|
47,224
|
|
|
18,234
|
|
|
18,115
|
|
||||
|
Revenue per available car day (in whole dollars)
|
$
|
37.63
|
|
|
$
|
37.25
|
|
|
$
|
40.97
|
|
|
$
|
40.13
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Total rental revenue
|
$
|
4,832
|
|
|
$
|
4,966
|
|
|
$
|
1,801
|
|
|
$
|
1,738
|
|
|
Available car days (in thousands)
|
136,391
|
|
|
135,626
|
|
|
46,929
|
|
|
46,492
|
|
||||
|
Revenue per available car day (in whole dollars)
|
$
|
35.43
|
|
|
$
|
36.62
|
|
|
$
|
38.38
|
|
|
$
|
37.38
|
|
|
(f)
|
Net depreciation per unit per month is a non-GAAP measure that is calculated by dividing depreciation of revenue earning equipment and lease charges, net by the average fleet in each period and then dividing by the number of months in the period reported, 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 useful in analyzing underlying trends. Average fleet used to calculate net depreciation per unit per month in our U.S. Car Rental segment includes Advantage sublease and Hertz 24/7 vehicles as these vehicles have associated lease charges. Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month. The tables below reconcile this non-GAAP measure to its most comparable GAAP measure, which is depreciation of revenue earning equipment and lease charges, net, (based on December 31, 2014 foreign exchange rates) for the periods shown:
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||||||
|
|
Three Months Ended September 30,
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Depreciation of revenue earning equipment and lease charges
|
$
|
399
|
|
|
$
|
409
|
|
|
$
|
114
|
|
|
$
|
143
|
|
|
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
9
|
|
|
(13
|
)
|
||||
|
Adjusted depreciation of revenue earning equipment and lease charges, net
|
$
|
399
|
|
|
$
|
409
|
|
|
$
|
123
|
|
|
$
|
130
|
|
|
Average Fleet
|
497,700
|
|
|
515,300
|
|
|
198,200
|
|
|
196,900
|
|
||||
|
Adjusted depreciation of revenue earning equipment and lease charges, net divided by average fleet (in whole dollars)
|
$
|
802
|
|
|
$
|
794
|
|
|
$
|
621
|
|
|
$
|
660
|
|
|
Number of months in period
|
3
|
|
3
|
|
3
|
|
3
|
||||||||
|
Net depreciation per unit per month (in whole dollars)
|
$
|
267
|
|
|
$
|
265
|
|
|
$
|
207
|
|
|
$
|
220
|
|
|
|
U.S. car rental segment
|
|
International car rental segment
|
||||||||||||
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
($ in millions, except as noted)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Depreciation of revenue earning equipment and lease charges, net
|
$
|
1,200
|
|
|
$
|
1,224
|
|
|
$
|
310
|
|
|
$
|
381
|
|
|
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
21
|
|
|
(37
|
)
|
||||
|
Adjusted depreciation of revenue earning equipment and lease charges, net
|
$
|
1,200
|
|
|
$
|
1,224
|
|
|
$
|
331
|
|
|
$
|
344
|
|
|
Average Fleet
|
499,600
|
|
|
503,300
|
|
|
171,900
|
|
|
170,300
|
|
||||
|
Adjusted depreciation of revenue earning equipment and lease charges, net divided by average fleet (in whole dollars)
|
$
|
2,402
|
|
|
$
|
2,432
|
|
|
$
|
1,926
|
|
|
$
|
2,020
|
|
|
Number of months in period
|
9
|
|
9
|
|
9
|
|
9
|
||||||||
|
Net depreciation per unit per month (in whole dollars)
|
$
|
267
|
|
|
$
|
270
|
|
|
$
|
214
|
|
|
$
|
224
|
|
|
(g)
|
Dollar utilization means revenue derived from the rental of equipment divided by the original cost of the equipment including additional capitalized refurbishment costs (with the basis of refurbished assets reset at the refurbishment date).
|
|
(h)
|
Time Utilization means the percentage of time an equipment unit is on-rent during a given period.
|
|
(i)
|
Worldwide equipment rental and rental related revenue is a Non-GAAP measure that 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 (based on December 31, 2014 foreign exchange rates). Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management and investors as it reflects time and mileage and ancillary charges for equipment on rent and is comparable with the reporting of other industry participants. The following table reconciles our worldwide equipment rental segment revenues, the
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
($ in millions)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
|
Worldwide Equipment Rental segment revenues
|
$
|
401
|
|
|
$
|
413
|
|
|
$
|
1,131
|
|
|
$
|
1,155
|
|
|
Equipment sales and other revenue
|
(28
|
)
|
|
(33
|
)
|
|
(79
|
)
|
|
(87
|
)
|
||||
|
Rental and rental related revenue at actual rates
|
373
|
|
|
380
|
|
|
1,052
|
|
|
1,068
|
|
||||
|
Foreign currency adjustment
|
7
|
|
|
(6
|
)
|
|
17
|
|
|
(19
|
)
|
||||
|
Rental and rental related revenue
|
$
|
380
|
|
|
$
|
374
|
|
|
$
|
1,069
|
|
|
$
|
1,049
|
|
|
(j)
|
Same-store revenue growth is calculated as the year over year change in revenue for locations that are open at the end of the period reported and have been operating under our direction for more than twelve months. The same-store revenue amounts are adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends.
|
|
|
Nine Months Ended
September 30, |
|
|
||||||||
|
(In millions)
|
2015
|
|
2014
|
|
$ Change
|
||||||
|
Cash provided by (used in):
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
2,683
|
|
|
$
|
2,729
|
|
|
$
|
(46
|
)
|
|
Investing activities
|
(3,114
|
)
|
|
(3,283
|
)
|
|
169
|
|
|||
|
Financing activities
|
471
|
|
|
790
|
|
|
(319
|
)
|
|||
|
Effect of exchange rate changes
|
(21
|
)
|
|
(18
|
)
|
|
(3
|
)
|
|||
|
Net change in cash and cash equivalents
|
$
|
19
|
|
|
$
|
218
|
|
|
$
|
(199
|
)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
(In millions)
|
Remaining
Capacity
|
|
Availability Under
Borrowing Base
Limitation
|
||||
|
Corporate Debt
|
|
|
|
||||
|
Senior ABL Facility
|
$
|
1,373
|
|
|
$
|
1,334
|
|
|
Total Corporate Debt
|
1,373
|
|
|
1,334
|
|
||
|
Fleet Debt
|
|
|
|
||||
|
HVF II U.S. Fleet Variable Funding Notes
|
2,090
|
|
|
—
|
|
||
|
HFLF Variable Funding Notes
|
256
|
|
|
—
|
|
||
|
European Revolving Credit Facility
|
—
|
|
|
—
|
|
||
|
European Securitization
|
54
|
|
|
7
|
|
||
|
Canadian Securitization
|
37
|
|
|
—
|
|
||
|
Australian Securitization
|
88
|
|
|
—
|
|
||
|
Capitalized Leases
|
35
|
|
|
5
|
|
||
|
Total Fleet Debt
|
2,560
|
|
|
12
|
|
||
|
Total
|
$
|
3,933
|
|
|
$
|
1,346
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
|
|
Revenue Earning Equipment
|
|
Capital Assets, Non-Fleet
|
||||||||||||||||||||
|
Cash inflow (cash outflow)_(In millions)
|
|
Capital
Expenditures
|
|
Disposal
Proceeds
|
|
Net Capital
Expenditures
|
|
Capital
Expenditures
|
|
Disposal
Proceeds
|
|
Net Capital
Expenditures
|
||||||||||||
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
First Quarter
|
|
$
|
(3,438
|
)
|
|
$
|
2,289
|
|
|
$
|
(1,149
|
)
|
|
$
|
(97
|
)
|
|
$
|
22
|
|
|
$
|
(75
|
)
|
|
Second Quarter
|
|
(4,553
|
)
|
|
2,620
|
|
|
(1,933
|
)
|
|
(73
|
)
|
|
25
|
|
|
(48
|
)
|
||||||
|
Third Quarter
|
|
(2,019
|
)
|
|
1,879
|
|
|
(140
|
)
|
|
(80
|
)
|
|
22
|
|
|
(58
|
)
|
||||||
|
|
|
$
|
(10,010
|
)
|
|
$
|
6,788
|
|
|
$
|
(3,222
|
)
|
|
$
|
(250
|
)
|
|
$
|
69
|
|
|
$
|
(181
|
)
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
First Quarter
|
|
$
|
(2,582
|
)
|
|
$
|
1,859
|
|
|
$
|
(723
|
)
|
|
$
|
(75
|
)
|
|
$
|
25
|
|
|
$
|
(50
|
)
|
|
Second Quarter
|
|
(3,414
|
)
|
|
1,858
|
|
|
(1,556
|
)
|
|
(76
|
)
|
|
20
|
|
|
(56
|
)
|
||||||
|
Third Quarter
|
|
(2,446
|
)
|
|
1,599
|
|
|
(847
|
)
|
|
(81
|
)
|
|
36
|
|
|
(45
|
)
|
||||||
|
|
|
$
|
(8,442
|
)
|
|
$
|
5,316
|
|
|
$
|
(3,126
|
)
|
|
$
|
(232
|
)
|
|
$
|
81
|
|
|
$
|
(151
|
)
|
|
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
(In millions)
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|||||||
|
Revenue earning equipment expenditures, net
|
|
|
|
|
|
|
|
|||||||
|
U.S. car rental
|
$
|
(1,390
|
)
|
|
$
|
(1,109
|
)
|
|
$
|
(281
|
)
|
|
25
|
%
|
|
International car rental
|
(995
|
)
|
|
(1,238
|
)
|
|
243
|
|
|
(20
|
)
|
|||
|
Worldwide equipment rental
|
(410
|
)
|
|
(340
|
)
|
|
(70
|
)
|
|
21
|
|
|||
|
All other operations
|
(427
|
)
|
|
(439
|
)
|
|
12
|
|
|
(3
|
)
|
|||
|
Total
|
$
|
(3,222
|
)
|
|
$
|
(3,126
|
)
|
|
$
|
(96
|
)
|
|
3
|
|
|
|
Nine Months Ended
September 30, |
|
|
|
|
|||||||||
|
(In millions)
|
2015
|
|
2014
|
|
$ Change
|
|
% Change
|
|||||||
|
Capital asset expenditures, non-fleet, net
|
|
|
|
|
|
|
|
|||||||
|
U.S. car rental
|
$
|
(46
|
)
|
|
$
|
(102
|
)
|
|
$
|
56
|
|
|
(55
|
)%
|
|
International car rental
|
(23
|
)
|
|
(13
|
)
|
|
(10
|
)
|
|
77
|
|
|||
|
Worldwide equipment rental
|
(62
|
)
|
|
(16
|
)
|
|
(46
|
)
|
|
288
|
|
|||
|
All other operations
|
(3
|
)
|
|
(4
|
)
|
|
1
|
|
|
(25
|
)
|
|||
|
Corporate
|
(47
|
)
|
|
(16
|
)
|
|
(31
|
)
|
|
194
|
|
|||
|
Total
|
$
|
(181
|
)
|
|
$
|
(151
|
)
|
|
$
|
(30
|
)
|
|
20
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
any claims, investigations or proceedings arising as a result of the restatement of our previously issued financial results;
|
|
•
|
our ability to remediate the material weaknesses in our internal controls over financial reporting described in Item 4 of this Report;
|
|
•
|
the effect of our proposed separation of HERC and ability to obtain the expected benefits of any related transaction;
|
|
•
|
levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets;
|
|
•
|
significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives;
|
|
•
|
an increase in our fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs;
|
|
•
|
occurrences that disrupt rental activity during our peak periods;
|
|
•
|
our ability to achieve and maintain cost savings and efficiencies and realize opportunities to increase productivity and profitability;
|
|
•
|
our ability to accurately estimate future levels of rental activity and adjust the size and mix of our fleet accordingly;
|
|
•
|
our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning equipment and to refinance our existing indebtedness;
|
|
•
|
our ability to integrate the car rental operations of Dollar Thrifty and realize operational efficiencies from the acquisition;
|
|
•
|
our ability to maintain access to third-party distribution channels, including current or favorable prices, commission structures and transaction volumes;
|
|
•
|
the operational and profitability impact of the divestitures that we agreed to undertake in order to secure regulatory approval for the acquisition of Dollar Thrifty;
|
|
•
|
an increase in our fleet costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles and equipment;
|
|
•
|
changes to our senior management team;
|
|
•
|
a major disruption in our communication or centralized information networks;
|
|
•
|
financial instability of the manufacturers of our vehicles and equipment, which could impact their ability to perform under agreements with us and/or their willingness or ability to make cars available to us or the rental car industry on commercially reasonable terms;
|
|
•
|
any impact on us from the actions of our franchisees, dealers and independent contractors;
|
|
•
|
our ability to maintain profitability during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease);
|
|
•
|
shortages of fuel and increases or volatility in fuel costs;
|
|
•
|
our ability to successfully integrate acquisitions and complete dispositions;
|
|
•
|
our ability to maintain favorable brand recognition;
|
|
•
|
costs and risks associated with litigation and investigations;
|
|
•
|
risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt and increases in interest rates or in our borrowing margins;
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
•
|
our ability to meet the financial and other covenants contained in our Senior Credit Facilities, our outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements;
|
|
•
|
changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on earnings;
|
|
•
|
changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect our operations, the cost thereof or applicable tax rates;
|
|
•
|
the effect of tangible and intangible asset impairment charges;
|
|
•
|
our exposure to uninsured claims in excess of historical levels;
|
|
•
|
fluctuations in interest rates and commodity prices;
|
|
•
|
our exposure to fluctuations in foreign exchange rates; and
|
|
•
|
other risks described from time to time in periodic and current reports that we file with the SEC.
|
|
•
|
Additional resources have been added to our management team
|
|
•
|
Chief Information Security Officer
|
|
•
|
Senior Vice President Finance
|
|
•
|
Vice President Revenue Management &Fleet Development
|
|
•
|
Vice President Compensation & Benefits
|
|
•
|
Vice President Communications
|
|
•
|
Vice President Marketing Communications
|
|
•
|
Vice President Specialty Sales
|
|
•
|
Vice President Inbound Sales
|
|
•
|
Vice President Customer Insight & Analytics
|
|
•
|
Vice President Financial Planning & Analysis
|
|
•
|
Vice President Insurance Risk & Claims Management
|
|
•
|
Town hall meetings held by our Chief Executive Officer and other members of our senior management team
|
|
•
|
Enhancements to our compliance and code of conduct trainings
|
|
•
|
Targeted training of field personnel in our non-fleet procurement process which includes the related Oracle ERP functionality
|
|
•
|
Reorganization of the Internal Audit function
|
|
•
|
Continued hiring of resources with an appropriate level of knowledge and experience
|
|
•
|
Co-sourcing arrangements with third party service providers
|
|
•
|
Enhancements to our risk assessment process
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program*
|
||||||
|
July 1, 2015–July 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,000,000,000
|
|
|
August 1, 2015–August 31, 2015
|
|
10,412,296
|
|
|
17.57
|
|
|
10,412,296
|
|
|
817,081,728
|
|
||
|
September 1, 2015–September 30, 2015
|
|
4,374,793
|
|
|
17.98
|
|
|
4,374,793
|
|
|
738,419,003
|
|
||
|
Total
|
|
14,787,089
|
|
|
$
|
17.69
|
|
|
14,787,089
|
|
|
|
||
|
(a)
|
Exhibits:
|
|
Date:
|
November 9, 2015
|
HERTZ GLOBAL HOLDINGS, INC.
(Registrant)
|
|
|
|
|
By:
|
/s/ THOMAS C. KENNEDY
|
|
|
|
|
Thomas C. Kennedy
Senior Executive Vice President and Chief Financial Officer
|
|
Exhibit
Number
|
Description
|
|
10.4.1
|
Hertz Global Holdings, Inc. Stock Incentive Plan*
|
|
31.1–31.2
|
Rule 13a-14(a)/15d-14(a) Certifications of Chief Executive Officer and Chief Financial Officer*
|
|
32.1–32.2
|
18 U.S.C. Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer*
|
|
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|