Restatement

During the preparation of the Company's Form 10-Q for the third quarter 2015, an error related to the depreciation of vehicles sold through the Company's retail car sales locations was identified that impacted the financial statements filed in the Company's Form 10-Q for the second quarter 2015 and had an immaterial impact on the first quarter 2015. As a result of this error, our depreciation expense during the three and six months ended June 30, 2015 was overstated by $21 million and $18 million, respectively. The impact of this error to the three months ended March 31, 2015 was a $3 million understatement of depreciation expense which we deemed immaterial and therefore has been reflected as an out of period adjustment in our restated results for the three months ended June 30, 2015. In addition to the depreciation expense error, in this amendment we have corrected for an error in direct operating expenses that resulted in a $3 million overstatement of direct operating expenses for the three and six months ended June 30, 2015. The correction of the errors resulted in an increase of $21 million to pre-tax income and $13 million to net income (loss) for the three and six months ended June 30, 2015. Management identified errors that impacted the second quarter 2015 balance sheet classification of tax accounts. As a result, as of June 30, 2015, prepaid expenses and other assets, deferred taxes on income, net, and accrued taxes, net, were understated by $26 million, $5 million and $21 million, respectively.

The impact of the adjustments to previously reported financial statements is shown in the following tables.



CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share data)
	June 30, 2015
	As Previously Reported			Restatement Adjustment		As Restated
ASSETS
Cash and cash equivalents	$	537		$	—	$	537
Restricted cash and cash equivalents	421			—		421
Receivables, net of allowance of $73 and $67, respectively	1,390			—		1,390
Due from affiliates	102			—		102
Inventories, net	75			—		75
Prepaid expenses and other assets	938			26		964
Revenue earning equipment:
Cars	16,393			—		16,393
Less accumulated depreciation - cars	(3,004		)	18		(2,986		)
Equipment	3,781			—		3,781
Less accumulated depreciation - equipment	(1,174		)	—		(1,174		)
Revenue earning equipment, net	15,996			18		16,014
Property and other equipment:
Land, buildings and leasehold improvements	1,364			—		1,364
Service equipment and other	1,072			3		1,075
Less accumulated depreciation	(1,129		)	—		(1,129		)
Property and other equipment, net	1,307			3		1,310
Other intangible assets, net	3,945			—		3,945
Goodwill	1,360			—		1,360
Total assets	$	26,071		$	47	$	26,118
LIABILITIES AND EQUITY
Accounts payable	$	1,431		$	—	$	1,431
Accrued liabilities	1,129			—		1,129
Accrued taxes, net	102			21		123
Debt	17,682			—		17,682
Public liability and property damage	384			—		384
Deferred taxes on income, net	2,920			13		2,933
Total liabilities	23,648			34		23,682
Commitments and contingencies
Equity:
Common Stock, $0.01 par value, 3,000 shares authorized, 100 shares issued and outstanding	—			—		—
Additional paid-in capital	3,575			—		3,575
Accumulated deficit	(1,002		)	13		(989		)
Accumulated other comprehensive income (loss)	(150		)	—		(150		)
Total equity	2,423			13		2,436
Total liabilities and equity	$	26,071		$	47	$	26,118



CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions)
	Three Months Ended June 30, 2015
	As Previously Reported			Restatement Adjustment			As Restated
Revenues:
Worldwide car rental	$	2,171		$	—		$	2,171
Worldwide equipment rental	375			—			375
All other operations	146			—			146
Total revenues	2,692			—			2,692
Expenses:
Direct operating	1,505			(3		)	1,502
Depreciation of revenue earning equipment and lease charges, net	696			(18		)	678
Selling, general and administrative	296			—			296
Interest expense, net	155			—			155
Other (income) expense, net	(10		)	—			(10		)
Total expenses	2,642			(21		)	2,621
Income (loss) before income taxes	50			21			71
(Provision) benefit for taxes on income (loss)	(27		)	(8		)	(35		)
Net income (loss)	$	23		$	13		$	36



CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions)
	Six Months Ended June 30, 2015
	As Previously Reported			Restatement Adjustment			As Restated
Revenues:
Worldwide car rental	$	4,127		$	—		$	4,127
Worldwide equipment rental	730			—			730
All other operations	288			—			288
Total revenues	5,145			—			5,145
Expenses:
Direct operating	2,913			(3		)	2,910
Depreciation of revenue earning equipment and lease charges, net	1,403			(18		)	1,385
Selling, general and administrative	560			—			560
Interest expense, net	308			—			308
Other (income) expense, net	(4		)	—			(4		)
Total expenses	5,180			(21		)	5,159
Income (loss) before income taxes	(35		)	21			(14		)
(Provision) benefit for taxes on income (loss)	(11		)	(8		)	(19		)
Net income (loss)	$	(46	)	$	13		$	(33	)



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
	Six Months Ended June 30, 2015
	As Previously Reported			Restatement Adjustment			As Restated
Cash flows from operating activities
Net income (loss)	$	(46	)	$	13		$	(33	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of revenue earning equipment, net	1,367			(18		)	1,349
Depreciation and amortization, non-fleet	169			—			169
Amortization and write-off of deferred financing costs	31			—			31
Amortization and write-off of debt discount (premium)	(2		)	—			(2		)
Stock-based compensation charges	9			—			9
Provision for receivables allowance	35			—			35
Deferred taxes on income	11			8			19
Impairment charges and asset write-downs	20			—			20
Other	(4		)	(3		)	(7		)
Changes in assets and liabilities



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Receivables	(164		)	—			(164		)
Inventories, prepaid expenses and other assets	(42		)	(26		)	(68		)
Accounts payable	57			—			57
Accrued liabilities	25			—			25
Accrued taxes	(23		)	26			3
Public liability and property damage	10			—			10
Net cash provided by (used in) operating activities	1,453			—			1,453
Cash flows from investing activities
Net change in restricted cash and cash equivalents	144			—			144
Revenue earning equipment expenditures	(7,991		)	—			(7,991		)
Proceeds from disposal of revenue earning equipment	4,909			—			4,909
Capital asset expenditures, non-fleet	(170		)	—			(170		)
Proceeds from disposal of property and other equipment	47			—			47
Acquisitions, net of cash acquired	(95		)	—			(95		)
Advances to Hertz Global Holdings, Inc.	(6		)	—			(6		)
Repayments from Hertz Global Holdings, Inc.	—			—			—
Net cash provided by (used in) investing activities	(3,162		)	—			(3,162		)
Cash flows from financing activities
Proceeds from issuance of long-term debt	1,069			—			1,069
Repayments of long-term debt	(1,032		)	—			(1,032		)
Short-term borrowings:
Proceeds	383			—			383
Payments	(258		)	—			(258		)
Proceeds under the revolving lines of credit	5,307			—			5,307
Payments under the revolving lines of credit	(3,688		)	—			(3,688		)
Payment of financing costs	(8		)	—			(8		)
Other	—			—			—
Net cash provided by (used in) financing activities	1,773			—			1,773
Effect of foreign exchange rate changes on cash and cash equivalents	(17		)	—			(17		)
Net increase (decrease) in cash and cash equivalents during the period	47			—			47
Cash and cash equivalents at beginning of period	490			—			490
Cash and cash equivalents at end of period	$	537		$	—		$	537