Guarantor and Non-Guarantor Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2012

Guarantor and Non-Guarantor Condensed Consolidating Financial Statements

Guarantor and Non-Guarantor Condensed Consolidating Financial Statements

Note 16—Guarantor and Non-Guarantor Condensed Consolidating Financial Statements

The following condensed consolidating financial information presents the Condensed Consolidating Balance Sheets as of March 31, 2012 and December 31, 2011 and the Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) for the three month periods ended March 31, 2012 and 2011 and Statements of Cash Flows for the three months ended March 31, 2012 and 2011, of (a) The Hertz Corporation, ("the Company" or "the Parent"); (b) the Parent's subsidiaries that guarantee the Parent's indebtedness, or the Guarantor Subsidiaries; (c) the Parent's subsidiaries that do not guarantee the Parent's indebtedness, or the Non-Guarantor Subsidiaries; (d) elimination entries necessary to consolidate the Parent with the Guarantor Subsidiaries and Non-Guarantor Subsidiaries; and of (e) the Company on a consolidated basis.

Investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the Guarantor Subsidiaries have not been provided as management believes the following information is sufficient, as the Guarantor Subsidiaries are 100% owned by the Parent and all guarantees are full and unconditional and joint and several. Additionally, substantially all of the assets of the Guarantor Subsidiaries are pledged under the Senior Credit Facilities, and consequently will not be available to satisfy the claims of our general creditors.

CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2012
(In Thousands of Dollars)

	Parent (The Hertz Corporation)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			The Hertz Corporation & Subsidiaries
ASSETS
Cash and cash equivalents	$	153,037	$	14,186	$	427,363	$	—		$	594,586
Restricted cash and cash equivalents		57,554		22,484		131,834		—			211,872
Receivables, less allowance for doubtful accounts		397,378		231,125		770,198		—			1,398,701
Due from Hertz affiliate		735,248		74,447		1,181,337		(1,977,891	)		13,141
Inventories, at lower cost or market		28,938		32,346		38,243		—			99,527
Prepaid expenses and other assets		2,220,811		28,667		118,480		(1,964,446	)		403,512
Revenue earning equipment, net		126,440		1,563,977		9,574,754		—			11,265,171
Property and equipment, net		836,055		179,530		250,339		—			1,265,924
Investment in subsidiaries, net		4,495,272		471,459		—		(4,966,731	)		—
Other intangible assets, net		89,661		2,397,731		76,830		—			2,564,222
Goodwill		100,221		151,747		219,462					471,430
Total assets	$	9,240,615	$	5,167,699	$	12,788,840	$	(8,909,068	)	$	18,288,086
LIABILITIES AND EQUITY
Due to Hertz affiliate	$	1,250,610	$	438,146	$	289,135	$	(1,977,891	)	$	—
Accounts payable		61,373		198,910		1,060,522		—			1,320,805
Accrued liabilities		756,439		152,670		294,016		—			1,203,125
Accrued taxes		68,384		150,592		86,289		(136,453	)		168,812
Debt		4,376,031		3,098		6,631,345		—			11,010,474
Public liability and property damage		106,057		16,914		158,076		—			281,047
Deferred taxes on income		—		1,465,307		2,044,768		(1,827,993	)		1,682,082
Total liabilities		6,618,894		2,425,637		10,564,151		(3,942,337	)		15,666,345
Equity:
The Hertz Corporation and Subsidiaries stockholder's equity		2,621,721		2,742,062		2,224,669		(4,966,731	)		2,621,721
Noncontrolling interest		—		—		20		—			20
Total equity		2,621,721		2,742,062		2,224,689		(4,966,731	)		2,621,741
Total liabilities and equity	$	9,240,615	$	5,167,699	$	12,788,840	$	(8,909,068	)	$	18,288,086

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2011
(In Thousands of Dollars)

	Parent (The Hertz Corporation)		Guarantor Subsidiaries		Non- Guarantor Subsidiaries			Eliminations			The Hertz Corporation & Subsidiaries
ASSETS
Cash and cash equivalents	$	565,002	$	7,410	$	358,796		$	—		$	931,208
Restricted cash and cash equivalents		44,663		28,130		235,246			—			308,039
Receivables, less allowance for doubtful accounts		297,292		226,143		1,092,947			—			1,616,382
Due from Hertz affiliate		655,411		78,660		1,181,387			(1,915,458	)		—
Inventories, at lower cost or market		22,440		27,505		34,033			—			83,978
Prepaid expenses and other assets		2,088,579		33,432		136,731			(1,842,608	)		416,134
Revenue earning equipment, net		167,304		1,505,867		8,432,238			—			10,105,409
Property and equipment, net		824,381		178,399		249,074			—			1,251,854
Investment in subsidiaries, net		4,413,289		460,201		—			(4,873,490	)		—
Other intangible assets, net		94,682		2,387,017		80,535			—			2,562,234
Goodwill		100,221		74,738		217,135			—			392,094
Total assets	$	9,273,264	$	5,007,502	$	12,018,122		$	(8,631,556	)	$	17,667,332
LIABILITIES AND EQUITY
Due to Hertz affiliate	$	1,251,347	$	268,026	$	396,497		$	(1,915,458	)	$	412
Accounts payable		188,695		164,989		543,805			—			897,489
Accrued liabilities		607,673		212,361		306,304			—			1,126,338
Accrued taxes		54,559		146,682		(26,385	)		(11,872	)		162,984
Debt		4,434,274		4,237		6,469,338			—			10,907,849
Public liability and property damage		107,881		16,618		157,035			—			281,534
Deferred taxes on income		—		1,445,856		2,046,752			(1,830,736	)		1,661,872
Total liabilities		6,644,429		2,258,769		9,893,346			(3,758,066	)		15,038,478
Equity:
The Hertz Corporation and Subsidiaries stockholder's equity		2,628,835		2,748,733		2,124,757			(4,873,490	)		2,628,835
Noncontrolling interest		—		—		19			—			19
Total equity		2,628,835		2,748,733		2,124,776			(4,873,490	)		2,628,854
Total liabilities and equity	$	9,273,264	$	5,007,502	$	12,018,122		$	(8,631,556	)	$	17,667,332

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2012
(In Thousands of Dollars)

	Parent (The Hertz Corporation)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			The Hertz Corporation & Subsidiaries
Total revenues	$	967,967		$	263,525		$	1,287,491		$	(558,058	)	$	1,960,925
Expenses:
Direct operating		571,851			166,762			376,534			—			1,115,147
Depreciation of revenue earning equipment		538,717			56,786			476,672			(558,058	)		514,117
Selling, general and administrative		104,123			26,433			77,180			—			207,736
Interest expense		63,637			11,919			73,933			—			149,489
Interest income		(113	)		(157	)		(822	)		—			(1,092	)
Other (income) expense, net		—			(4	)		(453	)		—			(457	)
Total expenses		1,278,215			261,739			1,003,044			(558,058	)		1,984,940
Income (loss) before income taxes and equity in earnings (losses) of subsidiaries		(310,248	)		1,786			284,447			—			(24,015	)
(Provision) benefit for taxes on income		111,243			(398	)		(135,071	)		—			(24,226	)
Equity in earnings (losses) of subsidiaries (net of tax)		150,764			11,256			—			(162,020	)		—
Net income (loss)	$	(48,241	)	$	12,644		$	149,376		$	(162,020	)	$	(48,241	)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2011
(In Thousands of Dollars)

	Parent (The Hertz Corporation)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			The Hertz Corporation & Subsidiaries
Total revenues	$	930,353		$	218,869		$	1,207,626		$	(576,845	)	$	1,780,003
Expenses:
Direct operating		556,178			140,855			376,632			—			1,073,665
Depreciation of revenue earning equipment		465,685			58,576			488,673			(576,845	)		436,089
Selling, general and administrative		88,180			19,771			74,239			—			182,190
Interest expense		104,484			7,156			73,121			—			184,761
Interest income		(358	)		(1	)		(1,496	)		—			(1,855	)
Other (income) expense, net		51,742			(9	)		143			—			51,876
Total expenses		1,265,911			226,348			1,011,312			(576,845	)		1,926,726
Income (loss) before income taxes, noncontrolling interest and equity in earnings (losses) of subsidiaries		(335,558	)		(7,479	)		196,314			—			(146,723	)
(Provision) benefit for taxes on income (loss)		106,725			2,399			(81,695	)		—			27,429
Equity in earnings (losses) of subsidiaries (net of tax)		105,866			(957	)		—			(104,909	)		—
Net income (loss)		(122,967	)		(6,037	)		114,619			(104,909	)		(119,294	)
Less: Net income attributable to noncontrolling interest		—			—			(3,673	)		—			(3,673	)
Net income (loss) attributable to The Hertz Corporation and Subsidiaries' common stockholder	$	(122,967	)	$	(6,037	)	$	110,946		$	(104,909	)	$	(122,967	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended March 31, 2012
(In Thousands of Dollars)

	Parent (The Hertz Corporation)			Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminations			The Hertz Corporation & Subsidiaries
Net income (loss)	$	(48,241	)	$	12,644	$	149,376	$	(162,020	)	$	(48,241	)
Other comprehensive income (net of tax)		32,388			—		29,262		(29,262	)		32,338
Comprehensive income (loss)	$	(15,903	)	$	12,644	$	178,638	$	(191,282	)	$	(15,903	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended March 31, 2011
(In Thousands of Dollars)

	Parent (The Hertz Corporation)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			The Hertz Corporation & Subsidiaries
Net income (loss)	$	(122,967	)	$	(6,037	)	$	114,619		$	(104,909	)	$	(119,294	)
Other comprehensive income, net of tax		31,050			—			42,608			(42,608	)		31,050
Comprehensive income (loss)		(91,917	)		(6,037	)		157,227			(147,517	)		(88,244	)
Less: Comprehensive income attributable to noncontrolling interest		—			—			(3,673	)		—			(3,673	)
Comprehensive income (loss) attributable to The Hertz Corporation and Subsidiaries' common stockholder	$	(91,917	)	$	(6,037	)	$	153,554		$	(147,517	)	$	(91,917	)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2012
(In Thousands of Dollars)

	Parent (The Hertz Corporation)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			The Hertz Corporation & Subsidiaries
Net cash provided by (used in) operating activities	$	(85,386	)	$	210,347		$	526,210		$	(159,137	)	$	492,034
Cash flows from investing activities:
Net change in restricted cash and cash equivalents		(12,892	)		5,647			104,884			—			97,639
Revenue earning equipment expenditures		(44,339	)		(132,572	)		(2,471,784	)		—			(2,648,695	)
Proceeds from disposal of revenue earning equipment		32,664			88,336			1,888,336			—			2,009,336
Property and equipment expenditures		(39,489	)		(19,438	)		(15,295	)		—			(74,222	)
Proceeds from disposal of property and equipment		39,597			3,228			4,806			—			47,631
Capital contributions to subsidiaries		(1,362,719	)		—			—			1,362,719			—
Return of capital from subsidiaries		1,340,884			—			—			(1,340,884	)		—
Acquisitions, net of acquired		—			(147,314	)		—			—			(147,314	)
Loan to Parent from Non-Guarantor		—			—			165,110			(165,110	)		—
Other investing activities		—			—			(140	)		—			(140	)
Net cash used in investing activities		(46,294	)		(202,113	)		(324,083	)		(143,275	)		(715,765	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		260,000			—			4,599			—			264,599
Payment of long-term debt		(451,104	)		(4	)		(2,171	)		—			(453,279	)
Short-term borrowings:
Proceeds		—			—			40,650			—			40,650
Payments		(14,949	)		—			(228,327	)		—			(243,276	)
Proceeds (payments) under the revolving lines of credit, net		145,000			(1,135	)		181,382			—			325,247
Purchase of noncontrolling interest		(38,000	)		—			—			—			(38,000	)
Capital contributions received from parent		—			—			1,362,719			(1,362,719	)		—
Payment of dividends and return of capital		—			—			(1,500,021	)		1,500,021			—
Loan from Hertz Global Holdings, Inc.		(165,110	)		—			—			165,110			—
Proceeds from employee stock purchase plan		985			—			—			—			985
Loan from Hertz Global Holdings, Inc.		(13,553	)		—			—			—			(13,553	)
Payment of financing costs		(3,554	)		(319	)		(344	)		—			(4,217	)
Net cash provided by (used in) financing activities		(280,285	)		(1,458	)		(141,513	)		302,412			(120,844	)
Effect of foreign exchange rate changes on cash and cash equivalents		—			—			7,953			—			7,953
Net change in cash and cash equivalents during the period		(411,965	)		6,776			68,567			—			(336,622	)
Cash and cash equivalents at beginning of period		565,002			7,410			358,796			—			931,208
Cash and cash equivalents at end of period	$	153,037		$	14,186		$	427,363		$	—		$	594,586

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 2011
(In Thousands of Dollars)

	Parent (The Hertz Corporation)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			The Hertz Corporation & Subsidiaries
Net cash provided by (used in) operating activities	$	(220,503	)	$	119,262		$	381,670		$	(114,560	)	$	165,869
Cash flows from investing activities:
Net change in restricted cash and cash equivalents		(2,266	)		12,798			10,079			—			20,611
Revenue earning equipment expenditures		(39,684	)		(155,822	)		(1,768,308	)		—			(1,963,814	)
Proceeds from disposal of revenue earning equipment		31,398			42,768			1,615,993			—			1,690,159
Property and equipment expenditures		(33,564	)		(7,449	)		(15,757	)		—			(56,770	)
Proceeds from disposal of property and equipment		4,446			1,287			8,718			—			14,451
Capital contributions to subsidiaries		(1,172,700	)		—			—			1,172,700			—
Return of capital from subsidiaries		1,250,440			—			—			(1,250,440	)		—
Acquisitions, net of cash acquired		—			—			(9,774	)		—			(9,774	)
Other investing activities		—			—			1,192			—			1,192
Net cash provided by (used in) investing activities		38,070			(106,418	)		(157,857	)		(77,740	)		(303,945	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		2,425,948			—			3,508			—			2,429,456
Payment of long-term debt		(3,095,542	)		(3	)		(43,330	)		—			(3,138,875	)
Short-term borrowings:
Proceeds		—			—			67,155			—			67,155
Repayments		(1,551	)		—			(223,751	)		—			(225,302	)
Proceeds (payments) under the revolving lines of credit, net		(14,128	)		(2,095	)		64,151			—			47,928
Capital contributions received from parent		—			—			1,172,700			(1,172,700	)		—
Payment of dividends and return of capital		—			—			(1,365,000	)		1,365,000			—
Proceeds from employee stock purchase plan		871			—			—			—			871
Loan from Hertz Global Holdings, Inc.		(9,016	)		—			—			—			(9,016	)
Payment of financing costs		(62,641	)		—			(1,450	)		—			(64,091	)
Net cash provided by (used in) financing activities		(756,059	)		(2,098	)		(326,017	)		192,300			(891,874	)
Effect of foreign exchange rate changes on cash and cash equivalents		—			—			21,687			—			21,687
Net change in cash and cash equivalents during the period		(938,492	)		10,746			(80,517	)		—			(1,008,263	)
Cash and cash equivalents at beginning of period		1,754,378			5,180			614,448			—			2,374,006
Cash and cash equivalents at end of period	$	815,886		$	15,926		$	533,931		$	—		$	1,365,743