falsefalse--12-31--12-31Q1Q12020202000016578530000047129P1Y0350000003500000031000000310000000.010.010.010.011441534441001443080011001421245121001422790691000.010.041250.0550.0550.06250.0712565000000200000000.010.01000020000002000000<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-weight:bold;"></font><font style="font-family:Arial;font-size:10pt;font-weight:bold;">Goodwill and Intangible Assets</font><font style="font-family:Arial;font-size:10pt;"> </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">As a result of declines in revenue and profitability of the Company and a decline in the share price of Hertz Global's common stock which are related to the COVID-19 virus as described in </font><font style="font-family:Arial;font-size:10pt;">Note 1</font><font style="font-family:Arial;font-size:10pt;">, "</font><font style="font-family:Arial;font-size:10pt;">Background</font><font style="font-family:Arial;font-size:10pt;">," the Company tested the recoverability of its goodwill and indefinite-lived intangible assets as of March 31, 2020 as further described below.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;font-style:italic;font-weight:bold;">Goodwill</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">The Company performed a goodwill impairment analysis using the income approach, a measurement using level 3 inputs under the GAAP fair value hierarchy. In performing the impairment analysis, the Company leveraged long-term strategic plans, which are based on strategic initiatives for future profitability growth. The weighted average cost of capital used in the discounted cash flow model was calculated based upon the fair value of the Company's debt and stock price with a debt to equity ratio comparable to the vehicle rental car industry. The results of the Company's analysis indicated that there was an impairment of goodwill in its International Rental Car segment and recorded a charge of </font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">$2 million</font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;"> which is included in other (income) expense, net in its condensed consolidated statement of operations for the three months ended March 31, 2020.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;font-style:italic;font-weight:bold;">Intangible Assets</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">The Company performed an impairment analysis of its indefinite-lived intangible assets using [the relief from royalty method], a measurement using level 3 inputs under the GAAP fair value hierarchy. As a result of the analysis, the Company concluded that there was an impairment of certain technology-related intangibles in its corporate operations and recorded a charge of </font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">$0 million</font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;"> which is included in other (income) expense, net in its condensed consolidated statement of operations for the three months ended March 31, 2020. The impairment was largely due to a decrease in long-term revenue projections </font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;text-decoration:line-through;">[coupled with an increase in the weighted average cost of capital]</font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">. The carrying value of the technology-related intangibles as of March 31, 2020 is approximately </font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">$0 million</font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">, representing its estimated fair value. A change of 1 percentage point to the weighted average cost of capital assumption used in the impairment analysis could impact the impairment charge by approximately </font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">$0 million</font><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">.</font></div></div><div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-weight:bold;"></font><font style="font-family:Arial;font-size:10pt;font-weight:bold;">Subsequent Events</font><font style="font-family:Arial;font-size:10pt;font-weight:bold;"> </font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;background-color:#d9c6f9;">[OPEN.]</font></div></div> 0001657853 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
001-37665
 
61-1770902
Delaware
 
001-07541
 
13-1938568
(State or other jurisdiction of
incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
 
 
8501 Williams Road
 
 
 
 
Estero,
Florida
33928
 
 
 
 
239
301-7000
 
 
 
 
(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)
 
 
 
 
 
 
 
 
 
Not Applicable
 
 
 
 
(Former name, former address and
former fiscal year, if changed since last report.)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which Registered
Hertz Global Holdings, Inc.
 
Common Stock
par value $0.01 per share
 
HTZ
 
New York Stock Exchange
The Hertz Corporation
 
None
 
None
 
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Hertz Global Holdings, Inc.    Yes  No 
The Hertz Corporation    Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Hertz Global Holdings, Inc.    Yes  No 
The Hertz Corporation    Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Hertz Global Holdings, Inc.
Large accelerated filer
Accelerated filer 
Non-accelerated filer
 
Smaller reporting company 
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
The Hertz Corporation
Large accelerated filer 
Accelerated filer 
Non-accelerated filer
 
Smaller reporting company 
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Hertz Global Holdings, Inc.    Yes  No 
The Hertz Corporation    Yes  No 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
 
 
Class
 
Shares Outstanding as of
May 4, 2020
Hertz Global Holdings, Inc.
 
Common Stock,
par value $0.01 per share
 
142,285,475
The Hertz Corporation(1)
 
Common Stock,
par value $0.01 per share
 
100
 
 
 
 
 
(1)(100% owned by
Rental Car Intermediate Holdings, LLC)
 
 
 
 
 
 
 


Table of Contents
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

 
 
 
 
 
Page
 
 


Table of Contents
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION
ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Index

 
 
Page
Hertz Global Holdings, Inc. and Subsidiaries
 
The Hertz Corporation and Subsidiaries
 
Notes to the Condensed Consolidated Financial Statements
 


1


Table of Contents



HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
 
March 31,
2020
 
December 31,
2019
ASSETS
 
 
 
Cash and cash equivalents
$
1,017

 
$
865

Restricted cash and cash equivalents:
 
 
 
Vehicle
368

 
466

Non-vehicle
24

 
29

Total restricted cash and cash equivalents
392

 
495

Total cash, cash equivalents, restricted cash and restricted cash equivalents
1,409

 
1,360

Receivables:
 
 
 
Vehicle
1,286

 
791

Non-vehicle, net of allowance of $31 and $35, respectively
809

 
1,049

Total receivables, net
2,095

 
1,840

Prepaid expenses and other assets
1,121

 
689

Revenue earning vehicles:
 
 
 
Vehicles
17,646

 
17,085

Less: accumulated depreciation
(3,337
)
 
(3,296
)
Total revenue earning vehicles, net
14,309

 
13,789

Property and equipment, net
765

 
757

Operating lease right-of-use assets
1,832

 
1,871

Intangible assets, net
3,231

 
3,238

Goodwill
1,080

 
1,083

Total assets(a)
$
25,842

 
$
24,627

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Accounts payable:
 
 
 
Vehicle
$
443

 
$
289

Non-vehicle
555

 
654

Total accounts payable
998

 
943

Accrued liabilities
982

 
1,032

Accrued taxes, net
133

 
150

Debt:
 
 
 
Vehicle
14,438

 
13,368

Non-vehicle
4,316

 
3,721

Total debt
18,754

 
17,089

Operating lease liabilities
1,844

 
1,848

Self-insured liabilities
532

 
553

Deferred income taxes, net
1,108

 
1,124

Total liabilities(a)
24,351

 
22,739

Commitments and contingencies


 


Stockholders' equity:
 
 
 
Preferred stock, $0.01 par value, no shares issued and outstanding

 

Common stock, $0.01 par value, 144,308,001 and 144,153,444 shares issued, respectively and 142,279,069 and 142,124,512 shares outstanding, respectively
1

 
1

Additional paid-in capital
3,022

 
3,024

Accumulated deficit
(1,323
)
 
(967
)
Accumulated other comprehensive income (loss)
(228
)
 
(189
)
Treasury stock, at cost, 2,028,932 and 2,028,932 shares, respectively
(100
)
 
(100
)
Stockholders' equity attributable to Hertz Global
1,372

 
1,769

Noncontrolling interests
119

 
119

Total stockholders' equity
1,491

 
1,888

Total liabilities and stockholders' equity
$
25,842

 
$
24,627

(a)
Hertz Global Holdings, Inc.'s consolidated total assets as of March 31, 2020 and December 31, 2019 include total assets of variable interest entities (“VIEs”) of $1.1 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of March 31, 2020 and December 31, 2019 include total liabilities of VIEs of $981 million and $1.1 billion, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Special Purpose Entities" in Note 4, "Debt," and "767 Auto Leasing LLC" in Note 10, "Related Party Transactions," for further information.

The accompanying notes are an integral part of these financial statements.
2


Table of Contents


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share data)
 
Three Months Ended
March 31,
 
2020
 
2019
Revenues:
 
 
 
Worldwide vehicle rental
$
1,749

 
$
1,953

All other operations
174

 
154

Total revenues
1,923

 
2,107

Expenses:
 
 
 
Direct vehicle and operating
1,241

 
1,266

Depreciation of revenue earning vehicles and lease charges
677

 
592

Selling, general and administrative
208

 
234

Interest expense, net:
 
 
 
Vehicle
118

 
112

Non-vehicle
57

 
71

Total interest expense, net
175

 
183

Other (income) expense, net
(17
)
 
(19
)
Total expenses
2,284

 
2,256

Income (loss) before income taxes
(361
)
 
(149
)
Income tax (provision) benefit
4

 
1

Net income (loss)
(357
)
 
(148
)
Net (income) loss attributable to noncontrolling interests
1

 
1

Net income (loss) attributable to Hertz Global
$
(356
)
 
$
(147
)
Weighted-average shares outstanding:
 
 
 
Basic
142

 
96

Diluted
142

 
96

Earnings (loss) per share:
 
 
 
Basic earnings (loss) per share
$
(2.50
)
 
$
(1.54
)
Diluted earnings (loss) per share
$
(2.50
)
 
$
(1.54
)



The accompanying notes are an integral part of these financial statements.
3


Table of Contents


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
 
Three Months Ended
March 31,
 
2020
 
2019
Net income (loss)
$
(357
)
 
$
(148
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
(41
)
 
8

Net gain (loss) on defined benefit pension plans
1


(1
)
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans
1

 
1

Total other comprehensive income (loss) before income taxes
(39
)
 
8

Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans

 
(1
)
Total other comprehensive income (loss)
(39
)
 
7

Total comprehensive income (loss)
(396
)
 
(141
)
Comprehensive (income) loss attributable to noncontrolling interests
1

 
1

Comprehensive income (loss) attributable to Hertz Global
$
(395
)
 
$
(140
)


The accompanying notes are an integral part of these financial statements.
4


Table of Contents


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Unaudited
(In millions)
 
Preferred Stock
Shares
 
Common Stock Shares
 
Common Stock Amount
 
Additional
Paid-In Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury Stock Shares
 
Treasury Stock Amount
 
Stockholders'
Equity
Attributable to
Hertz Global
 
Non-
controlling Interests
 
Total Stockholders' Equity
Balance as of:
 
 
 
 
 
December 31, 2018

 
84

 
$
1

 
$
2,261

 
$
(909
)
 
$
(192
)
 
2

 
$
(100
)
 
$
1,061

 
$
59

 
$
1,120

Net income (loss)

 

 

 

 
(147
)
 

 

 

 
(147
)
 
(1
)
 
(148
)
Other comprehensive income (loss)

 

 

 

 

 
7

 

 

 
7

 

 
7

Net settlement on vesting of restricted stock

 

 

 
(2
)
 

 

 

 

 
(2
)
 

 
(2
)
Stock-based compensation charges

 

 

 
3

 

 

 

 

 
3

 

 
3

Contributions from noncontrolling interests

 

 

 

 

 

 

 

 

 
25

 
25

March 31, 2019

 
84

 
$
1

 
$
2,262

 
$
(1,056
)
 
$
(185
)
 
2

 
$
(100
)
 
$
922

 
$
83

 
$
1,005


 
Preferred Stock
Shares
 
Common Stock Shares
 
Common Stock Amount
 
Additional
Paid-In Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury Stock Shares
 
Treasury Stock Amount
 
Stockholders'
Equity
Attributable to
Hertz Global
 
Non-
controlling Interests
 
Total Stockholders' Equity
Balance as of:
 
 
 
 
 
December 31, 2019

 
142

 
$
1

 
$
3,024

 
$
(967
)
 
$
(189
)
 
2

 
$
(100
)
 
$
1,769

 
$
119

 
$
1,888

Net income (loss)

 

 

 

 
(356
)
 

 

 

 
(356
)
 
(1
)
 
(357
)
Other comprehensive income (loss)

 

 

 

 

 
(39
)
 

 

 
(39
)
 

 
(39
)
Net settlement on vesting of restricted stock

 

 

 
(2
)
 

 

 

 

 
(2
)
 

 
(2
)
Contributions from noncontrolling interests

 

 

 

 

 

 

 

 

 
1

 
1

March 31, 2020

 
142

 
$
1

 
$
3,022

 
$
(1,323
)
 
$
(228
)
 
2

 
$
(100
)
 
$
1,372

 
$
119

 
$
1,491




The accompanying notes are an integral part of these financial statements.
5


Table of Contents
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)


 
Three Months Ended
March 31,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(357
)
 
$
(148
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and reserves for revenue earning vehicles
733

 
644

Depreciation and amortization, non-vehicle
53

 
48

Amortization of deferred financing costs and debt discount (premium)
12

 
14

Stock-based compensation charges

 
3

Provision for receivables allowance
15

 
10

Deferred income taxes, net
(13
)
 
(4
)
(Gain) loss on marketable securities

 
(11
)
(Gain) loss on sale of non-vehicle capital assets
(21
)
 
(8
)
(Gain) loss on derivatives

 
(5
)
Other
4

 

Changes in assets and liabilities:
 
 
 
Non-vehicle receivables
226

 
(33
)
Prepaid expenses and other assets
(61
)
 
(55
)
Operating lease right-of-use assets
100

 
90

Non-vehicle accounts payable
(86
)
 
32

Accrued liabilities
(59
)
 
25

Accrued taxes, net
(14
)
 
10

Operating lease liabilities
(66
)
 
(94
)
Self-insured liabilities
(17
)
 
(4
)
Net cash provided by (used in) operating activities
449

 
514

Cash flows from investing activities:
 
 
 
Revenue earning vehicles expenditures
(4,346
)
 
(3,973
)
Proceeds from disposal of revenue earning vehicles
2,212

 
2,153

Non-vehicle capital asset expenditures
(59
)
 
(54
)
Proceeds from non-vehicle capital assets disposed of or to be disposed of
23

 
19

Sales of marketable securities
74

 

Other
(1
)
 

Net cash provided by (used in) investing activities
(2,097
)
 
(1,855
)

The accompanying notes are an integral part of these financial statements.
6


Table of Contents
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)


 
Three Months Ended
March 31,
 
2020
 
2019
Cash flows from financing activities:
 
 
 
Proceeds from issuance of vehicle debt
3,661

 
3,667

Repayments of vehicle debt
(2,538
)
 
(2,736
)
Proceeds from issuance of non-vehicle debt
1,440

 
341

Repayments of non-vehicle debt
(851
)
 
(344
)
Payment of financing costs
(9
)
 
(12
)
Contributions from noncontrolling interests

 
25

Other
(2
)
 
(2
)
Net cash provided by (used in) financing activities
1,701

 
939

Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
(4
)
 
(2
)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
49

 
(404
)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
1,360

 
1,410

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
$
1,409

 
$
1,006

 


 


Supplemental disclosures of cash flow information:
 
 
 
Cash paid during the period for:
 
 
 
Interest, net of amounts capitalized:
 
 
 
Vehicle
$
103

 
$
87

Non-vehicle
26

 
29

Income taxes, net of refunds
5

 
6

Supplemental disclosures of non-cash information:
 
 
 
Purchases of revenue earning vehicles included in accounts payable, net of incentives
$
200

 
$
431

Sales of revenue earning vehicles included in vehicle receivables
1,043

 
365

Purchases of non-vehicle capital assets included in accounts payable
32

 
45




The accompanying notes are an integral part of these financial statements.
7


Table of Contents



THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
 
March 31,
2020
 
December 31,
2019
ASSETS
 
 
 
Cash and cash equivalents
$
1,017

 
$
865

Restricted cash and cash equivalents:
 
 
 
Vehicle
368

 
466

Non-vehicle
24

 
29

Total restricted cash and cash equivalents
392

 
495

Total cash, cash equivalents, restricted cash and restricted cash equivalents
1,409

 
1,360

Receivables:
 
 
 
Vehicle
1,286

 
791

Non-vehicle, net of allowance of $31 and $35, respectively
809

 
1,049

Total receivables, net
2,095

 
1,840

Prepaid expenses and other assets
1,121

 
689

Revenue earning vehicles:
 
 
 
Vehicles
17,646

 
17,085

Less: accumulated depreciation
(3,337
)
 
(3,296
)
Total revenue earning vehicles, net
14,309

 
13,789

Property and equipment, net
765

 
757

Operating lease right-of-use assets
1,832

 
1,871

Intangible assets, net
3,231

 
3,238

Goodwill
1,080

 
1,083

Total assets(a)
$
25,842

 
$
24,627

LIABILITIES AND STOCKHOLDER'S EQUITY
 
 
 
Accounts payable:
 
 
 
Vehicle
$
443

 
$
289

Non-vehicle
555

 
654

Total accounts payable
998

 
943

Accrued liabilities
982

 
1,032

Accrued taxes, net
133

 
150

Debt:
 
 
 
Vehicle
14,438

 
13,368

Non-vehicle
4,316

 
3,721

Total debt
18,754

 
17,089

Operating lease liabilities
1,844

 
1,848

Self-insured liabilities
532

 
553

Deferred income taxes, net
1,112

 
1,128

Total liabilities(a)
24,355

 
22,743

Commitments and contingencies


 


Stockholder's equity:
 
 
 
Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively

 

Additional paid-in capital
3,955

 
3,955

Due from affiliate
(67
)
 
(64
)
Accumulated deficit
(2,292
)
 
(1,937
)
Accumulated other comprehensive income (loss)
(228
)
 
(189
)
Stockholder's equity attributable to Hertz
1,368

 
1,765

Noncontrolling interests
119

 
119

Total stockholder's equity
1,487

 
1,884

Total liabilities and stockholder's equity
$
25,842

 
$
24,627

(a)
The Hertz Corporation's consolidated total assets as of March 31, 2020 and December 31, 2019 include total assets of variable interest entities (“VIEs”) of $1.1 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of March 31, 2020 and December 31, 2019 include total liabilities of VIEs of $981 million and $1.1 billion, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Special Purpose Entities" in Note 4, "Debt," and "767 Auto Leasing LLC" in Note 10, "Related Party Transactions," for further information.

The accompanying notes are an integral part of these financial statements.
8


Table of Contents


THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions)
 
Three Months Ended
March 31,
 
2020
 
2019
Revenues:
 
 
 
Worldwide vehicle rental
$
1,749

 
$
1,953

All other operations
174

 
154

Total revenues
1,923

 
2,107

Expenses:
 

 
 

Direct vehicle and operating
1,241

 
1,266

Depreciation of revenue earning vehicles and lease charges
677

 
592

Selling, general and administrative
208

 
234

Interest expense, net:
 
 
 
Vehicle
118

 
112

Non-vehicle
55

 
69

Total interest expense, net
173

 
181

Other (income) expense, net
(17
)
 
(19
)
Total expenses
2,282

 
2,254

Income (loss) before income taxes
(359
)
 
(147
)
Income tax (provision) benefit
3

 
1

Net income (loss)
(356
)
 
(146
)
Net (income) loss attributable to noncontrolling interests
1

 
1

Net income (loss) attributable to Hertz
$
(355
)
 
$
(145
)


The accompanying notes are an integral part of these financial statements.
9


Table of Contents


THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
 
Three Months Ended
March 31,
 
2020
 
2019
Net income (loss)
$
(356
)
 
$
(146
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustments
(41
)
 
8

Net gain (loss) on defined benefit pension plans
1

 
(1
)
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans
1

 
1

Total other comprehensive income (loss) before income taxes
(39
)
 
8

Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans

 
(1
)
Total other comprehensive income (loss)
(39
)
 
7

Total comprehensive income (loss)
(395
)
 
(139
)
Comprehensive (income) loss attributable to noncontrolling interests
1

 
1

Comprehensive income (loss) attributable to Hertz
$
(394
)
 
$
(138
)

The accompanying notes are an integral part of these financial statements.
10


Table of Contents


THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Unaudited
(In millions, except share data)
 
Common Stock Shares
 
Common Stock Amount
 
Additional
Paid-In Capital
 
Due From Affiliate
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Stockholder's Equity Attributable to Hertz
 
Noncontrolling Interests
 
Total Stockholder's Equity
Balance as of:
 
 
 
 
 
 
 
December 31, 2018
100

 
$

 
$
3,187

 
$
(52
)
 
$
(1,884
)
 
$
(192
)
 
$
1,059

 
$
59

 
$
1,118

Net income (loss)

 

 

 

 
(145
)
 

 
(145
)
 
(1
)
 
(146
)
Due from Hertz Holdings

 

 

 
(4
)
 

 

 
(4
)
 

 
(4
)
Other comprehensive income (loss)

 

 

 

 

 
7

 
7

 

 
7

Stock-based compensation charges

 

 
3

 

 

 

 
3

 

 
3

Contributions from noncontrolling interests

 

 

 

 

 

 

 
25

 
25

March 31, 2019
100

 
$

 
$
3,190

 
$
(56
)
 
$
(2,029
)
 
$
(185
)
 
$
920

 
$
83

 
$
1,003


 
Common Stock Shares
 
Common Stock Amount
 
Additional
Paid-In Capital
 
Due From Affiliate
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Stockholder's Equity Attributable to Hertz
 
Noncontrolling Interests
 
Total Stockholder's Equity
Balance as of:
 
 
 
 
 
 
 
December 31, 2019
100

 
$

 
$
3,955

 
$
(64
)
 
$
(1,937
)
 
$
(189
)
 
$
1,765

 
$
119

 
$
1,884

Net income (loss)

 

 

 

 
(355
)
 

 
(355
)
 
(1
)
 
(356
)
Due from Hertz Holdings

 

 

 
(3
)
 

 

 
(3
)
 

 
(3
)
Other comprehensive income (loss)

 

 

 

 

 
(39
)
 
(39
)
 

 
(39
)
Contributions from noncontrolling interests

 

 

 

 

 

 

 
1

 
1

March 31, 2020
100

 
$

 
$
3,955

 
$
(67
)
 
$
(2,292
)
 
$
(228
)
 
$
1,368

 
$
119

 
$
1,487




The accompanying notes are an integral part of these financial statements.
11


Table of Contents
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)

 
Three Months Ended
March 31,
 
2020
 
2019
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(356
)
 
$
(146
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and reserves for revenue earning vehicles
733

 
644

Depreciation and amortization, non-vehicle
53

 
48

Amortization of deferred financing costs and debt discount (premium)
12