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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hertz Global Holdings Inc | NASDAQ:HTZ | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.32 | 6.61% | 5.16 | 5.14 | 5.17 | 5.2256 | 4.87 | 4.93 | 9,751,552 | 00:45:51 |
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2016
|
|
OR
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
61-1770902
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
x
|
Smaller reporting company
|
o
|
|
|
|
|
(Do not check if a smaller
reporting company) |
|
|
|
Class
|
|
Shares Outstanding at
|
August 1, 2016
|
Common Stock, par value $0.01 per share
|
|
84,985,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
||
|
||
|
||
|
||
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||
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||
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||
|
||
|
June 30,
2016 |
|
December 31, 2015
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,285
|
|
|
$
|
474
|
|
Restricted cash and cash equivalents:
|
|
|
|
||||
Vehicle
|
272
|
|
|
289
|
|
||
Non-vehicle
|
46
|
|
|
44
|
|
||
Total restricted cash and cash equivalents
|
318
|
|
|
333
|
|
||
Receivables:
|
|
|
|
||||
Vehicle
|
480
|
|
|
1,137
|
|
||
Non-vehicle, net of allowance of $45 and $36, respectively
|
843
|
|
|
649
|
|
||
Total receivables, net
|
1,323
|
|
|
1,786
|
|
||
Inventories, net
|
43
|
|
|
29
|
|
||
Prepaid expenses and other assets
|
594
|
|
|
966
|
|
||
Revenue earning vehicles:
|
|
|
|
||||
Vehicles
|
15,418
|
|
|
13,441
|
|
||
Less accumulated depreciation
|
(2,609
|
)
|
|
(2,695
|
)
|
||
Total revenue earning vehicles, net
|
12,809
|
|
|
10,746
|
|
||
Property and equipment:
|
|
|
|
||||
Land, buildings and leasehold improvements
|
1,152
|
|
|
1,171
|
|
||
Service equipment and other
|
758
|
|
|
809
|
|
||
Less accumulated depreciation
|
(998
|
)
|
|
(978
|
)
|
||
Total property and equipment, net
|
912
|
|
|
1,002
|
|
||
Other intangible assets, net
|
3,479
|
|
|
3,522
|
|
||
Goodwill
|
1,257
|
|
|
1,261
|
|
||
Assets of discontinued operations
|
—
|
|
|
3,395
|
|
||
Total assets
|
$
|
22,020
|
|
|
$
|
23,514
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Accounts payable:
|
|
|
|
||||
Vehicle
|
$
|
647
|
|
|
$
|
207
|
|
Non-vehicle
|
592
|
|
|
559
|
|
||
Total accounts payable
|
1,239
|
|
|
766
|
|
||
Accrued liabilities
|
1,037
|
|
|
1,035
|
|
||
Accrued taxes, net
|
179
|
|
|
128
|
|
||
Debt:
|
|
|
|
||||
Vehicle
|
10,801
|
|
|
9,823
|
|
||
Non-vehicle
|
4,591
|
|
|
5,947
|
|
||
Total debt
|
15,392
|
|
|
15,770
|
|
||
Public liability and property damage
|
410
|
|
|
394
|
|
||
Deferred taxes on income, net
|
2,154
|
|
|
2,168
|
|
||
Liabilities of discontinued operations
|
—
|
|
|
1,234
|
|
||
Total liabilities
|
20,411
|
|
|
21,495
|
|
||
Commitments and contingencies
|
|
|
|
||||
Equity:
|
|
|
|
||||
Preferred Stock, $0.01 par value, no shares issued and outstanding
|
|
|
|
—
|
|
||
Common Stock, $0.01 par value, 85 and 464 shares issued and 85 and 423 shares outstanding
|
1
|
|
|
4
|
|
||
Additional paid-in capital
|
2,213
|
|
|
3,343
|
|
||
Accumulated deficit
|
(484
|
)
|
|
(391
|
)
|
||
Accumulated other comprehensive income (loss)
|
(121
|
)
|
|
(245
|
)
|
||
|
1,609
|
|
|
2,711
|
|
||
Treasury Stock, at cost, 0 shares and 41 shares
|
—
|
|
|
(692
|
)
|
||
Total equity
|
1,609
|
|
|
2,019
|
|
||
Total liabilities and equity
|
$
|
22,020
|
|
|
$
|
23,514
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Worldwide vehicle rental
|
$
|
2,124
|
|
|
$
|
2,171
|
|
|
$
|
3,963
|
|
|
$
|
4,127
|
|
All other operations
|
146
|
|
|
146
|
|
|
290
|
|
|
288
|
|
||||
Total revenues
|
2,270
|
|
|
2,317
|
|
|
4,253
|
|
|
4,415
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Direct vehicle and operating
|
1,267
|
|
|
1,290
|
|
|
2,425
|
|
|
2,492
|
|
||||
Depreciation of revenue earning vehicles and lease charges, net
|
629
|
|
|
597
|
|
|
1,245
|
|
|
1,228
|
|
||||
Selling, general and administrative
|
234
|
|
|
251
|
|
|
459
|
|
|
471
|
|
||||
Interest expense, net:
|
|
|
|
|
|
|
|
||||||||
Vehicle
|
72
|
|
|
62
|
|
|
140
|
|
|
123
|
|
||||
Non-vehicle
|
102
|
|
|
87
|
|
|
185
|
|
|
173
|
|
||||
Total interest expense, net
|
174
|
|
|
149
|
|
|
325
|
|
|
296
|
|
||||
Other (income) expense, net
|
1
|
|
|
(8
|
)
|
|
(89
|
)
|
|
(1
|
)
|
||||
Total expenses
|
2,305
|
|
|
2,279
|
|
|
4,365
|
|
|
4,486
|
|
||||
Income (loss) from continuing operations before income taxes
|
(35
|
)
|
|
38
|
|
|
(112
|
)
|
|
(71
|
)
|
||||
(Provision) benefit for taxes on income (loss) of continuing operations
|
7
|
|
|
(25
|
)
|
|
32
|
|
|
6
|
|
||||
Net income (loss) from continuing operations
|
(28
|
)
|
|
13
|
|
|
(80
|
)
|
|
(65
|
)
|
||||
Net income (loss) from discontinued operations
|
(15
|
)
|
|
23
|
|
|
(13
|
)
|
|
31
|
|
||||
Net income (loss)
|
$
|
(43
|
)
|
|
$
|
36
|
|
|
$
|
(93
|
)
|
|
$
|
(34
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
85
|
|
|
92
|
|
|
85
|
|
|
92
|
|
||||
Diluted
|
85
|
|
|
92
|
|
|
85
|
|
|
92
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per share - basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share from continuing operations
|
$
|
(0.33
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.94
|
)
|
|
$
|
(0.71
|
)
|
Basic earnings (loss) per share from discontinued operations
|
(0.18
|
)
|
|
0.25
|
|
|
(0.15
|
)
|
|
0.34
|
|
||||
Basic earnings (loss) per share
|
$
|
(0.51
|
)
|
|
$
|
0.39
|
|
|
$
|
(1.09
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share from continuing operations
|
$
|
(0.33
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.94
|
)
|
|
$
|
(0.71
|
)
|
Diluted earnings (loss) per share from discontinued operations
|
(0.18
|
)
|
|
0.25
|
|
|
(0.15
|
)
|
|
0.34
|
|
||||
Diluted earnings (loss) per share
|
$
|
(0.51
|
)
|
|
$
|
0.39
|
|
|
$
|
(1.09
|
)
|
|
$
|
(0.37
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
(43
|
)
|
|
$
|
36
|
|
|
$
|
(93
|
)
|
|
$
|
(34
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(18
|
)
|
|
9
|
|
|
18
|
|
|
(39
|
)
|
||||
Unrealized holding gains (losses) on securities
|
(8
|
)
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Net gain (loss) on defined benefit pension plans
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
||||
Reclassification from other comprehensive income (loss) to selling, general and administrative expense for amortization of actuarial (gains) losses on defined benefit pension plans
|
2
|
|
|
4
|
|
|
4
|
|
|
6
|
|
||||
Total other comprehensive income (loss) before income taxes
|
(58
|
)
|
|
13
|
|
|
(3
|
)
|
|
(33
|
)
|
||||
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
||||
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Total other comprehensive income (loss)
|
(45
|
)
|
|
11
|
|
|
9
|
|
|
(35
|
)
|
||||
Total comprehensive income (loss)
|
$
|
(88
|
)
|
|
$
|
47
|
|
|
$
|
(84
|
)
|
|
$
|
(69
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(93
|
)
|
|
$
|
(34
|
)
|
Less: Net income (loss) from discontinued operations
|
(13
|
)
|
|
31
|
|
||
Net income (loss) from continuing operations
|
(80
|
)
|
|
(65
|
)
|
||
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation of revenue earning vehicles, net
|
1,212
|
|
|
1,191
|
|
||
Depreciation and amortization, non-vehicle
|
128
|
|
|
131
|
|
||
Amortization and write-off of deferred financing costs
|
22
|
|
|
29
|
|
||
Amortization and write-off of debt discount (premium)
|
3
|
|
|
(2
|
)
|
||
Loss on extinguishment of debt
|
20
|
|
|
—
|
|
||
Stock-based compensation charges
|
12
|
|
|
8
|
|
||
Provision for receivables allowance
|
24
|
|
|
16
|
|
||
Deferred taxes on income
|
(49
|
)
|
|
8
|
|
||
Impairment charges and asset write-downs
|
3
|
|
|
20
|
|
||
(Gain) loss on sale of shares in equity method investment
|
(75
|
)
|
|
—
|
|
||
Other
|
(4
|
)
|
|
(6
|
)
|
||
Changes in assets and liabilities
|
|
|
|
||||
Non-vehicle receivables
|
(214
|
)
|
|
(168
|
)
|
||
Inventories, prepaid expenses and other assets
|
(48
|
)
|
|
(61
|
)
|
||
Non-vehicle accounts payable
|
43
|
|
|
36
|
|
||
Accrued liabilities
|
(15
|
)
|
|
21
|
|
||
Accrued taxes
|
14
|
|
|
(8
|
)
|
||
Public liability and property damage
|
18
|
|
|
11
|
|
||
Net cash provided by (used in) operating activities
|
1,014
|
|
|
1,161
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Net change in restricted cash and cash equivalents, vehicle
|
18
|
|
|
137
|
|
||
Net change in restricted cash and cash equivalents, non-vehicle
|
(2
|
)
|
|
(4
|
)
|
||
Revenue earning vehicles expenditures
|
(7,268
|
)
|
|
(7,639
|
)
|
||
Proceeds from disposal of revenue earning vehicles
|
5,168
|
|
|
4,816
|
|
||
Capital asset expenditures, non-vehicle
|
(72
|
)
|
|
(121
|
)
|
||
Proceeds from disposal of property and other equipment
|
39
|
|
|
44
|
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(95
|
)
|
||
Purchases of shares in equity method investment
|
(45
|
)
|
|
—
|
|
||
Sales of shares in equity method investment
|
233
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
(1,929
|
)
|
|
(2,862
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
2,185
|
|
|
1,069
|
|
||
Repayments of long-term debt
|
(2,404
|
)
|
|
(1,032
|
)
|
||
Short-term borrowings:
|
|
|
|
||||
Proceeds
|
312
|
|
|
383
|
|
||
Payments
|
(263
|
)
|
|
(258
|
)
|
||
Proceeds under the revolving lines of credit
|
5,058
|
|
|
5,307
|
|
||
Payments under the revolving lines of credit
|
(5,253
|
)
|
|
(3,683
|
)
|
||
Payment of financing costs
|
(51
|
)
|
|
(8
|
)
|
||
Transfers from discontinued entities
|
2,122
|
|
|
—
|
|
||
Other
|
12
|
|
|
(7
|
)
|
||
Net cash provided by (used in) financing activities
|
1,718
|
|
|
1,771
|
|
||
Effect of foreign exchange rate changes on cash and cash equivalents from continuing operations
|
8
|
|
|
(16
|
)
|
||
Net increase (decrease) in cash and cash equivalents during the period from continuing operations
|
811
|
|
|
54
|
|
||
Cash and cash equivalents at beginning of period
|
474
|
|
|
474
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,285
|
|
|
$
|
528
|
|
|
|
|
|
||||
Cash flows from discontinued operations:
|
|
|
|
||||
Cash flows provided by operating activities
|
$
|
205
|
|
|
$
|
290
|
|
Cash flows used in investing activities
|
(78
|
)
|
|
(295
|
)
|
||
Cash flows used in financing activities
|
(96
|
)
|
|
(1
|
)
|
||
Effect of foreign exchange rate changes on cash and cash equivalents
|
—
|
|
|
(1
|
)
|
||
Net increase (decrease) in cash and cash equivalents during the period from discontinued operations
|
$
|
31
|
|
|
$
|
(7
|
)
|
|
|
|
|
||||
Supplemental disclosures of cash information for continuing operations:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest, vehicle
|
$
|
115
|
|
|
$
|
93
|
|
Interest, non-vehicle
|
167
|
|
|
188
|
|
||
Income taxes, net of refunds
|
25
|
|
|
12
|
|
||
Supplemental disclosures of non-cash information:
|
|
|
|
||||
Purchases of revenue earning vehicles included in accounts payable and accrued liabilities
|
$
|
560
|
|
|
$
|
386
|
|
Sales of revenue earning vehicles included in receivables
|
392
|
|
|
150
|
|
||
Purchases of property and other equipment included in accounts payable
|
19
|
|
|
47
|
|
||
Sales of property and other equipment included in receivables
|
17
|
|
|
5
|
|
|
Preferred Stock
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock Shares
|
|
Treasury Stock Amount
|
|
Total
Equity
|
||||||||||||||||
Balance at:
|
|
|
|
|
|||||||||||||||||||||||||||||
December 31, 2015
|
$
|
—
|
|
|
423
|
|
|
$
|
4
|
|
|
$
|
3,343
|
|
|
$
|
(391
|
)
|
|
$
|
(245
|
)
|
|
41
|
|
|
$
|
(692
|
)
|
|
$
|
2,019
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93
|
)
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|||||||
Stock-based employee compensation charges
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||||
Exercise of stock options
|
—
|
|
|
1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||||
Common shares issued to directors
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Capital effect of Spin-Off
|
—
|
|
|
(339
|
)
|
|
(3
|
)
|
|
(689
|
)
|
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
692
|
|
|
—
|
|
|||||||
Distribution of Herc Holdings, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
(465
|
)
|
|
—
|
|
|
115
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|||||||
June 30, 2016
|
$
|
—
|
|
|
85
|
|
|
$
|
1
|
|
|
$
|
2,213
|
|
|
$
|
(484
|
)
|
|
$
|
(121
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
1,609
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Total revenues
|
$
|
349
|
|
|
$
|
375
|
|
|
$
|
677
|
|
|
$
|
730
|
|
Direct operating expenses
|
182
|
|
|
212
|
|
|
366
|
|
|
418
|
|
||||
Depreciation of revenue earning equipment and lease charges, net
|
91
|
|
|
81
|
|
|
181
|
|
|
157
|
|
||||
Selling, general and administrative
|
81
|
|
|
44
|
|
|
123
|
|
|
89
|
|
||||
Interest expense, net
(1)
|
11
|
|
|
7
|
|
|
17
|
|
|
14
|
|
||||
Other (income) expense, net
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Income (loss) from discontinued operations before income taxes
|
(16
|
)
|
|
33
|
|
|
(9
|
)
|
|
55
|
|
||||
(Provision) benefit for taxes on discontinued operations
|
1
|
|
|
(10
|
)
|
|
(4
|
)
|
|
(24
|
)
|
||||
Net income (loss) from discontinued operations
|
$
|
(15
|
)
|
|
$
|
23
|
|
|
$
|
(13
|
)
|
|
$
|
31
|
|
(In millions)
|
U.S. Rental Car
|
||
Revenue earning vehicles
|
$
|
71
|
|
Property and equipment
|
6
|
|
|
Other intangible assets
|
9
|
|
|
Goodwill
|
1
|
|
|
Total
|
$
|
87
|
|
(In millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Revenue earning vehicles
|
$
|
15,081
|
|
|
$
|
13,242
|
|
Less: Accumulated depreciation
|
(2,502
|
)
|
|
(2,631
|
)
|
||
|
12,579
|
|
|
10,611
|
|
||
Revenue earning vehicles held for sale, net
|
230
|
|
|
135
|
|
||
Revenue earning vehicles, net
|
$
|
12,809
|
|
|
$
|
10,746
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Depreciation of revenue earning vehicles
|
$
|
576
|
|
|
$
|
575
|
|
|
$
|
1,135
|
|
|
$
|
1,167
|
|
(Gain) loss on disposal of revenue earning vehicles
(a)
|
35
|
|
|
4
|
|
|
77
|
|
|
24
|
|
||||
Rents paid for vehicles leased
|
18
|
|
|
18
|
|
|
33
|
|
|
37
|
|
||||
Depreciation of revenue earning vehicles and lease charges, net
|
$
|
629
|
|
|
$
|
597
|
|
|
$
|
1,245
|
|
|
$
|
1,228
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Rental Car
|
$
|
38
|
|
|
$
|
5
|
|
|
$
|
81
|
|
|
$
|
25
|
|
International Rental Car
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
||||
Total
|
$
|
35
|
|
|
$
|
4
|
|
|
$
|
77
|
|
|
$
|
24
|
|
Increase (decrease)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Rental Car
(a)
|
$
|
19
|
|
|
$
|
27
|
|
|
$
|
45
|
|
|
$
|
57
|
|
International Rental Car
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
20
|
|
|
$
|
27
|
|
|
$
|
47
|
|
|
$
|
57
|
|
(a)
|
The depreciation rate changes in the U.S. Rental Car operations for the
three
and
six months
ended
June 30, 2016
include a net increase in depreciation expense of
$12 million
based on the review completed during the
second
quarter of
2016
. The depreciation rate changes in the U.S. Rental Car operations for the
three and six
months ended
June 30, 2015
include a net increase in depreciation expense of
$13 million
based on the review completed during the
second
quarter of
2015
.
|
Facility
|
|
Weighted Average Interest Rate at June 30, 2016
|
|
Fixed or
Floating Interest Rate |
|
Maturity
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Non-Vehicle Debt
|
|
|
|
|
|
|
|
|
|
|
||||
Senior Term Loan
|
|
3.50%
|
|
Floating
|
|
6/2023
|
|
$
|
700
|
|
|
$
|
—
|
|
Senior RCF
|
|
N/A
|
|
Floating
|
|
6/2021
|
|
—
|
|
|
—
|
|
||
Senior Term Facility
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
2,062
|
|
||
Senior ABL Facility
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
—
|
|
||
Senior Notes
(1)
|
|
6.58%
|
|
Fixed
|
|
4/2018–10/2022
|
|
3,900
|
|
|
3,900
|
|
||
Promissory Notes
|
|
7.00%
|
|
Fixed
|
|
1/2028
|
|
27
|
|
|
27
|
|
Facility
|
|
Weighted Average Interest Rate at June 30, 2016
|
|
Fixed or
Floating Interest Rate |
|
Maturity
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Other Vehicle Debt
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Vehicle RCF
(3)
|
|
3.50%
|
|
Floating
|
|
6/2021
|
|
185
|
|
|
—
|
|
||
U.S. Vehicle Financing Facility
|
|
N/A
|
|
N/A
|
|
N/A
|
|
—
|
|
|
190
|
|
||
European Revolving Credit Facility
|
|
2.13%
|
|
Floating
|
|
10/2017
|
|
376
|
|
|
273
|
|
||
European Vehicle Notes
|
|
4.38%
|
|
Fixed
|
|
1/2019
|
|
470
|
|
|
464
|
|
||
European Securitization
(2)
|
|
1.55%
|
|
Floating
|
|
10/2018
|
|
415
|
|
|
267
|
|
||
Canadian Securitization
(2)
|
|
1.88%
|
|
Floating
|
|
1/2018
|
|
253
|
|
|
148
|
|
||
Australian Securitization
(2)
|
|
3.51%
|
|
Floating
|
|
12/2016
|
|
89
|
|
|
98
|
|
||
Brazilian Vehicle Financing Facility
|
|
17.63%
|
|
Floating
|
|
10/2016
|
|
9
|
|
|
7
|
|
||
Capitalized Leases
|
|
2.61%
|
|
Floating
|
|
7/2016–3/2020
|
|
383
|
|
|
362
|
|
||
|
|
|
|
|
|
|
|
2,180
|
|
|
1,809
|
|
||
Unamortized Debt Issuance Costs and Net (Discount) Premium
|
|
|
|
|
|
|
|
(45
|
)
|
|
(34
|
)
|
||
Total Vehicle Debt
|
|
|
|
|
|
|
|
10,801
|
|
|
9,823
|
|
||
Total Debt
|
|
|
|
|
|
|
|
$
|
15,392
|
|
|
$
|
15,770
|
|
(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
|
June 30, 2016
|
|
December 31, 2015
|
||||
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)
|
Approximately
$67 million
of the aggregate maximum borrowing capacity under the U.S. Vehicle RCF is scheduled to expire in
January
2018
.
|
(In millions)
|
Remaining
Capacity
|
|
Availability Under
Borrowing Base
Limitation
|
||||
Non-Vehicle Debt
|
|
|
|
||||
Senior RCF
|
$
|
1,094
|
|
|
$
|
1,094
|
|
Total Non-Vehicle Debt
|
1,094
|
|
|
1,094
|
|
||
Vehicle Debt
|
|
|
|
||||
U.S. Vehicle RCF
|
—
|
|
|
—
|
|
||
HVF II U.S. Vehicle Variable Funding Notes
|
613
|
|
|
—
|
|
||
HFLF Variable Funding Notes
|
325
|
|
|
—
|
|
||
European Revolving Credit Facility
|
—
|
|
|
—
|
|
||
European Securitization
|
94
|
|
|
—
|
|
||
Canadian Securitization
|
16
|
|
|
—
|
|
||
Australian Securitization
|
96
|
|
|
2
|
|
||
Capitalized Leases
|
16
|
|
|
8
|
|
||
Total Vehicle Debt
|
1,160
|
|
|
10
|
|
||
Total
|
$
|
2,254
|
|
|
$
|
1,104
|
|
Fiscal Quarter(s) Ending
|
|
Maximum Ratio
|
September 30, 2016
|
|
5.25 to 1.00
|
December 31, 2016 through March 31, 2017
|
|
4.75 to 1.00
|
June 30, 2017 through September 30, 2017
|
|
5.25 to 1.00
|
December 31, 2017
|
|
4.75 to 1.00
|
March 31, 2018
|
|
4.50 to 1.00
|
June 30, 2018 through September 30, 2018
|
|
5.00 to 1.00
|
December 31, 2018 through March 31, 2019
|
|
4.50 to 1.00
|
June 30, 2019 through September 30, 2019
|
|
5.00 to 1.00
|
December 31, 2019 through March 31, 2020
|
|
4.50 to 1.00
|
June 30, 2020 through September 30, 2020
|
|
5.00 to 1.00
|
December 31, 2020 through March 31, 2021
|
|
4.50 to 1.00
|
Discount rate
|
|
3.5%
|
Expected rate of return on plan assets
|
|
7.2%
|
Average salary increase
|
|
4.3%
|
|
Pension Benefits
|
||||||||||||||
|
U.S.
|
|
Non-U.S.
|
||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Components of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Interest cost
|
7
|
|
|
6
|
|
|
2
|
|
|
2
|
|
||||
Expected return on plan assets
|
(7
|
)
|
|
(8
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Net amortizations
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Settlement loss
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Net periodic pension expense (benefit)
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Pension Benefits
|
||||||||||||||
|
U.S.
|
|
Non-U.S.
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Components of Net Periodic Benefit Cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
11
|
|
|
11
|
|
|
4
|
|
|
4
|
|
||||
Expected return on plan assets
|
(14
|
)
|
|
(16
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
Net amortizations
|
4
|
|
|
2
|
|
|
—
|
|
|
1
|
|
||||
Settlement loss
|
1
|
|
|
2
|
|
|
—
|
|
|
—
|
|
||||
Net periodic pension expense (benefit)
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Compensation expense
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
12
|
|
|
$
|
8
|
|
Income tax benefit
|
(2
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(3
|
)
|
||||
Total
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
5
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
By Type:
|
|
|
|
|
|
|
|
||||||||
Termination benefits
|
$
|
10
|
|
|
$
|
6
|
|
|
$
|
16
|
|
|
$
|
12
|
|
Impairments and asset write-downs
|
3
|
|
|
—
|
|
|
3
|
|
|
1
|
|
||||
Facility closure and lease obligation costs
|
5
|
|
|
14
|
|
|
5
|
|
|
14
|
|
||||
Other
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Total
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
24
|
|
|
$
|
25
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
By Caption:
|
|
|
|
|
|
|
|
||||||||
Direct vehicle and operating
|
$
|
8
|
|
|
$
|
14
|
|
|
$
|
9
|
|
|
$
|
15
|
|
Selling, general and administrative
|
10
|
|
|
5
|
|
|
15
|
|
|
10
|
|
||||
Total
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
24
|
|
|
$
|
25
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
By Segment:
|
|
|
|
|
|
|
|
||||||||
U.S. Rental Car
|
$
|
15
|
|
|
$
|
14
|
|
|
$
|
21
|
|
|
$
|
16
|
|
International Rental Car
|
3
|
|
|
5
|
|
|
3
|
|
|
7
|
|
||||
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Total
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
24
|
|
|
$
|
25
|
|
(In millions)
|
Termination
Benefits |
|
Other
|
|
Total
|
||||||
Balance as of December 31, 2015
|
$
|
9
|
|
|
$
|
15
|
|
|
$
|
24
|
|
Charges incurred
|
16
|
|
|
8
|
|
|
24
|
|
|||
Cash payments
|
(8
|
)
|
|
(7
|
)
|
|
(15
|
)
|
|||
Other non-cash changes
|
(1
|
)
|
|
1
|
|
|
—
|
|
|||
Balance as of June 30, 2016
|
$
|
16
|
|
|
$
|
17
|
|
|
$
|
33
|
|
|
Fair Value of Financial Instruments
|
||||||||||||||
|
Asset Derivatives
(1)
|
|
Liability Derivatives
(1)
|
||||||||||||
(In millions)
|
June 30,
2016 |
|
December 31,
2015 |
|
June 30,
2016 |
|
December 31,
2015 |
||||||||
Interest rate instruments
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
9
|
|
Foreign currency forward contracts
|
6
|
|
|
3
|
|
|
3
|
|
|
1
|
|
||||
Total
|
$
|
8
|
|
|
$
|
12
|
|
|
$
|
4
|
|
|
$
|
10
|
|
(1)
|
All asset derivatives are recorded in prepaid expenses and other assets and all liability derivatives are recorded in accrued liabilities in the accompanying condensed consolidated balance sheets.
|
|
Location of Gain or (Loss) Recognized on Derivatives
|
|
Amount of Gain or (Loss) Recognized
in Income on Derivatives |
||||||
|
|
|
Three Months Ended
June 30, |
||||||
(In millions)
|
|
|
2016
|
|
2015
|
||||
Foreign currency forward contracts
|
Selling, general and administrative
|
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
Location of Gain or (Loss) Recognized on Derivatives
|
|
Amount of Gain or (Loss) Recognized
in Income on Derivatives |
||||||
|
|
|
Six Months Ended
June 30, |
||||||
(In millions)
|
|
|
2016
|
|
2015
|
||||
Foreign currency forward contracts
|
Selling, general and administrative
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||||
(In millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Money market funds
|
|
$
|
205
|
|
|
$
|
406
|
|
|
$
|
—
|
|
|
$
|
611
|
|
|
$
|
181
|
|
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
230
|
|
Equity and other securities
|
|
40
|
|
|
100
|
|
|
—
|
|
|
140
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
||||||||
Total
|
|
$
|
245
|
|
|
$
|
506
|
|
|
$
|
—
|
|
|
$
|
751
|
|
|
$
|
181
|
|
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
341
|
|
|
As of June 30, 2016
|
|
As of December 31, 2015
|
||||||||||||
(In millions)
|
Nominal Unpaid Principal Balance
|
|
Aggregate Fair Value
|
|
Nominal Unpaid Principal Balance
|
|
Aggregate Fair Value
|
||||||||
Non-vehicle Debt
|
$
|
4,629
|
|
|
$
|
4,726
|
|
|
$
|
5,991
|
|
|
$
|
6,070
|
|
Vehicle Debt
|
10,846
|
|
|
10,927
|
|
|
9,857
|
|
|
9,854
|
|
||||
Total
|
$
|
15,475
|
|
|
$
|
15,653
|
|
|
$
|
15,848
|
|
|
$
|
15,924
|
|
(In millions)
|
Balance as of June 30, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Loss Adjustments Recorded for the Six Months ended June 30, 2016
|
||||||||||
Long-lived assets held for sale
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
3
|
|
(In millions)
|
Pension and Other Post-Employment Benefits
|
|
Foreign Currency Items
|
|
Unrealized Losses on Terminated Net Investment Hedges
|
|
Unrealized Gains on Available for Sale Securities
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance as of December 31, 2015
|
$
|
(102
|
)
|
|
$
|
(124
|
)
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
(245
|
)
|
Other comprehensive income (loss) before reclassification
|
(20
|
)
|
|
18
|
|
|
—
|
|
|
9
|
|
|
7
|
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||
Distribution of Herc Holdings, Inc
|
20
|
|
|
95
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|||||
Balance as of June 30, 2016
|
$
|
(100
|
)
|
|
$
|
(11
|
)
|
|
$
|
(19
|
)
|
|
$
|
9
|
|
|
$
|
(121
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance as of December 31, 2014
|
$
|
(101
|
)
|
|
$
|
5
|
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
(115
|
)
|
Other comprehensive income (loss) before reclassification
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Balance as of June 30, 2015
|
$
|
(97
|
)
|
|
$
|
(34
|
)
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
|
$
|
(150
|
)
|
•
|
U.S. Rental Car ("U.S. RAC") - rental of vehicles (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 Rental Car ("International RAC") - rental and leasing of vehicles (cars, vans, 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;
|
•
|
All Other Operations - includes the Company's Donlen operating segment which provides vehicle leasing and fleet management services and is not considered a separate reportable segment in accordance with applicable accounting standards, together with other business activities.
|
|
Three Months Ended June 30,
|
||||||||||||||
|
Revenues
|
|
Adjusted Pre-Tax Income (Loss)
|
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Rental Car
|
$
|
1,584
|
|
|
$
|
1,615
|
|
|
$
|
143
|
|
|
$
|
195
|
|
International Rental Car
|
540
|
|
|
556
|
|
|
34
|
|
|
45
|
|
||||
All Other Operations
|
146
|
|
|
146
|
|
|
17
|
|
|
17
|
|
||||
Total reportable segments
|
$
|
2,270
|
|
|
$
|
2,317
|
|
|
194
|
|
|
257
|
|
||
Corporate
(1)
|
|
|
|
|
(139
|
)
|
|
(139
|
)
|
||||||
Consolidated adjusted pre-tax income (loss)
|
|
|
|
|
55
|
|
|
118
|
|
||||||
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Acquisition accounting
(2)
|
|
|
|
|
(18
|
)
|
|
(23
|
)
|
||||||
Debt-related charges
(3)
|
|
|
|
|
(12
|
)
|
|
(15
|
)
|
||||||
Loss on extinguishment of debt
(4)
|
|
|
|
|
(20
|
)
|
|
—
|
|
||||||
Restructuring and restructuring related charges
(5)
|
|
|
|
|
(18
|
)
|
|
(41
|
)
|
||||||
Impairment charges and asset write-downs
(7)
|
|
|
|
|
(3
|
)
|
|
—
|
|
||||||
Finance and information technology transformation costs
(8)
|
|
|
|
|
(19
|
)
|
|
—
|
|
||||||
Other
(9)
|
|
|
|
|
—
|
|
|
(1
|
)
|
||||||
Income (loss) from continuing operations before income taxes
|
|
|
|
|
$
|
(35
|
)
|
|
$
|
38
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
Revenues
|
|
Adjusted Pre-Tax Income (Loss)
|
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Rental Car
|
$
|
2,990
|
|
|
$
|
3,135
|
|
|
$
|
138
|
|
|
$
|
265
|
|
International Rental Car
|
973
|
|
|
992
|
|
|
36
|
|
|
52
|
|
||||
All Other Operations
|
290
|
|
|
288
|
|
|
35
|
|
|
31
|
|
||||
Total reportable segments
|
$
|
4,253
|
|
|
$
|
4,415
|
|
|
209
|
|
|
348
|
|
||
Corporate
(1)
|
|
|
|
|
(262
|
)
|
|
(271
|
)
|
||||||
Consolidated adjusted pre-tax income (loss)
|
|
|
|
|
(53
|
)
|
|
77
|
|
||||||
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Acquisition accounting
(2)
|
|
|
|
|
(34
|
)
|
|
(45
|
)
|
||||||
Debt-related charges
(3)
|
|
|
|
|
(25
|
)
|
|
(29
|
)
|
||||||
Loss on extinguishment of debt
(4)
|
|
|
|
|
(20
|
)
|
|
—
|
|
||||||
Restructuring and restructuring related charges
(5)
|
|
|
|
|
(29
|
)
|
|
(59
|
)
|
||||||
Sale of CAR Inc. common stock
(6)
|
|
|
|
|
75
|
|
|
—
|
|
||||||
Impairment charges and asset write-downs
(7)
|
|
|
|
|
(3
|
)
|
|
(9
|
)
|
||||||
Finance and information technology transformation costs
(8)
|
|
|
|
|
(26
|
)
|
|
—
|
|
||||||
Other
(9)
|
|
|
|
|
3
|
|
|
(6
|
)
|
||||||
Income (loss) from continuing operations before income taxes
|
|
|
|
|
$
|
(112
|
)
|
|
$
|
(71
|
)
|
(1)
|
Represents general corporate expenses, non-vehicle interest expense, as well as other business activities.
|
(2)
|
Represents incremental expense associated with 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 the write-off of deferred debt financing costs in the second quarter of 2016 as a result of paying off the Senior Term Facility and various vehicle debt refinancings.
|
(5)
|
Represents expenses incurred under restructuring actions as defined in U.S. GAAP. For further information on restructuring costs, see
Note 9
, "
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. Also includes consulting costs and legal fees related to the accounting review and investigation.
|
(6)
|
Represents the pre-tax gain on the sale of CAR Inc. common stock.
|
(7)
|
In the first half of 2015, primarily represents a
$6 million
impairment on the former Dollar Thrifty headquarters in Tulsa, Oklahoma.
|
(8)
|
Represents external costs associated with the Company’s finance and information technology transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes. In the three months ended June 30, 2016,
$5 million
was incurred by U.S. RAC and
$14 million
was incurred by Corporate and in the six months ended June 30, 2016,
$9 million
was incurred by U.S. RAC and
$17 million
was incurred by Corporate.
|
(9)
|
Includes miscellaneous and non-recurring items including but not limited to acquisition charges, integration charges, and other non-cash items. For the
six
months ended
June 30, 2016
, also includes a settlement gain related to one of our airport locations. In the 2015 periods, includes charges incurred in connection with relocating the Company's corporate headquarters to Estero, Florida.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Rental Car
|
$
|
417
|
|
|
$
|
380
|
|
|
$
|
836
|
|
|
$
|
801
|
|
International Rental Car
|
98
|
|
|
101
|
|
|
184
|
|
|
196
|
|
||||
All Other Operations
|
114
|
|
|
116
|
|
|
225
|
|
|
231
|
|
||||
Total
|
$
|
629
|
|
|
$
|
597
|
|
|
$
|
1,245
|
|
|
$
|
1,228
|
|
(In millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
U.S. Rental Car
|
$
|
14,049
|
|
|
$
|
13,614
|
|
International Rental Car
|
4,416
|
|
|
3,002
|
|
||
All Other Operations
|
1,583
|
|
|
1,520
|
|
||
Corporate
|
1,972
|
|
|
1,983
|
|
||
Assets of discontinued operations
|
—
|
|
|
3,395
|
|
||
Total
|
$
|
22,020
|
|
|
$
|
23,514
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions, except per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Basic and diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from continuing operations
|
$
|
(28
|
)
|
|
$
|
13
|
|
|
$
|
(80
|
)
|
|
$
|
(65
|
)
|
Net income (loss) from discontinued operations
|
(15
|
)
|
|
23
|
|
|
(13
|
)
|
|
31
|
|
||||
Net income (loss), basic
|
$
|
(43
|
)
|
|
$
|
36
|
|
|
$
|
(93
|
)
|
|
$
|
(34
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares
|
85
|
|
|
92
|
|
|
85
|
|
|
92
|
|
||||
Dilutive stock options, RSUs and PSUs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares used to calculate diluted earnings per share
|
85
|
|
|
92
|
|
|
85
|
|
|
92
|
|
||||
Antidilutive stock options, RSUs and PSUs
|
1
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share from continuing operations
|
$
|
(0.33
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.94
|
)
|
|
$
|
(0.71
|
)
|
Basic earnings (loss) per share from discontinued operations
|
(0.18
|
)
|
|
0.25
|
|
|
(0.15
|
)
|
|
0.34
|
|
||||
Basic earnings (loss) per share
|
$
|
(0.51
|
)
|
|
$
|
0.39
|
|
|
$
|
(1.09
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share from continuing operations
|
$
|
(0.33
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.94
|
)
|
|
$
|
(0.71
|
)
|
Diluted earnings (loss) per share from discontinued operations
|
(0.18
|
)
|
|
0.25
|
|
|
(0.15
|
)
|
|
0.34
|
|
||||
Diluted earnings (loss) per share
|
$
|
(0.51
|
)
|
|
$
|
0.39
|
|
|
$
|
(1.09
|
)
|
|
$
|
(0.37
|
)
|
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 Transaction Day ("Total RPD") - important to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle 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 vehicle rental business 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 ("volume"). It is used as a component to measure Total RPD and vehicle utilization. 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 we 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, we determined that there was an impact to the calculation and we estimate that transaction days for the US RAC segment will increase by approximately 1% prospectively relative to historical calculations through the third quarter of 2016. This will also prospectively impact key metrics calculations that utilize transaction days, although to a lesser extent.
|
•
|
Vehicle Utilization - important to management and investors because it is the measurement of the proportion of our vehicles that are being used to generate revenues relative to the total number of vehicles available for rent ("fleet capacity.") Higher vehicle utilization means more vehicles are being utilized to generate revenue.
|
•
|
Net Depreciation Per Unit Per Month - important to management and investors as depreciation of revenue earning vehicles and lease charges, is one of our largest expenses for the vehicle 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 vehicles and facilitates a comparison with other participants in the vehicle rental industry.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
Vehicle rental revenues - revenues from all company-operated vehicle 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 vehicle rentals, including
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
All other operations revenues - revenues from vehicle leasing and fleet management services and other business activities.
|
•
|
Direct vehicle and 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; and other costs relating to the operation and rental of revenue earning vehicles, such as damage, maintenance and fuel costs);
|
•
|
Depreciation expense and lease charges, net relating to revenue earning vehicles (including net gains or losses on the disposal of such vehicles);
|
•
|
Selling, general and administrative expenses; and
|
•
|
Interest expense, net.
|
•
|
U.S. Rental Car ("U.S. RAC") - Rental of vehicles (cars, crossovers and light trucks), as well as sales of ancillary products and services, in the U.S.;
|
•
|
International Rental Car ("International RAC") - Rental and leasing of vehicles (cars, vans, crossovers and light trucks), as well as sales of ancillary products and services, internationally; and
|
•
|
All Other Operations - Comprised of our Donlen business, which provides vehicle leasing and fleet management services, and other business activities
.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
The Company successfully completed the previously announced separation of the Old Hertz Holdings vehicle rental business and equipment rental business on June 30, 2016, receiving approximately $2.0 billion pursuant to the Separation Agreement, which was used to repay outstanding non-vehicle debt;
|
•
|
Total revenues for U.S. RAC for the
second
quarter of
2016
decrease
d by
2%
as compared to
2015
driven by an
8%
decline in Total RPD, partially offset by a
6%
increase
in transaction days. Total revenues for U.S. RAC for the first half of 2016 decreased by
5%
as compared to 2015 driven by a
9%
decline in Total RPD, partially offset by a
4%
increase in transaction days;
|
•
|
Depreciation of revenue earning vehicles and lease charges, net for U.S. RAC increased
10%
to
$417 million
from
$380 million
for the second quarter of 2016 versus 2015 and increased
4%
to
$836 million
from
$801 million
for the first half of 2016 versus 2015. Net depreciation per unit per month in U.S. RAC increased
12%
to
$278
from
$248
for the
second
quarter of
2016
versus
2015
and increased
9%
to
$290
from
$267
for the first half of 2016 versus 2015. The increases are the result of declining residual values on non-program vehicles and higher program vehicle acquisition costs;
|
•
|
Total revenues for International RAC decreased
3%
and
2%
for the second quarter and first half of 2016 versus 2015, respectively. Excluding the impact of foreign currency, total revenues for International RAC
decrease
d
$10 million
, or
2%
for the second quarter 2016 versus 2015, driven by a
2%
decrease
in Total RPD, on a constant currency basis, on flat transaction days. Excluding the impact of foreign currency, total revenues for International RAC
increase
d
$13 million
, or
1%
for the first half of 2016 versus 2015, driven by flat Total RPD, on a constant currency basis, and a
1%
increase in transaction days;
|
•
|
Depreciation of revenue earning vehicles and lease charges, net for International RAC decreased
3%
to
$98 million
from
$101 million
for the second quarter of 2016 versus 2015 and decreased
6%
to
$184 million
from
$196 million
for the first half of 2016 versus 2015. On a constant currency basis, net depreciation per unit per month for International RAC decreased
4%
to
$179
from
$186
for the
second
quarter of
2016
versus
2015
and decreased
6%
to
$186
from
$197
for the first half of 2016 versus 2015. The decreases are the result of improved vehicle procurement, vehicle mix changes and optimized remarketing channels;
|
•
|
The Company realized cost savings of approximately $100 million in the second quarter 2016 and $170 million for the first half of 2016, reflecting continued progress as part of the Company's three-to-five year margin improvement plan. In addition to vehicle related initiatives,consolidated unit costs for the Company, defined as consolidated direct vehicle and operating and selling, general and administrative expenses per transaction day, decreased $2.23, or 7%, as compared to the second quarter of 2015 and decreased $2.01, or 6%, as compared to the first half of 2015.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
Wrote-off
$20 million
of deferred financing costs in the second quarter of 2016 as a result of paying off our Senior Term Facility and various vehicle debt refinancings;
|
•
|
Recorded
$3 million
of net impairments and asset write-downs during the
second
quarter of
2016
and zero in 2015. Recorded
$3 million
net impairments and asset write-downs during the first half of 2016 compared to
$20 million
during the first half of
2015
;
|
•
|
Recorded
$19 million
and
$26 million
in finance and information technology transformation costs during the second quarter and first half of 2016, respectively, with no comparable costs in the
second
quarter and first half of
2015
;
|
•
|
International RAC's public liability and property damage (“PLPD”) expense increased $20 million in the second quarter 2016 as compared to 2015, due to the adverse experience and case development of historical claims, primarily in the United Kingdom. While the company cannot be assured that additional exposure may not materialize in future quarters, the company has proactively addressed the root cause of the impact and changed its business practices accordingly. The increase in PLPD expense in International RAC was partially offset by a $5 million decrease in PLPD expense in the US RAC segment.
|
•
|
Recorded
$18 million
in restructuring and restructuring related expenses during the
second
quarter of
2016
compared to
$41 million
during the
second
quarter of
2015
. Recorded
$29 million
in restructuring and restructuring related expenses during the first half of 2016 compared to
$59 million
in
2015
. Included in these amounts were
$3 million
and
$7 million
in consulting, audit and legal costs associated with the restatement and investigation activities during the second quarter and first half of
2016
, respectively, as compared to
$13 million
and
$23 million
during the second quarter and first half of 2015, respectively;
|
•
|
The Company sold
204 million
shares of common stock of CAR Inc., a publicly traded company on the Hong Kong Stock Exchange, in the first quarter of 2016 for net proceeds of approximately
$233 million
, recognizing a pre-tax gain of
$75 million
;
|
•
|
The Company executed new financings and amended and extended the maturities of several existing financing facilities such that there are no significant maturities of non-vehicle debt until 2019; and
|
•
|
In an effort to focus its resources on continuing to grow the Hertz, Dollar and Thrifty brands, the Company substantially transitioned its Firefly operations to its Thrifty brand in the U.S. market.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
Three Months Ended June 30,
|
|
Percent Increase/(Decrease)
|
|
Six Months Ended June 30,
|
|
Percent Increase/(Decrease)
|
||||||||||||||
($ in millions)
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
||||||||||||
Total revenues
|
$
|
2,270
|
|
|
$
|
2,317
|
|
|
(2
|
)%
|
|
$
|
4,253
|
|
|
$
|
4,415
|
|
|
(4
|
)%
|
Direct vehicle and operating expenses
|
1,267
|
|
|
1,290
|
|
|
(2
|
)
|
|
2,425
|
|
|
2,492
|
|
|
(3
|
)
|
||||
Depreciation of revenue earning vehicles and lease charges, net
|
629
|
|
|
597
|
|
|
5
|
|
|
1,245
|
|
|
1,228
|
|
|
1
|
|
||||
Selling, general and administrative expenses
|
234
|
|
|
251
|
|
|
(7
|
)
|
|
459
|
|
|
471
|
|
|
(3
|
)
|
||||
Interest expense, net
|
174
|
|
|
149
|
|
|
17
|
|
|
325
|
|
|
296
|
|
|
10
|
|
||||
Other (income) expense, net
|
1
|
|
|
(8
|
)
|
|
NM
|
|
|
(89
|
)
|
|
(1
|
)
|
|
NM
|
|
||||
Income (loss) from continuing operations, before income taxes
|
(35
|
)
|
|
38
|
|
|
NM
|
|
|
(112
|
)
|
|
(71
|
)
|
|
58
|
|
||||
(Provision) benefit for taxes on income (loss) of continuing operations
|
7
|
|
|
(25
|
)
|
|
NM
|
|
|
32
|
|
|
6
|
|
|
433
|
|
||||
Net income (loss) from continuing operations
|
(28
|
)
|
|
13
|
|
|
NM
|
|
|
(80
|
)
|
|
(65
|
)
|
|
23
|
|
||||
Net income (loss) from discontinued operations
|
(15
|
)
|
|
23
|
|
|
NM
|
|
|
(13
|
)
|
|
31
|
|
|
NM
|
|
||||
Net income (loss)
|
$
|
(43
|
)
|
|
$
|
36
|
|
|
NM
|
|
|
$
|
(93
|
)
|
|
$
|
(34
|
)
|
|
174
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
55
|
|
|
$
|
118
|
|
|
(53
|
)
|
|
$
|
(53
|
)
|
|
$
|
77
|
|
|
NM
|
|
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
June 30, |
|
Percent Increase/(Decrease)
|
|
|
Six Months Ended
June 30, |
|
Percent Increase/(Decrease)
|
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
||||||||||||
Total revenues
|
$
|
1,584
|
|
|
$
|
1,615
|
|
|
(2
|
)%
|
|
|
$
|
2,990
|
|
|
$
|
3,135
|
|
|
(5
|
)%
|
|
Direct vehicle and operating expenses
|
$
|
916
|
|
|
$
|
942
|
|
|
(3
|
)
|
|
|
$
|
1,786
|
|
|
$
|
1,868
|
|
|
(4
|
)
|
|
Depreciation of revenue earning vehicles and lease charges, net
|
$
|
417
|
|
|
$
|
380
|
|
|
10
|
|
|
|
$
|
836
|
|
|
$
|
801
|
|
|
4
|
|
|
Income (loss) before income taxes
|
$
|
104
|
|
|
$
|
153
|
|
|
(32
|
)
|
|
|
$
|
82
|
|
|
$
|
188
|
|
|
(56
|
)
|
|
Adjusted pre-tax income
(loss)
(a)
|
$
|
143
|
|
|
$
|
195
|
|
|
(27
|
)
|
|
|
$
|
138
|
|
|
$
|
265
|
|
|
(48
|
)
|
|
Transaction days (in thousands)(b)
|
37,190
|
|
|
34,977
|
|
|
6
|
|
|
|
69,932
|
|
|
67,014
|
|
|
4
|
|
|
||||
Total RPD (in whole dollars)
(c)
|
$
|
42.11
|
|
|
$
|
45.80
|
|
|
(8
|
)
|
|
|
$
|
42.23
|
|
|
$
|
46.41
|
|
|
(9
|
)
|
|
Average vehicles
(d)
|
500,000
|
|
|
511,700
|
|
|
(2
|
)
|
|
|
480,100
|
|
|
500,500
|
|
|
(4
|
)
|
|
||||
Vehicle utilization
(d)
|
82
|
%
|
|
75
|
%
|
|
700
|
bps
|
|
80
|
%
|
|
74
|
%
|
|
600
|
|
bps
|
|||||
Revenue per available car day (in whole dollars)
(e)
|
$
|
34.42
|
|
|
$
|
34.40
|
|
|
—
|
|
|
|
$
|
33.80
|
|
|
$
|
34.33
|
|
|
(2
|
)
|
|
Net depreciation per unit per month (in whole dollars)
(f)
|
$
|
278
|
|
|
$
|
248
|
|
|
12
|
|
|
|
$
|
290
|
|
|
$
|
267
|
|
|
9
|
|
|
Program vehicles as a percentage of average vehicles at period end
|
12
|
%
|
|
29
|
%
|
|
N/A
|
|
|
|
12
|
%
|
|
29
|
%
|
|
N/A
|
|
|
•
|
Vehicle related expenses decreased $4 million year over year primarily due to:
|
◦
|
Decreased collision and short term maintenance expense of $5 million, driven primarily by process improvements leading to increased customer collections on damage claims and a decrease in the costs to prepare vehicles for turn-back due to a reduction in the number of program vehicles returned to the manufacturer in the second quarter of 2016 versus 2015;
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
◦
|
Decreased maintenance costs of $6 million due primarily to a reduction in the average age of revenue earning vehicles, thus requiring less maintenance as compared to 2015 and improved pricing through parts and supplier sourcing;
|
◦
|
Increases in other vehicle operating costs of $5 million due to fewer pre-delivery inspection credits (credits received from vehicle manufacturers for procedures we perform on new vehicle deliveries) as compared to 2015 when we were completing our fleet refresh. Additionally, there was an increase in vehicle trucking and transportation expenses of $2 million, primarily driven by repositioning of the fleet to respond to the severe weather conditions in the Southwest during the quarter.
|
•
|
Personnel related expenses decreased $4 million from the
second
quarter of
2015
, primarily due to decreased benefits expenses driven by a favorable adjustment to the worker's compensation reserve based on experience.
|
•
|
Transaction variable expenses decreased $9 million from the second quarter of 2015 primarily due to decreased fuel costs of $11 million driven by lower market fuel pricing, a $7 million decrease in concessions expense as a result of reduced airport revenues, and a decrease in PLPD expense of $5 million, partially offset by an increase in optional insurance liability expense of
$13 million
.
|
•
|
Other direct vehicle and operating expenses decreased $9 million from the
second
quarter of
2015
, primarily due to information technology cost savings resulting from the previously announced initiatives.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
Vehicle related expenses decreased $25 million year over year primarily due to:
|
◦
|
Decreased collision and short term maintenance expense of $13 million driven primarily by process improvements leading to increased customer collections on damage claims and a decrease in the costs to prepare vehicles for turn-back due to a reduction in the number of program vehicles returned to the manufacturer year over year;
|
◦
|
Decreased maintenance costs of $12 million due primarily to a reduction in the average age of our revenue earning vehicles, thus requiring less maintenance as compared to 2015 and improved pricing through parts and supplier sourcing.
|
•
|
Personnel related expenses decreased $22 million as compared to the first half of
2015
primarily due to centralization of workforce management, an $11 million improvement in benefits expenses, resulting from a decrease in worker's compensation reserves based on experience, and a $6 million decrease in incentive expenses.
|
•
|
Transaction variable expenses decreased $15 million from the first half of 2015 primarily due to decreased fuel costs of $19 million driven by lower market fuel pricing and a $13 million decrease in concessions expense as a result of reduced airport revenues, partially offset by increased optional insurance liability expense of
$17 million
.
|
•
|
Other direct vehicle and operating expenses decreased $20 million from the first half of
2015
primarily due to a net $15 million of information technology cost savings resulting from the previously announced initiatives.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
Three Months Ended June 30,
|
|
Percent Increase/(Decrease)
|
|
|
Six Months Ended
June 30, |
|
Percent Increase/(Decrease)
|
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|
|
||||||||||||
Total revenues
|
$
|
540
|
|
|
$
|
556
|
|
|
(3
|
)%
|
|
|
$
|
973
|
|
|
$
|
992
|
|
|
(2
|
)%
|
|
Direct vehicle and operating expenses
|
$
|
341
|
|
|
$
|
332
|
|
|
3
|
|
|
|
$
|
620
|
|
|
$
|
599
|
|
|
4
|
|
|
Depreciation of revenue earning vehicles and lease charges, net
|
$
|
98
|
|
|
$
|
101
|
|
|
(3
|
)
|
|
|
$
|
184
|
|
|
$
|
196
|
|
|
(6
|
)
|
|
Income (loss) before income taxes
|
$
|
29
|
|
|
$
|
36
|
|
|
(19
|
)
|
|
|
$
|
27
|
|
|
$
|
38
|
|
|
(29
|
)
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
34
|
|
|
$
|
45
|
|
|
(24
|
)
|
|
|
$
|
36
|
|
|
$
|
52
|
|
|
(31
|
)
|
|
Transaction days (in thousands)(b)
|
12,511
|
|
|
12,523
|
|
|
—
|
|
|
|
22,613
|
|
|
22,298
|
|
|
1
|
|
|
||||
Total RPD (in whole dollars)
(c)
|
$
|
42.04
|
|
|
$
|
42.72
|
|
|
(2
|
)
|
|
|
$
|
42.45
|
|
|
$
|
42.56
|
|
|
—
|
|
|
Average vehicles
(d)
|
178,600
|
|
|
173,700
|
|
|
3
|
|
|
|
163,300
|
|
|
158,800
|
|
|
3
|
|
|
||||
Vehicle utilization
(d)
|
77
|
%
|
|
79
|
%
|
|
(200
|
)
|
bps
|
|
76
|
%
|
|
78
|
%
|
|
(200
|
)
|
bps
|
||||
Revenue per available car day (in whole dollars)
(e)
|
$
|
32.36
|
|
|
$
|
33.85
|
|
|
(4
|
)
|
|
|
$
|
32.30
|
|
|
$
|
33.02
|
|
|
(2
|
)
|
|
Net depreciation per unit per month (in whole dollars)
(f)
|
$
|
179
|
|
|
$
|
186
|
|
|
(4
|
)
|
|
|
$
|
186
|
|
|
$
|
197
|
|
|
(6
|
)
|
|
Program vehicles as a percentage of average vehicles at period end
|
45
|
%
|
|
46
|
%
|
|
N/A
|
|
|
|
45
|
%
|
|
46
|
%
|
|
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 June 30,
|
|
Percent Increase/(Decrease)
|
|
Six Months Ended
June 30, |
|
Percent Increase/(Decrease)
|
||||||||||||||
($ in millions)
|
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
||||||||||||
Total revenues
|
$
|
146
|
|
|
$
|
146
|
|
|
—
|
%
|
|
$
|
290
|
|
|
$
|
288
|
|
|
1
|
%
|
Direct vehicle and operating expenses
|
$
|
6
|
|
|
$
|
6
|
|
|
—
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
—
|
|
Depreciation of revenue earning vehicles and lease charges, net
|
$
|
114
|
|
|
$
|
116
|
|
|
(2
|
)
|
|
$
|
225
|
|
|
$
|
231
|
|
|
(3
|
)
|
Income (loss) before income taxes
|
$
|
14
|
|
|
$
|
14
|
|
|
—
|
|
|
$
|
30
|
|
|
$
|
25
|
|
|
20
|
|
Adjusted pre-tax income (loss)
(a)
|
$
|
17
|
|
|
$
|
17
|
|
|
—
|
|
|
$
|
35
|
|
|
$
|
31
|
|
|
13
|
|
Average vehicles - Donlen
|
166,900
|
|
|
165,600
|
|
|
1
|
|
|
166,900
|
|
|
167,100
|
|
|
—
|
|
(a)
|
Adjusted pre-tax income (loss) is a Non-GAAP measure that is calculated as income (loss) from continuing operations 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 (loss) 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. When evaluating our operating performance, investors should not consider adjusted pre-tax income (loss) in isolation of, or as a substitute for, measures of our financial performance, such as net income (loss) from continuing operations or income (loss) from continuing operations before income tax. 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
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Adjusted pre-tax income (loss):
|
|
|
|
|
|
|
|
||||||||
U.S. Rental Car
|
$
|
143
|
|
|
$
|
195
|
|
|
$
|
138
|
|
|
$
|
265
|
|
International Rental Car
|
34
|
|
|
45
|
|
|
36
|
|
|
52
|
|
||||
All Other Operations
|
17
|
|
|
17
|
|
|
35
|
|
|
31
|
|
||||
Total reportable segments
|
194
|
|
|
257
|
|
|
209
|
|
|
348
|
|
||||
Corporate
(1)
|
(139
|
)
|
|
(139
|
)
|
|
(262
|
)
|
|
(271
|
)
|
||||
Consolidated adjusted pre-tax income (loss)
|
55
|
|
|
118
|
|
|
(53
|
)
|
|
77
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Acquisition accounting
(2)
|
(18
|
)
|
|
(23
|
)
|
|
(34
|
)
|
|
(45
|
)
|
||||
Debt-related charges
(3)
|
(12
|
)
|
|
(15
|
)
|
|
(25
|
)
|
|
(29
|
)
|
||||
Loss on extinguishment of debt
(4)
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
||||
Restructuring and restructuring related charges
(5)
|
(18
|
)
|
|
(41
|
)
|
|
(29
|
)
|
|
(59
|
)
|
||||
Sale of CAR Inc. common stock
(6)
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
||||
Impairment charges and asset write-downs
(7)
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
(9
|
)
|
||||
Finance and information technology transformation costs
(8)
|
(19
|
)
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
||||
Other
(9)
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
(6
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
$
|
(35
|
)
|
|
$
|
38
|
|
|
$
|
(112
|
)
|
|
$
|
(71
|
)
|
(1)
|
Represents general corporate expenses, non-vehicle interest expense, as well as other business activities.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
(2)
|
Represents incremental expense associated with 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 the write-off of deferred debt financing costs in the second quarter of 2016 as a result of paying off the Senior Term Facility and various vehicle debt refinancings.
|
(5)
|
Represents expenses incurred under restructuring actions as defined in U.S. GAAP. For further information on restructuring costs, see
Note 9
, "
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. Also includes consulting costs and legal fees related to the accounting review and investigation.
|
(6)
|
Represents the pre-tax gain on the sale of CAR Inc. common stock.
|
(7)
|
In the first half of 2015, primarily represents a
$6 million
impairment on the former Dollar Thrifty headquarters in Tulsa, Oklahoma.
|
(8)
|
Represents external costs associated with the Company’s finance and information technology transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company’s systems and processes. In the three months ended June 30, 2016,
$5 million
was incurred by U.S. RAC and
$14 million
was incurred by Corporate and in the six months ended June 30, 2016,
$9 million
was incurred by U.S. RAC and
$17 million
was incurred by Corporate.
|
(9)
|
Includes miscellaneous and non-recurring items including but not limited to acquisition charges, integration charges, and other non-cash items. For the
six
months ended
June 30, 2016
, also includes a settlement gain related to one of our airport locations. In the 2015 periods, includes charges incurred in connection with relocating the Company's corporate headquarters to Estero, Florida.
|
(b)
|
Transaction days represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period. Late in the third quarter of 2015 the Company fully integrated the Dollar Thrifty and Hertz counter systems and as a result aligned the transaction day calculation in the Hertz system. As a result of this alignment, Hertz determined that there was an impact to the calculation. Hertz expects that transaction days for the U.S. RAC segment will increase by approximately 1% prospectively relative to the historic calculations through the third quarter of 2016.
|
(c)
|
Total RPD is a Non-GAAP measure that is calculated as total revenue less ancillary retail vehicle sales revenue, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is useful in analyzing underlying trends. This statistic is important to our management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
1,584
|
|
|
$
|
1,615
|
|
|
$
|
540
|
|
|
$
|
556
|
|
Ancillary retail vehicle sales revenue
|
(18
|
)
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
||||
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
(21
|
)
|
||||
Total rental revenue
|
$
|
1,566
|
|
|
$
|
1,602
|
|
|
$
|
526
|
|
|
$
|
535
|
|
Transaction days (in thousands)
|
37,190
|
|
|
34,977
|
|
|
12,511
|
|
|
12,523
|
|
||||
Total RPD (in whole dollars)
|
$
|
42.11
|
|
|
$
|
45.80
|
|
|
$
|
42.04
|
|
|
$
|
42.72
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
2,990
|
|
|
$
|
3,135
|
|
|
$
|
973
|
|
|
$
|
992
|
|
Ancillary retail vehicle sales revenue
|
(37
|
)
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
||||
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(43
|
)
|
||||
Total rental revenue
|
$
|
2,953
|
|
|
$
|
3,110
|
|
|
$
|
960
|
|
|
$
|
949
|
|
Transaction days (in thousands)
|
69,932
|
|
|
67,014
|
|
|
22,613
|
|
|
22,298
|
|
||||
Total RPD (in whole dollars)
|
$
|
42.23
|
|
|
$
|
46.41
|
|
|
$
|
42.45
|
|
|
$
|
42.56
|
|
(d)
|
Average vehicles is determined using a simple average of the number of vehicles at the beginning and end of a given period. Among other things, average vehicles is used to calculate our vehicle utilization which represents the portion of our vehicles that are being utilized to generate revenue. Vehicle utilization is calculated by dividing total transaction days by available car days.
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||
|
Three Months Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Transaction days (in thousands)
|
37,190
|
|
|
34,977
|
|
|
12,511
|
|
|
12,523
|
|
Average vehicles
|
500,000
|
|
|
511,700
|
|
|
178,600
|
|
|
173,700
|
|
Number of days in period
|
91
|
|
|
91
|
|
|
91
|
|
|
91
|
|
Available car days (in thousands)
|
45,500
|
|
|
46,565
|
|
|
16,253
|
|
|
15,807
|
|
Vehicle utilization
|
82
|
%
|
|
75
|
%
|
|
77
|
%
|
|
79
|
%
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||
|
Six Months Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Transaction days (in thousands)
|
69,932
|
|
|
67,014
|
|
|
22,613
|
|
|
22,298
|
|
Average vehicles
|
480,100
|
|
|
500,500
|
|
|
163,300
|
|
|
158,800
|
|
Number of days in period
|
182
|
|
|
181
|
|
|
182
|
|
|
181
|
|
Available car days (in thousands)
|
87,378
|
|
|
90,591
|
|
|
29,721
|
|
|
28,743
|
|
Vehicle utilization
|
80
|
%
|
|
74
|
%
|
|
76
|
%
|
|
78
|
%
|
(e)
|
Revenue per available car day is calculated as total revenues less ancillary retail vehicle sales revenue, 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 vehicle rental business and provides a measure of revenue production relative to overall capacity.
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
Three Months Ended March 31,
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Total rental revenue
|
$
|
1,566
|
|
|
$
|
1,602
|
|
|
$
|
526
|
|
|
$
|
535
|
|
Available car days (in thousands)
|
45,500
|
|
|
46,565
|
|
|
16,253
|
|
|
15,807
|
|
||||
Revenue per available car day (in whole dollars)
|
$
|
34.42
|
|
|
$
|
34.40
|
|
|
$
|
32.36
|
|
|
$
|
33.85
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Total rental revenue
|
$
|
2,953
|
|
|
$
|
3,110
|
|
|
$
|
960
|
|
|
$
|
949
|
|
Available car days (in thousands)
|
87,378
|
|
|
90,591
|
|
|
29,721
|
|
|
28,743
|
|
||||
Revenue per available car day (in whole dollars)
|
$
|
33.80
|
|
|
$
|
34.33
|
|
|
$
|
32.30
|
|
|
$
|
33.02
|
|
(f)
|
Net depreciation per unit per month is a non-GAAP measure that is calculated by dividing depreciation of revenue earning vehicles and lease charges, net by the average vehicles 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. 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 vehicles and lease charges, net, (based on
December 31, 2015
foreign exchange rates) for the periods shown:
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Depreciation of revenue earning vehicles and lease charges
|
$
|
417
|
|
|
$
|
380
|
|
|
$
|
98
|
|
|
$
|
101
|
|
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(4
|
)
|
||||
Adjusted depreciation of revenue earning vehicles and lease charges, net
|
$
|
417
|
|
|
$
|
380
|
|
|
$
|
96
|
|
|
$
|
97
|
|
Average vehicles
|
500,000
|
|
|
511,700
|
|
|
178,600
|
|
|
173,700
|
|
||||
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
|
$
|
834
|
|
|
$
|
743
|
|
|
$
|
538
|
|
|
$
|
558
|
|
Number of months in period
|
3
|
|
3
|
|
3
|
|
3
|
||||||||
Net depreciation per unit per month (in whole dollars)
|
$
|
278
|
|
|
$
|
248
|
|
|
$
|
179
|
|
|
$
|
186
|
|
|
U.S. Rental Car
|
|
International Rental Car
|
||||||||||||
|
Six Months Ended June 30,
|
||||||||||||||
($ in millions, except as noted)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Depreciation of revenue earning vehicles and lease charges
|
$
|
836
|
|
|
$
|
801
|
|
|
$
|
184
|
|
|
$
|
196
|
|
Foreign currency adjustment
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(8
|
)
|
||||
Adjusted depreciation of revenue earning vehicles and lease charges, net
|
$
|
836
|
|
|
$
|
801
|
|
|
$
|
182
|
|
|
$
|
188
|
|
Average vehicles
|
480,100
|
|
|
500,500
|
|
|
163,300
|
|
|
158,800
|
|
||||
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)
|
$
|
1,741
|
|
|
$
|
1,600
|
|
|
$
|
1,115
|
|
|
$
|
1,184
|
|
Number of months in period
|
6
|
|
6
|
|
6
|
|
6
|
||||||||
Net depreciation per unit per month (in whole dollars)
|
$
|
290
|
|
|
$
|
267
|
|
|
$
|
186
|
|
|
$
|
197
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
Six Months Ended
June 30, |
|
|
||||||||
(In millions)
|
2016
|
|
2015
|
|
$ Change
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
1,014
|
|
|
$
|
1,161
|
|
|
$
|
(147
|
)
|
Investing activities
|
(1,929
|
)
|
|
(2,862
|
)
|
|
933
|
|
|||
Financing activities
|
1,718
|
|
|
1,771
|
|
|
(53
|
)
|
|||
Effect of exchange rate changes
|
8
|
|
|
(16
|
)
|
|
24
|
|
|||
Net change in cash and cash equivalents
|
$
|
811
|
|
|
$
|
54
|
|
|
$
|
757
|
|
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)
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
(In millions)
|
Remaining
Capacity
|
|
Availability Under
Borrowing Base
Limitation
|
||||
Non-Vehicle Debt
|
|
|
|
||||
Senior RCF
|
$
|
1,094
|
|
|
$
|
1,094
|
|
Total Non-Vehicle Debt
|
1,094
|
|
|
1,094
|
|
||
Vehicle Debt
|
|
|
|
||||
U.S. Vehicle RCF
|
—
|
|
|
—
|
|
||
HVF II U.S. Vehicle Variable Funding Notes
|
613
|
|
|
—
|
|
||
HFLF Variable Funding Notes
|
325
|
|
|
—
|
|
||
European Revolving Credit Facility
|
—
|
|
|
—
|
|
||
European Securitization
|
94
|
|
|
—
|
|
||
Canadian Securitization
|
16
|
|
|
—
|
|
||
Australian Securitization
|
96
|
|
|
2
|
|
||
Capitalized Leases
|
16
|
|
|
8
|
|
||
Total Vehicle Debt
|
1,160
|
|
|
10
|
|
||
Total
|
$
|
2,254
|
|
|
$
|
1,104
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
Fiscal Quarter(s) Ending
|
|
Maximum Ratio
|
September 30, 2016
|
|
5.25 to 1.00
|
December 31, 2016 through March 31, 2017
|
|
4.75 to 1.00
|
June 30, 2017 through September 30, 2017
|
|
5.25 to 1.00
|
December 31, 2017
|
|
4.75 to 1.00
|
March 31, 2018
|
|
4.50 to 1.00
|
June 30, 2018 through September 30, 2018
|
|
5.00 to 1.00
|
December 31, 2018 through March 31, 2019
|
|
4.50 to 1.00
|
June 30, 2019 through September 30, 2019
|
|
5.00 to 1.00
|
December 31, 2019 through March 31, 2020
|
|
4.50 to 1.00
|
June 30, 2020 through September 30, 2020
|
|
5.00 to 1.00
|
December 31, 2020 through March 31, 2021
|
|
4.50 to 1.00
|
|
|
Revenue Earning Vehicles
|
|
Capital Assets, Non-Vehicle
|
||||||||||||||||||||
Cash inflow (cash outflow)(In millions)
|
|
Capital
Expenditures
|
|
Disposal
Proceeds
|
|
Net Capital
Expenditures
|
|
Capital
Expenditures
|
|
Disposal
Proceeds
|
|
Net Capital
Expenditures
|
||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First Quarter
|
|
$
|
(3,590
|
)
|
|
$
|
2,967
|
|
|
$
|
(623
|
)
|
|
$
|
(46
|
)
|
|
$
|
19
|
|
|
$
|
(27
|
)
|
Second Quarter
|
|
(3,678
|
)
|
|
2,201
|
|
|
(1,477
|
)
|
|
(26
|
)
|
|
20
|
|
|
(6
|
)
|
||||||
Total
|
|
$
|
(7,268
|
)
|
|
$
|
5,168
|
|
|
$
|
(2,100
|
)
|
|
$
|
(72
|
)
|
|
$
|
39
|
|
|
$
|
(33
|
)
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First Quarter
|
|
$
|
(3,317
|
)
|
|
$
|
2,227
|
|
|
$
|
(1,090
|
)
|
|
$
|
(66
|
)
|
|
$
|
18
|
|
|
$
|
(48
|
)
|
Second Quarter
|
|
(4,322
|
)
|
|
2,589
|
|
|
(1,733
|
)
|
|
(55
|
)
|
|
26
|
|
|
(29
|
)
|
||||||
Total
|
|
$
|
(7,639
|
)
|
|
$
|
4,816
|
|
|
$
|
(2,823
|
)
|
|
$
|
(121
|
)
|
|
$
|
44
|
|
|
$
|
(77
|
)
|
|
Six Months Ended
June 30, |
|
|
|
|
|||||||||
(In millions)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Revenue earning vehicle expenditures, net
|
|
|
|
|
|
|
|
|||||||
U.S. Rental Car
|
$
|
(1,309
|
)
|
|
$
|
(1,911
|
)
|
|
$
|
602
|
|
|
(32
|
)%
|
International Rental Car
|
(543
|
)
|
|
(621
|
)
|
|
78
|
|
|
(13
|
)
|
|||
All Other Operations
|
(248
|
)
|
|
(291
|
)
|
|
43
|
|
|
(15
|
)
|
|||
Total
|
$
|
(2,100
|
)
|
|
$
|
(2,823
|
)
|
|
$
|
723
|
|
|
(26
|
)
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
|
Six Months Ended
June 30, |
|
|
|
|
|||||||||
(In millions)
|
2016
|
|
2015
|
|
$ Change
|
|
% Change
|
|||||||
Capital asset expenditures, non-vehicle, net
|
|
|
|
|
|
|
|
|||||||
U.S. Rental Car
|
$
|
(17
|
)
|
|
$
|
(16
|
)
|
|
$
|
(1
|
)
|
|
6
|
%
|
International Rental Car
|
(7
|
)
|
|
(19
|
)
|
|
12
|
|
|
(63
|
)
|
|||
All Other Operations
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Corporate
|
(7
|
)
|
|
(40
|
)
|
|
33
|
|
|
(83
|
)
|
|||
Total
|
$
|
(33
|
)
|
|
$
|
(77
|
)
|
|
$
|
44
|
|
|
(57
|
)
|
|
|
|
Payments Due by Period
|
||||||||||||||||
(in millions)
|
Total
|
|
2016
|
|
2017 to 2018
|
|
2019 to 2020
|
|
After 2020
|
||||||||||
Vehicle:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt obligation
(a)
|
$
|
10,846
|
|
|
$
|
906
|
|
|
$
|
6,140
|
|
(d)
|
$
|
2,254
|
|
|
$
|
1,546
|
|
Interest on debt
(b)
|
652
|
|
|
139
|
|
|
358
|
|
|
151
|
|
|
4
|
|
|||||
Non-Vehicle:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt obligation
(a)
|
4,629
|
|
|
703
|
|
(c)
|
265
|
|
|
1,965
|
|
|
1,696
|
|
|||||
Interest on debt
(b)
|
1,014
|
|
|
130
|
|
|
454
|
|
|
291
|
|
|
139
|
|
|||||
Total
|
$
|
17,141
|
|
|
$
|
1,878
|
|
|
$
|
7,217
|
|
|
$
|
4,661
|
|
|
$
|
3,385
|
|
(a)
|
Amounts represent nominal value of debt obligations. See
Note 6
, "
Debt
," to the Notes to our condensed consolidated financial statements included in this Report.
|
(b)
|
Amounts represent the estimated commitment fees and interest payments based on the principal amounts, minimum non-cancelable maturity dates and applicable interest rates on the debt at
June 30, 2016
.
|
(c)
|
Amount includes
$700 million
principal related to the
7.50% Senior Notes due October 2018
that were repaid in July 2016 as further described in
Note 19
, "
Subsequent Events
," to the Notes to our condensed consolidated financial statements included in this Report.
|
(d)
|
Amount includes
$89 million
outstanding borrowings at
June 30, 2016
related to the Australian Securitization which was extended to
July
2018
as further described in
Note 19
, "
Subsequent Events
," to the Notes to our condensed consolidated financial statements included in this Report.
|
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;
|
•
|
levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets;
|
•
|
the effect of our separation of our vehicle and equipment rental businesses, any failure by Herc Holdings Inc. to comply with the agreements entered into in connection with the separation and our ability to obtain the expected benefits of the separation;
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
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;
|
•
|
increased vehicle costs due to declines in the value of our non-program vehicles;
|
•
|
occurrences that disrupt rental activity during our peak periods;
|
•
|
our ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles we purchase;
|
•
|
our ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in our rental operations accordingly;
|
•
|
our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning vehicles and to refinance our existing indebtedness;
|
•
|
our ability to adequately respond to changes in technology and customer demands;
|
•
|
our ability to maintain access to third-party distribution channels, including current or favorable prices, commission structures and transaction volumes;
|
•
|
an increase in our vehicle costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles;
|
•
|
a major disruption in our communication or centralized information networks;
|
•
|
financial instability of the manufacturers of our vehicles;
|
•
|
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, the fact that substantially all of our consolidated assets secure certain of our outstanding indebtedness and increases in interest rates or in our borrowing margins;
|
•
|
our ability to meet the financial and other covenants contained in our Senior 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;
|
•
|
risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws;
|
•
|
our ability to successfully outsource a significant portion of our information technology services or other activities;
|
•
|
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;
|
•
|
changes to our senior management team and the dependence of our business operations on our senior management team;
|
•
|
the effect of tangible and intangible asset impairment charges;
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|
•
|
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.
|
(a)
|
Exhibits:
|
Date:
|
August 8, 2016
|
HERTZ GLOBAL HOLDINGS, INC.
(Registrant)
|
|
|
|
By:
|
/s/ THOMAS C. KENNEDY
|
|
|
|
Thomas C. Kennedy
Senior Executive Vice President and Chief Financial Officer
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
1 Year Hertz Global Chart |
1 Month Hertz Global Chart |
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