PARK RIDGE, N.J., July 29, 2013 /PRNewswire/ — Hertz Global Holdings, Inc. (NYSE: HTZ) (with its subsidiaries, the "Company" or "we") reported second quarter 2013 worldwide revenues of $2.7 billion, an increase of 22.0% year-over-year. Worldwide car rental revenues for the quarter increased 23.3% year-over-year to $2,329.5 million. Revenues from worldwide equipment rental for the second quarter were $384.3 million, up 14.7% year-over-year.
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Second quarter 2013 adjusted pre-tax income was $314.5 million, versus adjusted pre-tax income of $233.9 million in the same period in 2012, and pre-tax income, on a GAAP basis, was $211.9 million versus $158.7 million in the second quarter of 2012. Corporate EBITDA for the second quarter of 2013 was $540.4 million, an increase of 32.5% from the same period in 2012.
Second quarter 2013 adjusted net income(1) was $204.4 million, versus $154.4 million in the same period of 2012, resulting in adjusted diluted earnings per share for the quarter of $0.45, compared to $0.35 for the second quarter of 2012. Second quarter 2013 net income attributable to Hertz Global Holdings, Inc. and Subsidiaries’ common stockholders, on a GAAP basis, was $121.4 million or $0.27 per share on a diluted basis, compared to $92.9 million or $0.21 per share on a diluted basis for the second quarter of 2012.
Mark P. Frissora, the Company’s Chairman and Chief Executive Officer, said, "Our eighth consecutive quarter of record adjusted pre-tax income, which increased 34.5% year-over-year in the second quarter, was driven in part by double-digit revenue growth in four businesses: U.S. off-airport car rental, leisure car rental, HERC and Donlen. Hertz also achieved several other financial records this past quarter, the result of solid execution of balanced revenue, cost initiatives, and Dollar Thrifty synergies which are running ahead of plan," he added.
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INCOME MEASUREMENTS, SECOND QUARTER 2013 & 2012 |
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|
Q2 2013 |
Q2 2012 |
|||||||||||||||||||
|
(in millions, except per share amounts) |
Pre-tax Income |
Net Income |
Diluted Earnings Per Share |
Pre-tax Income |
Net Income |
Diluted Earnings Per Share |
||||||||||||||
|
Earnings Measures, as reported (EPS |
$ |
211.9 |
$ |
121.4 |
$ |
0.27 |
$ |
158.7 |
$ |
92.9 |
$ |
0.21 |
||||||||
|
Adjustments: |
||||||||||||||||||||
|
Purchase accounting |
33.1 |
29.0 |
||||||||||||||||||
|
Non-cash debt charges |
19.5 |
20.6 |
||||||||||||||||||
|
Integration expenses |
9.2 |
– |
||||||||||||||||||
|
Restructuring and related charges |
26.2 |
21.1 |
||||||||||||||||||
|
Acquisition related costs |
9.1 |
4.5 |
||||||||||||||||||
|
Other |
5.4 |
– |
||||||||||||||||||
|
Adjusted pre-tax income |
314.5 |
314.5 |
233.9 |
233.9 |
||||||||||||||||
|
Assumed provision for income taxes at |
(110.1) |
(79.5) |
||||||||||||||||||
|
Earnings Measures, as adjusted (EPS |
$ |
314.5 |
$ |
204.4 |
$ |
0.45 |
$ |
233.9 |
$ |
154.4 |
$ |
0.35 |
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|
* We had a change in policy in Q1 2013 with respect to settling the conversion of our 5.25% Convertible Senior Notes due June 2014. For 2013, this policy change results in an adjustment to the numerator (net income) of our earnings per share computation. The numerator is adjusted to add back the after-tax amount of interest recognized in the period associated with the Convertible Senior Notes on the same pro rata basis. |
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Net cash provided by operating activities year to date was $1,458.6 million, compared to $1,158.4 million in the same period last year, an increase of $300.2 million. The increase was primarily due to an increase in net income before depreciation and amortization partially offset by increased non-fleet working capital requirements. Free cash flow(1) for the six months ended June 30, 2013 decreased by $219.2 million compared to the same period last year. The year over year improvement in operating cash flow, compared to free cash flow, was more than offset by an incremental $302.8 million increase in net investments related to car rental and equipment rental fleet growth and increased non fleet capital expenditures. The Company ended the second quarter of 2013 with total debt of $17.8 billion and net corporate debt(1) of $7.1 billion, compared with total debt of $15.4 billion and net corporate debt of $5.9 billion as of December 31, 2012
WORLDWIDE CAR RENTAL
Worldwide car rental revenues were $2,329.5 million for the second quarter of 2013, an increase of 23.3% from the prior year period. The Company achieved record transaction days for the quarter which increased 22.0% over the second quarter of 2012 [29.9% U.S.; 2.9% International] largely due to the acquisition of Dollar Thrifty, partially offset by the Advantage divestiture. U.S. off-airport total revenues for the second quarter increased 11.6% year-over-year, and transaction days increased 10.2% from the prior year period. Worldwide total revenue per transaction day(1) ("total RPD") for the quarter increased 1.2% [3.1% U.S.; (0.5)% International] from the prior year period.
Worldwide car rental adjusted pre-tax income for the second quarter of 2013 was $363.0 million, an increase of $85.6 million from $277.4 million in the prior year period. The result was driven by stronger volumes and pricing including the impact of the Dollar Thrifty acquisition, lower net depreciation per vehicle, lower interest expense as a % of revenues, and disciplined cost management. As a result, worldwide car rental achieved an adjusted pre-tax margin(1) of 15.6% for the quarter, versus 14.7% in the prior year period. The Company noted that the second quarter was an unusually tough comparison for U.S. car rental due to second quarter 2012 residual values which were at peak levels compared with the second quarter 2013. Therefore, the year-over-year margin improvement in the recently completed second quarter was impressive given the $45.8 million residual value hurdle.
The worldwide average number of Company-operated cars for the second quarter of 2013 was 830,300, an increase of 26.5% over the prior year period, largely as a result of the Dollar Thrifty acquisition.
WORLDWIDE EQUIPMENT RENTAL
Worldwide equipment rental revenues were $384.4 million for the second quarter of 2013, a 14.7% increase from the prior year period. The primary drivers of the increase were stronger equipment rental volumes, up 16.4%, and a 3.6% increase in pricing. Volume increased on strong industrial and improving construction performance.
Adjusted pre-tax income for worldwide equipment rental for the second quarter of 2013 was $74.1 million, an improvement of $31.6 million from $42.5 million in the prior year period, primarily attributable to the effects of increased volume, improved pricing and cost management initiatives. Worldwide equipment rental achieved an adjusted pre-tax margin of 19.3% and a Corporate EBITDA margin(1) of 43.1% for the quarter.
The average acquisition cost of rental equipment operated during the second quarter of 2013 increased by 12.3% year-over-year and net revenue earning equipment as of June 30, 2013 was $2,385.3 million, compared to $2,269.5 million as of March 31, 2013.
OUTLOOK
The Company reaffirms its full year 2013 guidance, provided on February 25, 2013, for revenues, Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share(2). In 2013, the Company expects to generate worldwide revenues in the range of $10,850 million – $10,950 million, Corporate EBITDA in the range of $2,210 million – $2,270 million, adjusted pre-tax income in the range of $1,270 million – $1,340 million, adjusted net income in the range of $830 million – $875 million and adjusted diluted earnings per share in the range of $1.82 – $1.92.
RESULTS OF THE HERTZ CORPORATION
The Company’s operating subsidiary, The Hertz Corporation ("Hertz"), posted the same revenues for the second quarter of 2013 as the Company. Hertz’s second quarter 2013 pre-tax income was $225.7 million versus the Company’s pre-tax income of $211.9 million. The difference between Hertz’s and the Company’s results is primarily due to additional interest expense recognized by the Company on its 5.25% Convertible Senior Notes issued in May and September 2009.
(1) Adjusted pre-tax income, adjusted pre-tax margin, Corporate EBITDA, Corporate EBITDA margin, adjusted net income, adjusted diluted earnings per share, free cash flow, net corporate debt and total revenue per transaction day are non-GAAP measures. See the accompanying Tables and Exhibit for the reconciliations and definitions for each of these non-GAAP measures and the reason the Company’s management believes that these measures provide useful information to investors regarding the Company’s financial condition and results of operations.
(2) Management believes that Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share are useful in measuring the comparable results of the Company period-over-period. The GAAP measures most directly comparable to Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share are (i) pre-tax income and cash flows from operating activities, (ii) pre-tax income, (iii) net income, and (iv) diluted earnings per share, respectively. Because of the forward-looking nature of the Company’s forecasted Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share, specific quantifications of the amounts that would be required to reconcile forecasted cash flows from operating activities, pre-tax income and net income are not available. The Company believes that there is a degree of volatility with respect to certain of the Company’s GAAP measures, primarily related to fair value accounting for its financial assets (which includes the Company’s derivative financial instruments), its income tax reporting and certain adjustments made to arrive at the relevant non-GAAP measures, which preclude the Company from providing accurate forecasted GAAP to non-GAAP reconciliations. Based on the above, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP Corporate EBITDA, adjusted pre-tax income, adjusted net income and adjusted diluted earnings per share to forecasted cash flows from operating activities, pre-tax income, net income and diluted earnings per share would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.
CONFERENCE CALL INFORMATION
The Company’s second quarter 2013 earnings conference call will be held on Monday, July 29, 2013, at 9:30 a.m. (EDT). To access the conference call live, dial 800-230-1093 in the U.S. and 612-288-0329 for international callers using the passcode: 297956 or listen via webcast at www.hertz.com/investorrelations. The conference call will be available for replay one hour following the conclusion of the call until August 12, 2013 by calling 800-475-6701 in the U.S. or 320-365-3844 for international callers with the passcode: 297956. The press release and related tables containing the reconciliations of non-GAAP measures will be available on our website, www.hertz.com/investorrelations.
ABOUT THE COMPANY
Hertz is the largest worldwide airport general use car rental brand, operating from approximately 10,900 corporate and licensee locations in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand. Hertz is the largest airport general use car rental brand, operating from approximately 9,300 corporate and licensee locations in approximately 150 countries. Our Dollar and Thrifty brands have approximately 1,600 corporate and franchise locations in approximately 90 countries. Hertz is the number one airport car rental brand in the U.S. and at 120 major airports in Europe. Hertz is an inaugural member of Travel + Leisure’s World’s Best Awards Hall of Fame and was recently named, for the thirteenth time, by the magazine’s readers as the Best Car Rental Agency. Hertz was also voted the Best Overall Car Rental Company in Zagat’s 2012/13 U.S. Car Rental Survey, earning top honors in 14 additional categories, and the Company swept the global awards for Best Rewards Program and Best Overall Benefits from FlyerTalk.com. Product and service initiatives such as Hertz Gold Plus Rewards, NeverLost®, and unique cars and SUVs offered through the Company’s Adrenaline, Prestige and Green Traveler Collections, also set Hertz apart from the competition. Additionally, Hertz owns the vehicle leasing and fleet management leader Donlen Corporation and operates the Hertz On Demand car sharing business. The Company also owns a leading North American equipment rental business, Hertz Equipment Rental Corporation, which includes Hertz Entertainment Services.
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release and in related comments by our management include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include information concerning the Company’s outlook, anticipated revenues and results of operations, as well as any other statement that does not directly relate to any historical or current fact. These forward-looking statements often include words such as "believe," "expect," "project," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts" or similar expressions. These statements are based on certain assumptions that the Company has made in light of its experience in the industry as well as its perceptions of historical trends, current conditions, expected future developments and other factors that the Company believes are appropriate in these circumstances. We believe these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative.
Among other items, such factors could include: our ability to integrate the car rental operations of Dollar Thrifty and realize operational efficiencies from the acquisition; the risk that expected synergies, cost savings from the Dollar Thrifty acquisition may not be fully realized or realized within the expected time frame; the operational and profitability impact of the Advantage divestiture and the divestiture of the airport locations that we agreed to undertake in order to secure regulatory approval for the Dollar Thrifty acquisition; levels of travel demand, particularly with respect to airline passenger traffic in the United States and in global markets; the impact of pending and future U.S. governmental action to address budget deficits through reductions in spending and similar austerity measures, which could materially adversely affect unemployment rates and consumer spending levels; significant changes in the competitive environment, including as a result of industry consolidation, and the effect of competition in our markets, including on our pricing policies or use of incentives; occurrences that disrupt rental activity during our peak periods; our ability to achieve cost savings and efficiencies and realize opportunities to increase productivity and profitability; an increase in our fleet costs as a result of an increase in the cost of new vehicles and/or a decrease in the price at which we dispose of used vehicles either in the used vehicle market or under repurchase or guaranteed depreciation programs our ability to accurately estimate future levels of rental activity and adjust the size and mix of our fleet accordingly; our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning equipment and to refinance our existing indebtedness; safety recalls by the manufacturers of our vehicles and equipment; a major disruption in our communication or centralized information networks; financial instability of the manufacturers of our vehicles and equipment; any impact on us from the actions of our licensees, 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; risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt and increases in interest rates or in our borrowing margins; our ability to meet the financial and other covenants contained in our Senior Credit Facilities, our outstanding unsecured Senior Notes and certain asset-backed and asset-based arrangements; changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on earnings; changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect our operations, the cost thereof or applicable tax rates; changes to our senior management team; the effect of tangible and intangible asset impairment charges; the impact of our derivative instruments, which can be affected by fluctuations in interest rates and commodity prices; and our exposure to fluctuations in foreign exchange rates. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
The Company therefore cautions you against relying on these forward-looking statements. All forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
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Tables and Exhibit: |
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Table 1: |
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012 |
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Table 2: |
Condensed Consolidated Statements of Operations As Reported and As Adjusted for the Three and Six Months Ended June 30, 2013 and 2012 |
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Table 3: |
Segment and Other Information for the Three and Six Months Ended June 30, 2013 and 2012 |
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Table 4: |
Selected Operating and Financial Data as of or for the Three and Six Months Ended June 30, 2013 compared to June 30, 2012 and Selected Balance Sheet Data as of June 30, 2013 and December 31, 2012 |
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Table 5: |
Non-GAAP Reconciliations of Adjusted Pre-Tax Income (Loss), Adjusted Net Income (Loss) and Adjusted Diluted Earnings per Share for the Three and Six Months Ended June 30, 2013 and 2012 |
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Table 6: |
Non-GAAP Reconciliations of Free Cash Flow, EBITDA, and Corporate EBITDA for the Three and Six Months Ended June 30, 2013 and 2012 |
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Table 7: |
Non-GAAP Reconciliations of Operating Cash Flows to EBITDA for Three and Six Months Ended June 30, 2013 and 2012, Net Corporate Debt, Net Fleet Debt and Total Net Debt as of June 30, 2013, 2012 and 2011, March 31, 2012 and 2011, and December 31, 2012 and 2011, Car Rental Rate Revenue per Transaction Day and Equipment Rental and Rental Related Revenue for the Three Months Ended June 30, 2013 and 2012 |
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Exhibit 1: |
Non-GAAP Measures: Definitions and Use/Importance |
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Table 1 |
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HERTZ GLOBAL HOLDINGS, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In millions, except per share amounts) |
||||||||||
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Unaudited |
||||||||||
|
Three Months Ended |
As a Percentage |
|||||||||
|
June 30, |
of Total Revenues |
|||||||||
|
2013 |
2012 |
2013 |
2012 |
|||||||
|
Total revenues |
$ 2,714.6 |
$ 2,225.1 |
100.0 |
% |
100.0 |
% |
||||
|
Expenses: |
||||||||||
|
Direct operating |
1,405.9 |
1,188.9 |
51.8 |
% |
53.4 |
% |
||||
|
Depreciation of revenue earning |
||||||||||
|
equipment and lease charges |
641.1 |
519.8 |
23.6 |
% |
23.4 |
% |
||||
|
Selling, general and administrative |
275.0 |
206.6 |
10.1 |
% |
9.3 |
% |
||||
|
Interest expense |
183.8 |
152.2 |
6.8 |
% |
6.8 |
% |
||||
|
Interest income |
(2.0) |
(0.5) |
(0.1) |
% |
0.0 |
% |
||||
|
Other income, net |
(1.1) |
(0.6) |
– |
% |
0.0 |
% |
||||
|
Total expenses |
2,502.7 |
2,066.4 |
92.2 |
% |
92.9 |
% |
||||
|
Income before income taxes |
211.9 |
158.7 |
7.8 |
% |
7.1 |
% |
||||
|
Provision for taxes on income |
(90.5) |
(65.8) |
(3.3) |
% |
(2.9) |
% |
||||
|
Net income attributable to Hertz Global Holdings, |
||||||||||
|
Inc. and Subsidiaries’ common stockholders |
$ 121.4 |
$ 92.9 |
4.5 |
% |
4.2 |
% |
||||
|
Weighted average number of |
||||||||||
|
shares outstanding: |
||||||||||
|
Basic |
400.8 |
420.0 |
||||||||
|
Diluted |
465.1 |
447.4 |
||||||||
|
Earnings per share attributable to Hertz Global |
||||||||||
|
Holdings, Inc. and Subsidiaries’ common stockholders: |
||||||||||
|
Basic |
$ 0.30 |
$ 0.22 |
||||||||
|
Diluted (a) |
$ 0.27 |
$ 0.21 |
||||||||
|
Six Months Ended |
As a Percentage |
|||||||||
|
June 30, |
of Total Revenues |
|||||||||
|
2013 |
2012 |
2013 |
2012 |
|||||||
|
Total revenues |
$ 5,151.2 |
$ 4,186.1 |
100.0 |
% |
100.0 |
% |
||||
|
Expenses: |
||||||||||
|
Direct operating |
2,757.1 |
2,303.1 |
53.5 |
% |
55.0 |
% |
||||
|
Depreciation of revenue earning |
||||||||||
|
equipment and lease charges |
1,228.1 |
1,034.9 |
23.9 |
% |
24.7 |
% |
||||
|
Selling, general and administrative |
526.7 |
414.3 |
10.2 |
% |
9.9 |
% |
||||
|
Interest expense |
360.6 |
314.5 |
7.0 |
% |
7.5 |
% |
||||
|
Interest income |
(3.8) |
(1.6) |
(0.1) |
% |
0.0 |
% |
||||
|
Other income, net |
(1.7) |
(1.0) |
0.0 |
% |
0.0 |
% |
||||
|
Total expenses |
4,867.0 |
4,064.2 |
94.5 |
% |
97.1 |
% |
||||
|
Income before income taxes |
284.2 |
121.9 |
5.5 |
% |
2.9 |
% |
||||
|
Provision for taxes on income |
(144.8) |
(85.3) |
(2.8) |
% |
(2.0) |
% |
||||
|
Net income attributable to Hertz Global Holdings, |
||||||||||
|
Inc. and Subsidiaries’ common stockholders |
$ 139.4 |
$ 36.6 |
2.7 |
% |
0.9 |
% |
||||
|
Weighted average number of |
||||||||||
|
shares outstanding: |
||||||||||
|
Basic |
408.3 |
419.1 |
||||||||
|
Diluted |
463.0 |
447.9 |
||||||||
|
Earnings per share attributable to Hertz Global |
||||||||||
|
Holdings, Inc. and Subsidiaries’ common stockholders: |
||||||||||
|
Basic |
$ 0.34 |
$ 0.09 |
||||||||
|
Diluted (a) |
$ 0.31 |
$ 0.08 |
||||||||
|
(a) We had a change in policy in Q1 2013 with respect to settling the conversion of our 5.25% Convertible Senior Notes |
||||||||||
|
due June 2014. For 2013, this policy change results in an adjustment to the numerator (net income) of our earnings |
||||||||||
|
per share computation. The numerator is adjusted to add back the after-tax amount of interest recognized in the period |
||||||||||
|
associated with the Convertible Senior Notes on the same pro rata basis. |
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|
Table 2 |
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|
HERTZ GLOBAL HOLDINGS, INC. |
||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||
|
(In millions) |
||||||||||||
|
Unaudited |
||||||||||||
|
Three Months Ended June 30, 2013 |
Three Months Ended June 30, 2012 |
|||||||||||
|
As |
As |
As |
As |
|||||||||
|
Reported |
Adjustments |
Adjusted |
Reported |
Adjustments |
Adjusted |
|||||||
|
Total revenues |
$ 2,714.6 |
$ – |
$ 2,714.6 |
$ 2,225.1 |
$ – |
$ 2,225.1 |
||||||
|
Expenses: |
||||||||||||
|
Direct operating |
1,405.9 |
(45.4) |
(a) |
1,360.5 |
1,188.9 |
(34.6) |
(a) |
1,154.3 |
||||
|
Depreciation of revenue earning |
||||||||||||
|
equipment and lease charges |
641.1 |
(1.8) |
(b) |
639.3 |
519.8 |
(2.7) |
(b) |
517.1 |
||||
|
Selling, general and administrative |
275.0 |
(35.4) |
(c) |
239.6 |
206.6 |
(17.3) |
(c) |
189.3 |
||||
|
Interest expense |
183.8 |
(18.5) |
(d) |
165.3 |
152.2 |
(20.6) |
(d) |
131.6 |
||||
|
Interest income |
(2.0) |
– |
(2.0) |
(0.5) |
– |
(0.5) |
||||||
|
Other income, net |
(1.1) |
(1.5) |
(2.6) |
(0.6) |
– |
(0.6) |
||||||
|
Total expenses |
2,502.7 |
(102.6) |
2,400.1 |
2,066.4 |
(75.2) |
1,991.2 |
||||||
|
Income before income taxes |
211.9 |
102.6 |
314.5 |
158.7 |
75.2 |
233.9 |
||||||
|
Provision for taxes on income |
(90.5) |
(19.6) |
(e) |
(110.1) |
(65.8) |
(13.7) |
(e) |
(79.5) |
||||
|
Net income attributable to Hertz Global Holdings, |
||||||||||||
|
Inc. and Subsidiaries’ common stockholders |
$ 121.4 |
$ 83.0 |
$ 204.4 |
$ 92.9 |
$ 61.5 |
$ 154.4 |
||||||
|
Six Months Ended June 30, 2013 |
Six Months Ended June 30, 2012 |
|||||||||||
|
As |
As |
As |
As |
|||||||||
|
Reported |
Adjustments |
Adjusted |
Reported |
Adjustments |
Adjusted |
|||||||
|
Total revenues |
$ 5,151.2 |
$ – |
$ 5,151.2 |
$ 4,186.1 |
$ – |
$ 4,186.1 |
||||||
|
Expenses: |
||||||||||||
|
Direct operating |
2,757.1 |
(86.9) |
(a) |
2,670.2 |
2,303.1 |
(63.4) |
(a) |
2,239.7 |
||||
|
Depreciation of revenue earning |
||||||||||||
|
equipment and lease charges |
1,228.1 |
(2.5) |
(b) |
1,225.6 |
1,034.9 |
(5.5) |
(b) |
1,029.4 |
||||
|
Selling, general and administrative |
526.7 |
(48.1) |
(c) |
478.6 |
414.3 |
(26.7) |
(c) |
387.6 |
||||
|
Interest expense |
360.6 |
(35.9) |
(d) |
324.7 |
314.5 |
(45.7) |
(d) |
268.8 |
||||
|
Interest income |
(3.8) |
– |
(3.8) |
(1.6) |
– |
(1.6) |
||||||
|
Other income, net |
(1.7) |
(1.4) |
(3.1) |
(1.0) |
– |
(1.0) |
||||||
|
Total expenses |
4,867.0 |
(174.8) |
4,692.2 |
4,064.2 |
(141.3) |
3,922.9 |
||||||
|
Income before income taxes |
284.2 |
174.8 |
459.0 |
121.9 |
141.3 |
263.2 |
||||||
|
Provision for taxes on income |
(144.8) |
(15.9) |
(e) |
(160.7) |
(85.3) |
(4.2) |
(e) |
(89.5) |
||||
|
Net income attributable to Hertz Global Holdings, |
||||||||||||
|
Inc. and Subsidiaries’ common stockholders |
$ 139.4 |
$ 158.9 |
$ 298.3 |
$ 36.6 |
$ 137.1 |
$ 173.7 |
||||||
|
(a) Represents the increase in amortization of other intangible assets, depreciation of property and equipment and accretion of certain revalued liabilities relating to purchase |
||||||||||||
|
accounting. For the three months ended June 30, 2013 and 2012, also includes restructuring and restructuring related charges of $8.5 million and $9.0 million, |
||||||||||||
|
respectively. For the six months ended June 30, 2013 and 2012, also includes restructuring and restructuring related charges of $11.0 million and $17.0 million, |
||||||||||||
|
respectively. |
||||||||||||
|
(b) Represents the increase in depreciation of equipment rental revenue earning equipment based upon its revaluation relating to purchase accounting. |
||||||||||||
|
(c) Represents an increase in depreciation of property and equipment relating to purchase accounting. For the three months ended June 30, 2013 and 2012, also includes |
||||||||||||
|
restructuring and restructuring related charges of $10.8 million and $12.2 million, respectively. For the six months ended June 30, 2013 and 2012, also includes |
||||||||||||
|
restructuring and restructuring related charges of $14.7 million and $14.1 million, respectively. For all periods presented, also includes other adjustments which are |
||||||||||||
|
detailed in Table 5. |
||||||||||||
|
(d) Represents non-cash debt charges relating to the amortization of deferred debt financing costs and debt discounts. |
||||||||||||
|
(e) Represents a provision for income taxes derived utilizing a normalized income tax rate (35% for 2013 and 34% for 2012). |
||||||||||||
|
Table 3 |
||||||||
|
HERTZ GLOBAL HOLDINGS, INC. |
||||||||
|
SEGMENT AND OTHER INFORMATION |
||||||||
|
(In millions, except per share amounts) |
||||||||
|
Unaudited |
||||||||
|
Three Months Ended |
Six Months Ended |
|||||||
|
June 30, |
June 30, |
|||||||
|
2013 |
2012 |
2013 |
2012 |
|||||
|
Revenues: |
||||||||
|
Car Rental |
$ 2,329.5 |
$ 1,889.6 |
$ 4,414.3 |
$ 3,547.9 |
||||
|
Equipment Rental |
384.3 |
335.0 |
735.4 |
637.1 |
||||
|
Other reconciling items |
0.8 |
0.5 |
1.5 |
1.1 |
||||
|
$ 2,714.6 |
$ 2,225.1 |
$ 5,151.2 |
$ 4,186.1 |
|||||
|
Depreciation of property and equipment: |
||||||||
|
Car Rental |
$ 39.5 |
$ 29.9 |
$ 79.8 |
$ 60.8 |
||||
|
Equipment Rental |
8.5 |
8.3 |
17.0 |
16.6 |
||||
|
Other reconciling items |
2.5 |
3.3 |
5.0 |
6.4 |
||||
|
$ 50.5 |
$ 41.5 |
$ 101.8 |
$ 83.8 |
|||||
|
Amortization of other intangible assets: |
||||||||
|
Car Rental |
$ 19.3 |
$ 9.2 |
$ 38.9 |
$ 18.4 |
||||
|
Equipment Rental |
10.3 |
10.3 |
20.8 |
19.8 |
||||
|
Other reconciling items |
0.5 |
0.4 |
1.0 |
0.8 |
||||
|
$ 30.1 |
$ 19.9 |
$ 60.7 |
$ 39.0 |
|||||
|
Income (loss) before income taxes: |
||||||||
|
Car Rental |
$ 307.0 |
$ 234.8 |
$ 476.6 |
$ 296.4 |
||||
|
Equipment Rental |
62.8 |
28.1 |
95.0 |
38.2 |
||||
|
Other reconciling items |
(157.9) |
(104.2) |
(287.4) |
(212.7) |
||||
|
$ 211.9 |
$ 158.7 |
$ 284.2 |
$ 121.9 |
|||||
|
Corporate EBITDA (a): |
||||||||
|
Car Rental |
$ 394.3 |
$ 302.7 |
$ 641.9 |
$ 425.1 |
||||
|
Equipment Rental |
165.7 |
126.4 |
304.7 |
233.7 |
||||
|
Other reconciling items |
(19.6) |
(21.4) |
(41.8) |
(43.1) |
||||
|
$ 540.4 |
$ 407.7 |
$ 904.8 |
$ 615.7 |
|||||
|
Adjusted pre-tax income (loss) (a): |
||||||||
|
Car Rental |
$ 363.0 |
$ 277.4 |
$ 571.4 |
$ 369.0 |
||||
|
Equipment Rental |
74.1 |
42.5 |
119.9 |
68.4 |
||||
|
Other reconciling items |
(122.6) |
(86.0) |
(232.3) |
(174.2) |
||||
|
$ 314.5 |
$ 233.9 |
$ 459.0 |
$ 263.2 |
|||||
|
Adjusted net income (loss) (a): |
||||||||
|
Car Rental |
$ 235.9 |
$ 183.1 |
$ 371.4 |
$ 243.6 |
||||
|
Equipment Rental |
48.2 |
28.1 |
77.9 |
45.1 |
||||
|
Other reconciling items |
(79.7) |
(56.8) |
(151.0) |
(115.0) |
||||
|
$ 204.4 |
$ 154.4 |
$ 298.3 |
$ 173.7 |
|||||
|
Adjusted diluted number of shares outstanding (a) |
465.1 |
447.4 |
463.0 |
447.9 |
||||
|
Adjusted diluted earnings per share (a)(b) |
$ 0.45 |
$ 0.35 |
$ 0.65 |
$ 0.39 |
||||
|
(a) Represents a non-GAAP measure, see the accompanying reconciliations and definitions. |
||||||||
|
(b) See footnote explanation in Table 1. |
||||||||
|
Note: "Other Reconciling Items" includes general corporate expenses, certain interest expense (including net interest on corporate debt), |
||||||||
|
as well as other business activities such as our third-party claim management services. See Tables 5 and 6. |
||||||||
|
Table 4 |
||||||||
|
HERTZ GLOBAL HOLDINGS, INC. |
||||||||
|
SELECTED OPERATING AND FINANCIAL DATA |
||||||||
|
Unaudited |
||||||||
|
Three |
Percent |
Six |
Percent |
|||||
|
Months |
change |
Months |
change |
|||||
|
Ended, or as |
from |
Ended, or as |
from |
|||||
|
of Jun. 30, |
prior year |
of Jun. 30, |
prior year |
|||||
|
2013 |
period |
2013 |
period |
|||||
|
Selected Car Rental Operating Data |
||||||||
|
Worldwide number of transactions (in thousands) |
9,208 |
22.5 |
% |
16,902 |
21.6 |
% |
||
|
Domestic (Hertz, Dollar and Thrifty) |
7,208 |
28.3 |
% |
13,308 |
27.3 |
% |
||
|
International (Hertz, Dollar and Thrifty) |
2,000 |
5.4 |
% |
3,594 |
4.2 |
% |
||
|
Worldwide transaction days (in thousands) |
45,439 |
22.0 |
% |
85,817 |
24.5 |
% |
||
|
Domestic (Hertz, Dollar and Thrifty) |
34,178 |
29.9 |
% |
65,549 |
33.4 |
% |
||
|
International (Hertz, Dollar and Thrifty) |
11,261 |
2.9 |
% |
20,268 |
2.4 |
% |
||
|
Worldwide Total RPD (a) |
$ 48.58 |
1.2 |
% |
$ 48.55 |
0.3 |
% |
||
|
Domestic (Hertz, Dollar and Thrifty) |
$ 46.78 |
3.1 |
% |
$ 47.03 |
1.9 |
% |
||
|
International (Hertz, Dollar and Thrifty) (b) |
$ 54.05 |
(0.5) |
% |
$ 53.48 |
(0.8) |
% |
||
|
Worldwide average number of cars during period |
830,300 |
26.5 |
% |
816,100 |
30.5 |
% |
||
|
Domestic (Hertz company-operated) |
470,400 |
33.2 |
% |
472,200 |
40.2 |
% |
||
|
Domestic (Leased) |
28,400 |
N/A |
26,600 |
N/A |
||||
|
International (Hertz company-operated) |
163,500 |
4.1 |
% |
150,500 |
3.9 |
% |
||
|
Donlen (under lease and maintenance) |
168,000 |
15.0 |
% |
166,800 |
16.0 |
% |
||
|
Worldwide revenue earning equipment, net (in millions) |
$ 13,320.7 |
28.0 |
% |
$ 13,320.7 |
28.0 |
% |
||
|
Selected Worldwide Equipment Rental Operating Data |
||||||||
|
Rental and rental related revenue (in millions) (a) (b) |
$ 351.0 |
15.8 |
% |
$ 673.1 |
16.6 |
% |
||
|
Same store revenue growth , including initiatives (a) (b) |
11.4 |
% |
56.2 |
% |
12.4 |
% |
53.1 |
% |
|
Average acquisition cost of revenue earning equipment operated |
||||||||
|
during period (in millions) |
$ 3,373.1 |
12.3 |
% |
$ 3,324.7 |
12.6 |
% |
||
|
Worldwide revenue earning equipment, net (in millions) |
$ 2,385.3 |
17.5 |
% |
$ 2,385.3 |
17.5 |
% |
||
|
Other Financial Data (in millions) |
||||||||
|
Cash flows provided by operating activities |
$ 715.1 |
5.4 |
% |
$ 1,458.6 |
24.6 |
% |
||
|
Free cash flow (a) |
(327.0) |
144.8 |
% |
(404.8) |
(2.2) |
% |
||
|
EBITDA (a) |
1,115.8 |
25.1 |
% |
2,032.2 |
27.7 |
% |
||
|
Corporate EBITDA (a) |
540.4 |
32.5 |
% |
904.8 |
47.0 |
% |
||
|
Selected Balance Sheet Data (in millions) |
||||||||
|
June 30, |
December 31, |
|||||||
|
2013 |
2012 |
|||||||
|
Cash and cash equivalents |
$ 483.1 |
$ 533.3 |
||||||
|
Total revenue earning equipment, net |
15,706.0 |
12,908.3 |
||||||
|
Total assets |
25,932.3 |
23,286.0 |
||||||
|
Total debt |
17,842.0 |
15,448.6 |
||||||
|
Net corporate debt (a) |
7,054.1 |
5,934.4 |
||||||
|
Net fleet debt (a) |
9,911.6 |
8,409.3 |
||||||
|
Total net debt (a) |
16,965.7 |
14,343.7 |
||||||
|
Total equity |
2,164.2 |
2,507.3 |
||||||
|
(a) Represents a non-GAAP measure, see the accompanying reconciliations and definitions. |
||||||||
|
(b) Based on 12/31/12 foreign exchange rates. |
||||||||
|
N/M Percentage change not meaningful. |
||||||||
|
Table 5 |
||||||||||||||||
|
HERTZ GLOBAL HOLDINGS, INC. |
||||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES |
||||||||||||||||
|
(In millions, except per share amounts) |
||||||||||||||||
|
Unaudited |
||||||||||||||||
|
ADJUSTED PRE-TAX INCOME (LOSS), ADJUSTED NET INCOME (LOSS) AND ADJUSTED DILUTED EARNINGS PER SHARE |
||||||||||||||||
|
Three Months Ended June 30, 2013 |
Three Months Ended June 30, 2012 |
|||||||||||||||
|
Other |
Other |
|||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
|||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
|||||||||
|
Total revenues: |
$ 2,329.5 |
$ 384.3 |
$ 0.8 |
$ 2,714.6 |
$ 1,889.6 |
$ 335.0 |
$ 0.5 |
$ 2,225.1 |
||||||||
|
Expenses: |
||||||||||||||||
|
Direct operating and selling, general and administrative |
1,380.3 |
239.1 |
61.5 |
1,680.9 |
1,123.8 |
230.4 |
41.3 |
1,395.5 |
||||||||
|
Depreciation of revenue earning equipment and lease charges |
568.4 |
72.7 |
0.0 |
641.1 |
454.1 |
65.7 |
0.0 |
519.8 |
||||||||
|
Interest expense |
76.7 |
11.7 |
95.4 |
183.8 |
77.2 |
11.5 |
63.5 |
152.2 |
||||||||
|
Interest income |
(1.9) |
(0.1) |
0.0 |
(2.0) |
(0.3) |
(0.1) |
(0.1) |
(0.5) |
||||||||
|
Other income, net |
(1.0) |
(1.9) |
1.8 |
(1.1) |
0.0 |
(0.6) |
0.0 |
(0.6) |
||||||||
|
Total expenses |
2,022.5 |
321.5 |
158.7 |
2,502.7 |
1,654.8 |
306.9 |
104.7 |
2,066.4 |
||||||||
|
Income (loss) before income taxes |
307.0 |
62.8 |
(157.9) |
211.9 |
234.8 |
28.1 |
(104.2) |
158.7 |
||||||||
|
Adjustments: |
||||||||||||||||
|
Purchase accounting (a): |
||||||||||||||||
|
Direct operating and selling, general and administrative |
20.4 |
10.3 |
0.5 |
31.2 |
14.5 |
10.8 |
1.0 |
26.3 |
||||||||
|
Depreciation of revenue earning equipment |
1.9 |
– |
– |
1.9 |
2.7 |
– |
– |
2.7 |
||||||||
|
Non-cash debt charges (b) |
5.4 |
1.1 |
13.0 |
19.5 |
10.6 |
1.1 |
8.9 |
20.6 |
||||||||
|
Restructuring charges (c) |
15.7 |
0.9 |
1.0 |
17.6 |
11.8 |
2.5 |
1.8 |
16.1 |
||||||||
|
Restructuring related charges (c) |
6.7 |
– |
1.9 |
8.6 |
3.1 |
– |
1.9 |
5.0 |
||||||||
|
Derivative (gains) losses (c) |
0.1 |
– |
– |
0.1 |
(0.1) |
– |
0.1 |
– |
||||||||
|
Acquisition related costs (d) |
– |
– |
9.1 |
9.1 |
– |
– |
– |
– |
||||||||
|
Integration expenses (d) |
(0.6) |
– |
9.8 |
9.2 |
– |
– |
4.5 |
4.5 |
||||||||
|
Management transition costs (d) |
– |
– |
– |
– |
– |
– |
– |
– |
||||||||
|
Other unusual/non-recurring (c) |
6.4 |
(1.0) |
– |
5.4 |
– |
– |
– |
– |
||||||||
|
Adjusted pre-tax income (loss) |
363.0 |
74.1 |
(122.6) |
314.5 |
277.4 |
42.5 |
(86.0) |
233.9 |
||||||||
|
Assumed (provision) benefit for income taxes (e) |
(127.1) |
(25.9) |
42.9 |
(110.1) |
(94.3) |
(14.4) |
29.2 |
(79.5) |
||||||||
|
Adjusted net income (loss) |
$ 235.9 |
$ 48.2 |
$ (79.7) |
$ 204.4 |
$ 183.1 |
$ 28.1 |
$ (56.8) |
$ 154.4 |
||||||||
|
Adjusted diluted number of shares outstanding |
465.1 |
447.4 |
||||||||||||||
|
Adjusted diluted earnings per share (f) |
$ 0.45 |
$ 0.35 |
||||||||||||||
|
Six Months Ended June 30, 2013 |
Six Months Ended June 30, 2012 |
|||||||||||||||
|
Other |
Other |
|||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
|||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
|||||||||
|
Total revenues: |
$ 4,414.3 |
$ 735.4 |
$ 1.5 |
$ 5,151.2 |
$ 3,547.9 |
$ 637.1 |
$ 1.1 |
$ 4,186.1 |
||||||||
|
Expenses: |
||||||||||||||||
|
Direct operating and selling, general and administrative |
2,708.5 |
471.1 |
104.2 |
3,283.8 |
2,189.2 |
446.7 |
81.5 |
2,717.4 |
||||||||
|
Depreciation of revenue earning equipment and lease charges |
1,081.4 |
146.7 |
0.0 |
1,228.1 |
905.8 |
129.1 |
0.0 |
1,034.9 |
||||||||
|
Interest expense |
152.5 |
25.1 |
183.0 |
360.6 |
157.8 |
24.3 |
132.4 |
314.5 |
||||||||
|
Interest income |
(3.6) |
(0.1) |
(0.1) |
(3.8) |
(1.3) |
(0.2) |
(0.1) |
(1.6) |
||||||||
|
Other income, net |
(1.1) |
(2.4) |
1.8 |
(1.7) |
0.0 |
(1.0) |
0.0 |
(1.0) |
||||||||
|
Total expenses |
3,937.7 |
640.4 |
288.9 |
4,867.0 |
3,251.5 |
598.9 |
213.8 |
4,064.2 |
||||||||
|
Income (loss) before income taxes |
476.6 |
95.0 |
(287.4) |
284.2 |
296.4 |
38.2 |
(212.7) |
121.9 |
||||||||
|
Adjustments: |
||||||||||||||||
|
Purchase accounting (a): |
||||||||||||||||
|
Direct operating and selling, general and administrative |
40.9 |
20.8 |
1.1 |
62.8 |
24.7 |
20.8 |
2.0 |
47.5 |
||||||||
|
Depreciation of revenue earning equipment |
4.0 |
– |
– |
4.0 |
5.5 |
– |
– |
5.5 |
||||||||
|
Non-cash debt charges (b) |
11.1 |
2.3 |
23.4 |
36.8 |
21.7 |
2.7 |
21.4 |
45.8 |
||||||||
|
Restructuring charges (c) |
18.9 |
1.3 |
1.1 |
21.3 |
17.0 |
6.7 |
1.8 |
25.5 |
||||||||
|
Restructuring related charges (c) |
9.3 |
1.5 |
2.0 |
12.8 |
3.7 |
– |
1.9 |
5.6 |
||||||||
|
Derivative (gains) losses (c) |
0.1 |
– |
(0.1) |
– |
– |
– |
– |
– |
||||||||
|
Acquisition related costs (d) |
– |
– |
11.7 |
11.7 |
– |
– |
11.4 |
11.4 |
||||||||
|
Integration expenses (d) |
4.1 |
– |
15.9 |
20.0 |
– |
– |
– |
– |
||||||||
|
Management transition costs (d) |
– |
– |
– |
– |
– |
– |
– |
– |
||||||||
|
Other unusual/non-recurring (c) |
6.4 |
(1.0) |
– |
5.4 |
– |
– |
– |
– |
||||||||
|
Adjusted pre-tax income (loss) |
571.4 |
119.9 |
(232.3) |
459.0 |
369.0 |
68.4 |
(174.2) |
263.2 |
||||||||
|
Assumed (provision) benefit for income taxes (e) |
(200.0) |
(42.0) |
81.3 |
(160.7) |
(125.4) |
(23.3) |
59.2 |
(89.5) |
||||||||
|
Adjusted net income (loss) |
$ 371.4 |
$ 77.9 |
$ (151.0) |
$ 298.3 |
$ 243.6 |
$ 45.1 |
$ (115.0) |
$ 173.7 |
||||||||
|
Adjusted diluted number of shares outstanding |
463.0 |
447.9 |
||||||||||||||
|
Adjusted diluted earnings per share (f) |
$ 0.65 |
$ 0.39 |
||||||||||||||
|
(a) Represents the purchase accounting effects of the acquisition of all of Hertz’s common stock on December 21, 2005 on our results of operations relating to increased depreciation |
||||||||||||||||
|
and amortization of tangible and intangible assets and accretion of workers’ compensation and public liability and property damage liabilities. Also represents the purchase accounting |
||||||||||||||||
|
effects of certain subsequent acquisitions on our results of operations relating to increased depreciation and amortization of intangible assets. |
||||||||||||||||
|
(b) Represents non-cash debt charges relating to the amortization of deferred debt financing costs and debt discounts. |
||||||||||||||||
|
(c) Amounts are included within direct operating and selling, general and administrative expense in our statement of operations. |
||||||||||||||||
|
(d) Amounts are included within selling, general and administrative expense in our statement of operations. |
||||||||||||||||
|
(e) Represents a provision for income taxes derived utilizing a normalized income tax rate (35% for 2013 and 34% for 2012). |
||||||||||||||||
|
(f) See footnote explanation in Table 1. |
||||||||||||||||
|
Table 6 |
|||||||||||||||
|
HERTZ GLOBAL HOLDINGS, INC. |
|||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES |
|||||||||||||||
|
(In millions) |
|||||||||||||||
|
Unaudited |
|||||||||||||||
|
FREE CASH FLOW, EBITDA, AND CORPORATE EBITDA |
|||||||||||||||
|
FREE CASH FLOW |
Three Months Ended |
Six Months Ended |
|||||||||||||
|
June 30, |
June 30, |
||||||||||||||
|
2013 |
2012 |
2013 |
2012 |
||||||||||||
|
Income before income taxes |
$ 211.9 |
$ 158.7 |
$ 284.2 |
$ 121.9 |
|||||||||||
|
Depreciation of property and equipment |
50.5 |
41.5 |
101.8 |
85.5 |
|||||||||||
|
Amortization of intangibles and debt costs |
49.7 |
40.5 |
97.5 |
84.5 |
|||||||||||
|
Cash paid for income taxes |
(37.3) |
(15.3) |
(43.0) |
(37.7) |
|||||||||||
|
Changes in assets and liabilities, net of effects of acquisitions, and other |
(182.9) |
(45.2) |
(176.7) |
(74.1) |
|||||||||||
|
Net cash provided by operating activities excluding depreciation of revenue |
|||||||||||||||
|
earning equipment |
91.9 |
180.2 |
263.8 |
180.1 |
|||||||||||
|
Car rental fleet growth (a) |
(255.0) |
(136.9) |
(407.1) |
(191.2) |
|||||||||||
|
Equipment rental fleet growth (a) |
(94.9) |
(90.5) |
(135.9) |
(93.8) |
|||||||||||
|
Property and equipment expenditures, net of disposals |
(69.0) |
(54.1) |
(125.6) |
(80.7) |
|||||||||||
|
Net investment activity |
(418.9) |
(281.5) |
(668.6) |
(365.7) |
|||||||||||
|
Free cash flow |
$ (327.0) |
$ (101.3) |
$ (404.8) |
$ (185.6) |
|||||||||||
|
(a) Car rental fleet growth is defined as car rental fleet capital expenditures, net of proceeds from disposals, plus car rental fleet depreciation and net car rental |
|||||||||||||||
|
fleet financing. Equipment rental fleet growth is defined as equipment rental fleet expenditures, net of proceeds from disposals, plus depreciation. The |
|||||||||||||||
|
calculation reflects the following: |
|||||||||||||||
|
FLEET GROWTH |
Three Months Ended June 30, 2013 |
Three Months Ended June 30, 2012 |
|||||||||||||
|
Car |
Equipment |
Car |
Equipment |
||||||||||||
|
Rental |
Rental |
Total |
Rental |
Rental |
Total |
||||||||||
|
Revenue earning equipment expenditures |
$ (3,361.5) |
$ (211.2) |
$ (3,572.7) |
$ (2,806.3) |
$ (206.9) |
$ (3,013.2) |
|||||||||
|
Proceeds from disposal of revenue earning equipment |
1,461.4 |
43.5 |
1,504.9 |
1,126.4 |
49.7 |
1,176.1 |
|||||||||
|
Net revenue earning equipment capital expenditures |
(1,900.1) |
(167.7) |
(2,067.8) |
(1,679.9) |
(157.2) |
(1,837.1) |
|||||||||
|
Depreciation of revenue earning equipment |
550.2 |
72.8 |
623.0 |
431.5 |
66.7 |
498.2 |
|||||||||
|
Net financing activity related to car rental fleet |
1,094.9 |
– |
1,094.9 |
1,111.5 |
– |
1,111.5 |
|||||||||
|
Fleet growth |
$ (255.0) |
$ (94.9) |
$ (349.9) |
$ (136.9) |
$ (90.5) |
$ (227.4) |
|||||||||
|
Six Months Ended June 30, 2013 |
Six Months Ended June 30, 2012 |
||||||||||||||
|
Car |
Equipment |
Car |
Equipment |
||||||||||||
|
Rental |
Rental |
Total |
Rental |
Rental |
Total |
||||||||||
|
Revenue earning equipment expenditures |
$ (6,460.3) |
$ (365.2) |
$ (6,825.5) |
$ (5,331.3) |
$ (330.9) |
$ (5,662.2) |
|||||||||
|
Proceeds from disposal of revenue earning equipment |
3,660.3 |
82.5 |
3,742.8 |
3,077.4 |
108.0 |
3,185.4 |
|||||||||
|
Net revenue earning equipment capital expenditures |
(2,800.0) |
(282.7) |
(3,082.7) |
(2,253.9) |
(222.9) |
(2,476.8) |
|||||||||
|
Depreciation of revenue earning equipment |
1,048.0 |
146.8 |
1,194.8 |
861.2 |
129.1 |
990.3 |
|||||||||
|
Net financing activity related to car rental fleet |
1,344.9 |
– |
1,344.9 |
1,201.5 |
– |
1,201.5 |
|||||||||
|
Fleet growth |
$ (407.1) |
$ (135.9) |
$ (543.0) |
$ (191.2) |
$ (93.8) |
$ (285.0) |
|||||||||
|
EBITDA AND CORPORATE EBITDA |
Three Months Ended June 30, 2013 |
Three Months Ended June 30, 2012 |
|||||||||||||
|
Other |
Other |
||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
||||||||
|
Income (loss) before income taxes |
$ 307.0 |
$ 62.8 |
$ (157.9) |
$ 211.9 |
$ 234.8 |
$ 28.1 |
$ (104.2) |
$ 158.7 |
|||||||
|
Depreciation and amortization |
627.5 |
91.6 |
3.0 |
722.1 |
493.3 |
84.4 |
3.7 |
581.4 |
|||||||
|
Interest, net of interest income |
74.8 |
11.6 |
95.4 |
181.8 |
76.9 |
11.4 |
63.4 |
151.7 |
|||||||
|
EBITDA |
1,009.3 |
166.0 |
(59.5) |
1,115.8 |
805.0 |
123.9 |
(37.1) |
891.8 |
|||||||
|
Adjustments: |
|||||||||||||||
|
Car rental fleet interest |
(72.5) |
– |
– |
(72.5) |
(73.5) |
– |
– |
(73.5) |
|||||||
|
Car rental fleet depreciation |
(568.4) |
– |
– |
(568.4) |
(454.1) |
– |
– |
(454.1) |
|||||||
|
Non-cash expenses and charges (b) |
5.3 |
0.0 |
11.7 |
17.0 |
10.4 |
0.0 |
7.5 |
17.9 |
|||||||
|
Extraordinary, unusual or non-recurring gains and losses (c) |
20.6 |
(0.3) |
28.2 |
48.5 |
14.9 |
2.5 |
8.2 |
25.6 |
|||||||
|
Corporate EBITDA |
$ 394.3 |
$ 165.7 |
$ (19.6) |
$ 540.4 |
$ 302.7 |
$ 126.4 |
$ (21.4) |
$ 407.7 |
|||||||
|
Six Months Ended June 30, 2013 |
Six Months Ended June 30, 2012 |
||||||||||||||
|
Other |
Other |
||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
||||||||
|
Income (loss) before income taxes |
$ 476.6 |
$ 95.0 |
$ (287.4) |
$ 284.2 |
$ 296.4 |
$ 38.2 |
$ (212.7) |
$ 121.9 |
|||||||
|
Depreciation and amortization |
1,200.6 |
184.6 |
6.0 |
1,391.2 |
985.3 |
164.7 |
7.2 |
1,157.2 |
|||||||
|
Interest, net of interest income |
148.9 |
25.0 |
182.9 |
356.8 |
156.5 |
24.1 |
132.3 |
312.9 |
|||||||
|
EBITDA |
1,826.1 |
304.6 |
(98.5) |
2,032.2 |
1,438.2 |
227.0 |
(73.2) |
1,592.0 |
|||||||
|
Adjustments: |
|||||||||||||||
|
Car rental fleet interest |
(143.2) |
– |
– |
(143.2) |
(149.4) |
– |
– |
(149.4) |
|||||||
|
Car rental fleet depreciation |
(1,081.4) |
– |
– |
(1,081.4) |
(905.8) |
– |
– |
(905.8) |
|||||||
|
Non-cash expenses and charges (b) |
10.6 |
0.0 |
19.7 |
30.3 |
21.4 |
0.0 |
15.0 |
36.4 |
|||||||
|
Extraordinary, unusual or non-recurring gains and losses (c) |
29.8 |
0.1 |
37.0 |
66.9 |
20.7 |
6.7 |
15.1 |
42.5 |
|||||||
|
Corporate EBITDA |
$ 641.9 |
$ 304.7 |
$ (41.8) |
$ 904.8 |
$ 425.1 |
$ 233.7 |
$ (43.1) |
$ 615.7 |
|||||||
|
(b) As defined in the credit agreements for the senior credit facilities, Corporate EBITDA excludes the impact of certain non-cash expenses and charges. The adjustments reflect the following: |
|||||||||||||||
|
NON-CASH EXPENSES AND CHARGES |
Three Months Ended June 30, 2013 |
Three Months Ended June 30, 2012 |
|||||||||||||
|
Other |
Other |
||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
||||||||
|
Non-cash amortization of debt costs included |
|||||||||||||||
|
in car rental fleet interest |
$ 5.3 |
$ – |
$ – |
$ 5.3 |
$ 10.4 |
$ – |
$ – |
$ 10.4 |
|||||||
|
Non-cash stock-based employee |
|||||||||||||||
|
compensation charges |
– |
– |
11.7 |
11.7 |
– |
– |
7.5 |
7.5 |
|||||||
|
Total non-cash expenses and charges |
$ 5.3 |
$ – |
$ 11.7 |
$ 17.0 |
$ 10.4 |
$ – |
$ 7.5 |
$ 17.9 |
|||||||
|
Six Months Ended June 30, 2013 |
Six Months Ended June 30, 2012 |
||||||||||||||
|
Other |
Other |
||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
||||||||
|
Non-cash amortization of debt costs included |
|||||||||||||||
|
in car rental fleet interest |
$ 10.6 |
$ – |
$ – |
$ 10.6 |
$ 21.4 |
$ – |
$ – |
$ 21.4 |
|||||||
|
Non-cash stock-based employee |
|||||||||||||||
|
compensation charges |
– |
– |
19.7 |
19.7 |
– |
– |
15.0 |
15.0 |
|||||||
|
Total non-cash expenses and charges |
$ 10.6 |
$ – |
$ 19.7 |
$ 30.3 |
$ 21.4 |
$ – |
$ 15.0 |
$ 36.4 |
|||||||
|
(c) As defined in the credit agreements for the senior credit facilities, Corporate EBITDA excludes the impact of extraordinary, unusual or non-recurring gains or losses or charges or credits. |
|||||||||||||||
|
The adjustments reflect the following: |
|||||||||||||||
|
EXTRAORDINARY, UNUSUAL OR |
|||||||||||||||
|
NON-RECURRING ITEMS |
Three Months Ended June 30, 2013 |
Three Months Ended June 30, 2012 |
|||||||||||||
|
Other |
Other |
||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
||||||||
|
Restructuring charges |
$ 13.9 |
$ (0.3) |
$ 1.0 |
$ 14.6 |
$ 11.8 |
$ 2.5 |
$ 1.8 |
$ 16.1 |
|||||||
|
Restructuring related charges |
6.7 |
– |
1.9 |
8.6 |
3.1 |
– |
1.9 |
5.0 |
|||||||
|
Acquisition related costs |
– |
– |
17.6 |
17.6 |
– |
– |
4.5 |
4.5 |
|||||||
|
Integration expenses |
– |
– |
7.7 |
7.7 |
– |
– |
– |
– |
|||||||
|
Total extraordinary, unusual or non-recurring items |
$ 20.6 |
$ (0.3) |
$ 28.2 |
$ 48.5 |
$ 14.9 |
$ 2.5 |
$ 8.2 |
$ 25.6 |
|||||||
|
Six Months Ended June 30, 2013 |
Six Months Ended June 30, 2012 |
||||||||||||||
|
Other |
Other |
||||||||||||||
|
Car |
Equipment |
Reconciling |
Car |
Equipment |
Reconciling |
||||||||||
|
Rental |
Rental |
Items |
Total |
Rental |
Rental |
Items |
Total |
||||||||
|
Restructuring charges |
$ 18.9 |
$ 0.1 |
$ 1.1 |
$ 20.1 |
$ 17.0 |
$ 6.7 |
$ 1.8 |
$ 25.5 |
|||||||
|
Restructuring related charges |
9.3 |
– |
1.9 |
11.2 |
3.7 |
– |
1.9 |
5.6 |
|||||||
|
Acquisition related costs |
– |
– |
26.3 |
26.3 |
– |
– |
11.4 |
11.4 |
|||||||
|
Integration expenses |
1.6 |
– |
7.7 |
9.3 |
– |
– |
– |
– |
|||||||
|
Total extraordinary, unusual or non-recurring items |
$ 29.8 |
$ 0.1 |
$ 37.0 |
$ 66.9 |
$ 20.7 |
$ 6.7 |
$ 15.1 |
$ 42.5 |
|||||||
|
Table 7 |
|||||||||||||||
|
HERTZ GLOBAL HOLDINGS, INC. |
|||||||||||||||
|
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS MEASURES |
|||||||||||||||
|
(In millions, except as noted) |
|||||||||||||||
|
Unaudited |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
RECONCILIATION FROM OPERATING |
June 30, |
June 30, |
|||||||||||||
|
CASH FLOWS TO EBITDA: |
2013 |
2012 |
2013 |
2012 |
|||||||||||
|
Net cash provided by operating activities |
$ 715.1 |
$ 678.5 |
$ 1,458.6 |
$ 1,170.5 |
|||||||||||
|
Amortization of debt costs |
(19.4) |
(20.6) |
(36.8) |
(45.4) |
|||||||||||
|
Provision for losses on doubtful accounts |
(8.8) |
(6.7) |
(21.4) |
(13.6) |
|||||||||||
|
Derivative gains (losses) |
2.1 |
(2.1) |
3.6 |
0.9 |
|||||||||||
|
Gain on sale of property and equipment |
0.5 |
0.5 |
1.5 |
0.7 |
|||||||||||
|
Loss on revaluation of foreign denominated debt |
(1.5) |
0.0 |
(1.5) |
(2.5) |
|||||||||||
|
Stock-based compensation charges |
(11.7) |
(7.5) |
(19.7) |
(15.0) |
|||||||||||
|
Lease charges |
18.0 |
21.5 |
33.3 |
44.6 |
|||||||||||
|
Deferred income taxes |
(57.5) |
(28.9) |
(93.5) |
(31.3) |
|||||||||||
|
Provision for taxes on income |
90.5 |
65.8 |
144.8 |
85.3 |
|||||||||||
|
Interest expense, net of interest income |
181.8 |
151.7 |
356.8 |
312.9 |
|||||||||||
|
Changes in assets and liabilities |
206.8 |
39.6 |
206.5 |
84.9 |
|||||||||||
|
EBITDA |
$ 1,115.9 |
$ 891.8 |
$ 2,032.2 |
$ 1,592.0 |
|||||||||||
|
NET CORPORATE DEBT, NET FLEET DEBT |
June 30, |
March 31, |
December 31, |
June 30, |
March 31, |
December 31, |
June 30, |
||||||||
|
AND TOTAL NET DEBT |
2013 |
2013 |
2012 |
2012 |
2012 |
2011 |
2011 |
||||||||
|
Total Corporate Debt |
$ 7,578.8 |
$ 7,237.0 |
$ 6,545.3 |
$ 4,767.9 |
$ 4,645.2 |
$ 4,704.8 |
$ 4,846.8 |
||||||||
|
Total Fleet Debt |
10,263.2 |
9,080.0 |
8,903.3 |
7,700.0 |
6,780.5 |
6,612.3 |
6,846.8 |
||||||||
|
Total Debt |
$ 17,842.0 |
$ 16,317.0 |
$ 15,448.6 |
$ 12,467.9 |
$ 11,425.7 |
$ 11,317.1 |
$ 11,693.6 |
||||||||
|
Corporate Restricted Cash |
|||||||||||||||
|
Restricted Cash, less: |
$ 393.2 |
$ 425.2 |
$ 571.6 |
$ 175.4 |
$ 211.9 |
$ 308.0 |
$ 274.3 |
||||||||
|
Restricted Cash Associated with Fleet Debt |
(351.6) |
(370.5) |
(494.0) |
(104.0) |
(126.5) |
(213.6) |
(183.2) |
||||||||
|
Corporate Restricted Cash |
$ 41.6 |
$ 54.7 |
$ 77.6 |
$ 71.4 |
$ 85.4 |
$ 94.4 |
$ 91.1 |
||||||||
|
Net Corporate Debt |
|||||||||||||||
|
Corporate Debt, less: |
$ 7,578.8 |
$ 7,237.0 |
$ 6,545.3 |
$ 4,767.9 |
$ 4,645.2 |
$ 4,704.8 |
$ 4,846.8 |
||||||||
|
Cash and Cash Equivalents |
(483.1) |
(653.8) |
(533.3) |
(586.2) |
(594.7) |
(931.8) |
(747.6) |
||||||||
|
Corporate Restricted Cash |
(41.6) |
(54.7) |
(77.6) |
(71.4) |
(85.4) |
(94.4) |
(91.1) |
||||||||
|
Net Corporate Debt |
$ 7,054.1 |
$ 6,528.5 |
$ 5,934.4 |
$ 4,110.3 |
$ 3,965.1 |
$ 3,678.6 |
$ 4,008.1 |
||||||||
|
Net Fleet Debt |
|||||||||||||||
|
Fleet Debt, less: |
$ 10,263.2 |
$ 9,080.0 |
$ 8,903.3 |
$ 7,700.0 |
$ 6,780.5 |
$ 6,612.3 |
$ 6,846.8 |
||||||||
|
Restricted Cash Associated with Fleet Debt |
(351.6) |
(370.5) |
(494.0) |
(104.0) |
(126.5) |
(213.6) |
(183.2) |
||||||||
|
Net Fleet Debt |
$ 9,911.6 |
$ 8,709.5 |
$ 8,409.3 |
$ 7,596.0 |
$ 6,654.0 |
$ 6,398.7 |
$ 6,663.6 |
||||||||
|
Total Net Debt |
$ 16,965.7 |
$ 15,238.0 |
$ 14,343.7 |
$ 11,706.3 |
$ 10,619.1 |
$ 10,077.3 |
$ 10,671.7 |
||||||||
|
Three Months Ended |
Six Months Ended |
||||||||||||||
|
June 30, |
June 30, |
||||||||||||||
|
CAR RENTAL RPD (a) |
2013 |
2012 |
2013 |
2012 |
|||||||||||
|
Car rental segment revenues (b) |
$ 2,329.5 |
$ 1,889.6 |
$ 4,414.3 |
$ 3,547.9 |
|||||||||||
|
Non-rental revenue |
(134.3) |
(115.5) |
(262.1) |
(225.9) |
|||||||||||
|
Foreign currency adjustment |
12.4 |
14.2 |
14.3 |
13.4 |
|||||||||||
|
Total rental revenue |
$ 2,207.6 |
$ 1,788.3 |
$ 4,166.5 |
$ 3,335.4 |
|||||||||||
|
Transactions days (in thousands) |
45,439 |
37,256 |
85,817 |
68,925 |
|||||||||||
|
Worldwide Total RPD (in whole dollars) |
$ 48.58 |
$ 48.00 |
$ 48.55 |
$ 48.39 |
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Three Months Ended |
Six Months Ended |
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|
EQUIPMENT RENTAL AND RENTAL |
June 30, |
June 30, |
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RELATED REVENUE(a) |
2013 |
2012 |
2013 |
2012 |
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|
Equipment rental segment revenues |
$ 384.3 |
$ 335.0 |
$ 735.4 |
$ 637.1 |
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|
Equipment sales and other revenue |
(35.5) |
(31.3) |
(65.4) |
(57.6) |
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Foreign currency adjustment |
2.2 |
(0.7) |
3.1 |
(2.2) |
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|
Rental and rental related revenue |
$ 351.0 |
$ 303.0 |
$ 673.1 |
$ 577.3 |
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(a) Based on 12/31/12 foreign exchange rates. |
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(b) Includes U.S. off-airport revenues of $362.9 million and $325.3 million for the three months ended June 30, 2013 and 2012, respectively, and $683.8 and $608.0 million for the |
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six months ended June 30, 2013 and 2012, respectively. |
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Exhibit 1
Non-GAAP Measures: Definitions and Use/Importance
Hertz Global Holdings, Inc. ("Hertz Holdings") is our top-level holding company. The Hertz Corporation ("Hertz") is our primary operating company. The term "GAAP" refers to accounting principles generally accepted in the United States of America.
Definitions of non-GAAP measures utilized in Hertz Holdings’ July 29, 2013 Press Release are set forth below. Also set forth below is a summary of the reasons why management of Hertz Holdings and Hertz believes that the presentation of the non-GAAP financial measures included in the Press Release provide useful information regarding Hertz Holdings’ and Hertz’s financial condition and results of operations and additional purposes, if any, for which management of Hertz Holdings and Hertz utilize the non-GAAP measures.
1. Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Corporate EBITDA
EBITDA is defined as net income before net interest expense, income taxes and depreciation (which includes revenue earning equipment lease charges) and amortization. Corporate EBITDA, as presented herein, represents EBITDA as adjusted for car rental fleet interest, car rental fleet depreciation and certain other items, as described in more detail in the accompanying tables.
Management uses EBITDA and Corporate EBITDA as operating performance and liquidity metrics for internal monitoring and planning purposes, including the preparation of our annual operating budget and monthly operating reviews, as well as to facilitate analysis of investment decisions, profitability and performance trends. Further, EBITDA enables management and investors to isolate the effects on profitability of operating metrics such as revenue, operating expenses and selling, general and administrative expenses, which enables management and investors to evaluate our two business segments that are financed differently and have different depreciation characteristics and compare our performance against companies with different capital structures and depreciation policies. We also present Corporate EBITDA as a supplemental measure because such information is utilized in the calculation of financial covenants under Hertz’s senior credit facilities.
EBITDA and Corporate EBITDA are not recognized measurements under GAAP. When evaluating our operating performance or liquidity, investors should not consider EBITDA and Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance and liquidity as determined in accordance with GAAP, such as net income, operating income or net cash provided by operating activities.
2. Adjusted Pre-Tax Income
Adjusted pre-tax income is calculated as income before income taxes plus non-cash purchase accounting charges, non-cash debt charges relating to the amortization of debt financing costs and debt discounts and certain one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess the operational performance of the Company on the same basis that management uses internally.
3. Adjusted Net Income
Adjusted net income is calculated as adjusted pre-tax income less a provision for income taxes derived utilizing a normalized income tax rate (35% in 2013 and 34% in 2012) and noncontrolling interest. The normalized income tax rate is management’s estimate of our long-term tax rate. Adjusted net income is important to management and investors because it represents our operational performance exclusive of the effects of purchase accounting, non-cash debt charges, one-time charges and items that are not operational in nature or comparable to those of our competitors.
4. Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is calculated as adjusted net income divided by, for the three months ended June 30, 2013, 465.1 million which represents the weighted average diluted shares outstanding for the period, for the six months ended June 30, 2013, 463.0 million which represents the weighted average diluted shares outstanding for the period and for the three months ended June 30, 2012, 447.4 million which represents the approximate number of shares outstanding at June 30, 2012, for the six months ended June 30, 2012, 447.9 million which represents the average for the period. Adjusted diluted earnings per share is important to management and investors because it represents a measure of our operational performance exclusive of the effects of purchase accounting adjustments, non-cash debt charges, one-time charges and items that are not operational in nature or comparable to those of our competitors.
5. Transaction Days
Transaction days represent the total number of days that vehicles were on rent in a given period.
6. Car Rental Revenue, Total RPD and Total Rental Revenue Per Transaction
Car rental revenue consists of all revenue, net of discounts, associated with the rental of cars including charges for optional insurance products, but excluding non-rental revenues derived from Donlen. Total revenue per transaction day, "Total RPD," is calculated as total rental 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 appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management and investors as it represents the best measurement of the changes in underlying pricing in the car rental business and encompasses the elements in car rental pricing that management has the ability to control.
7. Equipment Rental and Rental Related Revenue
Equipment rental and rental related revenue consists of all revenue, net of discounts, associated with the rental of equipment including charges for delivery, loss damage waivers and fueling, but excluding revenue arising from the sale of equipment, parts and supplies and certain other ancillary revenue. Rental and rental related revenue is adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends. This statistic is important to our management and to investors as it is utilized in the measurement of rental revenue generated per dollar invested in fleet on an annualized basis and is comparable with the reporting of other industry participants.
8. Same Store Revenue Growth
Same store revenue growth is calculated as the year over year change in revenue for locations that are open at the end of the period reported and have been operating under our direction for more than twelve months. The same store revenue amounts are adjusted in all periods to eliminate the effect of fluctuations in foreign currency. Our management believes eliminating the effect of fluctuations in foreign currency is appropriate so as not to affect the comparability of underlying trends.
9. Free Cash Flow
Free cash flow is calculated as Net cash provided by operating activities less revenue earning equipment expenditures, net of disposal proceeds and car rental fleet financing, less non-fleet capital expenditures, net of non-fleet disposals. Free cash flow is important to management and investors as it represents the cash available for acquisitions and the reduction of corporate debt.
10. Net Corporate Debt
Net corporate debt is calculated as total debt excluding fleet debt less cash and equivalents and corporate restricted cash. Corporate debt consists of our Senior Term Facility; Senior ABL Facility; Senior Notes; Senior Subordinated Notes, Convertible Senior Notes; and certain other indebtedness of our domestic and foreign subsidiaries. Net Corporate Debt is important to management, investors and ratings agencies as it helps measure our leverage. Net Corporate Debt also assists in the evaluation of our ability to service our non-fleet-related debt without reference to the expense associated with the fleet debt, which is fully collateralized by assets not available to lenders under the non-fleet debt facilities.
11. Corporate Restricted Cash (used in the calculation of Net Corporate Debt)
Total restricted cash includes cash and cash equivalents that are not readily available for our normal disbursements. Total restricted cash and equivalents are restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities, our like-kind exchange programs and to satisfy certain of our self-insurance regulatory reserve requirements. Corporate restricted cash is calculated as total restricted cash less restricted cash associated with fleet debt.
12. Net Fleet Debt
Net fleet debt is calculated as total fleet debt less restricted cash associated with fleet debt. As of June 30, 2013, fleet debt consists of HVF U.S. Fleet Variable Funding Notes, HVF U.S. Fleet Medium Term Notes, RCFC U.S. Fleet Variable Funding Notes, RCFC U.S. Fleet Medium Term Notes, Donlen GN II Variable Funding Notes, U.S. Fleet Financing Facility, European Revolving Credit Facility, European Fleet Notes, European Securitization, Hertz-Sponsored Canadian Securitization, Dollar Thrifty-Sponsored Canadian Securitization, Australian Securitization, Brazilian Fleet Financing and Capitalized Leases relating to revenue earning equipment. This measure is important to management, investors and ratings agencies as it helps measure our leverage.
13. Restricted Cash Associated with Fleet Debt (used in the calculation of Net Fleet Debt and Corporate Restricted Cash)
Restricted cash associated with fleet debt is restricted for the purchase of revenue earning vehicles and other specified uses under our Fleet Debt facilities and our car rental like-kind exchange program.
14. Total Net Debt
Total net debt is calculated as net corporate debt plus net fleet debt. This measure is important to management, investors and ratings agencies as it helps measure our leverage.
SOURCE The Hertz Corporation
