Request-HTZ 2009 Annual Report

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UnrivaledGrowth Opportunities

2009 Annual Report


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www.hertz.com

Contents:Letter to Shareholders 2

Industry-Leading, Customer Focused Innovations 4

Off-Airport Car Rental, Our Most Advanced Revenue Diversication Initiative 6

Serving The Vacation Traveler: Advantage and The Car Collections 8

Car Sharing with Connect by Hertz 10

Equipment Rental Revenue Growth and Diversication 12

Expanding Our Global Footprint 14

Board of Directors 16

Hertz Management Team IBC

Shareholder Information IBC

0 2000 4000 6000 8000

0 160 320 480 640

0.0 0.3 0.6 0.9 1.2

0 200 400 600 800

Worldwide Revenues (in millions)

2006

2007

2008

2009

$8,058

$8,686

$8,525

$7,102

Adjusted Pre-Tax Income* (in millions)

2006

2007

2008

2009

$486.7

$660.7

$237.2

$198.9

Adjusted EPS*

2006

2007

2008

2009

$0.92

$1.26

$0.42

$0.29

Total Net Cash Flow* (in millions)

2006

2007

2008

2009

$553.9

$847.8

$593.1

$733.4

*Indicates a Non-GAAP measurement presented and reconciled within the section of the Annual Report to Stockholders entitled Denitions and Non-GAAP Reconciliations,

which follows the SEC Business and Financial Information in this Annual Report.

2009 Financial Highlights

nDue to the effects of the 2008-2009 reces-

sion, full year 2009 revenues of $7.1 billion,

$1.4 billion below 2008.

nFull year 2009 adjusted pre-tax income* only

$38 million below 2008, at almost $200 mil-

lion. Corporate EBITDA* of $980 million, only

$120 million lower, year-over-year.

nFull year 2009 adjusted earnings per share*

of $0.29.

nFull year 2009 loss before income taxes of

$171 million compared with a $1,383 million

loss in 2008.

nFull year 2009 net loss of $126 million,

compared with a loss of $1,207 million in

2008.

nFull year 2009 diluted loss per share of $0.34,

compared with a $3.74 loss per share in 2008.

nFull year 2009 total net cash ow* of over

$733 million, $140 million above 2008.

n Liquidity of $5.8 billion as of December 31,

2009, subject to borrowing base limitations

and other factors.

n $3.3 billion of U.S. eet debt renanced a year

ahead of schedule and on favorable terms.


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UnrivaledGrowth Opportunities

Hertzemergesfromtherecessionof2009evenmoreefcient,customerfocus

ed

andpoisedforstrongrevenuegrowth.Wevereducedcostsbyover$1.2billionsince

2007andweareimplementingsolidplanstodriveaddit

ionalefcienciesandimprove

servicelevels.Wedevelopednewbusinessopportunities

in2009whichgenerated

over$170millionofincrementalrevenues.Asaresult,

theconsolidatedoperating

margin,onanadjustedpre-tax*basis,forfullyear2009

wasequalto2008,on$1.4

billionlowerrevenues,andthemarginforworldwidecar

rentalincreased360bpsto

7.8%.Goingforwardourbalancedfocusoncosts,service

andrevenues,combined

withimprovingconditionsinourcarandequipmentrent

albusinesses,areexpected

toyieldsignicantmarginexpansionandincreasedsha

reholdervalue.

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Letter To Shareholders

Dear Hertz Shareholders,

In 2009, Hertz experienced the most difcult macro-

economic conditions in its 91-year history. We began

the year executing plans to mitigate the effects of

unprecedented, double-digit declines in car and

equipment rental volumes, and to eliminate any nancial

impact from auto manufacturer bankruptcies. Because

of a concerted, company wide effort by our employees

and business partners worldwide, these plans were

executed successfully. Despite the recession, we

achieved year-over-year prot improvement for the last

two quarters of 2009, and we generated over $170

million of incremental revenue from new products and

services. While the full effects of the global recession

are not behind us in 2010, Hertz is a much more

efcient company poised for signicant growth from new

revenue-generating initiatives in the car and equipment

rental businesses. As a result, we believe operating

margins, on an adjusted pre-tax basis, should improve360 basis points as revenues normalize to 2007 levels.

Our diversied revenue sources and a proven ability

to manage costs will become even bigger competitive

advantages as macro-economic conditions improve.

As 2010 unfolds, and consistent with the trend in

the second half of 2009, we continue to experience

improvement in U.S. car rental, our largest business.

The corporate travel business is rebounding along with

our leisure business, which already represents more

than 50% of our revenue and is rapidly expanding

after the acquisition of Advantage Rent A Car in April

2009. Consistent with current economic conditions,our European business continues to decline modestly

compared with last year, but we achieved our 2009

nancial targets in Europe due to solid expense

management and targeted revenue growth.

Hertz Equipment Rental Corporation (HERC)

continues to suffer through the worst construction-

related recession in its 41 year history. In over two

years, revenues have been cut by 40%. Throughout

2009 HERC maintained Corporate EBITDA* margins of

over 40%, while diversifying and expanding its business

opportunities. The good news is that when Europe and

the construction industry rebound, we believe Hertz

will realize signicant revenue growth and margin

expansion due to the operational improvements weve

made and the market opportunities weve developed.

We are also successfully developing businesses in keyemerging markets such as Brazil, China and India.

As we worked through the global recession, we never

wavered from our philosophy of managing the business

with balanced emphasis in three key areas: asset

management, employee satisfaction and customer

satisfaction. We made tough decisions and we shared

sacrices to carry us through the worst periods, but by

maintaining a balanced approach we achieved rapid

prot improvement as conditions eased at the end of

the second quarter last year.

Asset Management

Our asset management achievements in 2009

were exemplary given underlying external conditions,

and include:

n Consolidated 2009 operating margin equaled

2008 margin of 2.8%, worldwide car rental margin

increased 360 bps to 7.8%.

n Cost savings of $760 million in 2009, with

cumulative savings of $1.2 billion since 2007.

n 2009 eet costs worldwide were reduced by more

than 4%, with double-digit decreases in the second

half of the year.

n Worldwide car rental eet utilization increased

140 bps to 78.4% and net depreciation per unitdecreased 2.6% compared with 2008.

n Total net cash ow* of over $730 million, easily

beating our targets.

n $3.3 billion of U.S. eet debt renanced a year

ahead of schedule and on favorable terms.

Employee Satisfaction

Despite a difcult operating environment, employee

satisfaction improved throughout the year. Because of

the severity of the recession, we reduced staff and

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closed under performing locations, and we operated

with fewer resources. Employees worked reduced hours

and we temporarily reduced salaries and cut other

compensation programs. We communicated our decisions

and rationale clearly, and employees rallied together and

performed exceptionally well in difcult circumstances.

Given the fact that there were fewer employees working

harder than ever with temporarily reduced compensation,

why did morale improve? Part of the answer is the character

of Hertz employees who are loyal and dedicated to theCompany in good and bad times. Also, management

communicated openly about the challenges we faced

and how we would

recover. We backlled

resources wherever

necessary to provide

good customer service

and to relieve employee

stress. All sacrices

were shared company

wide and we delivered

on our unequivocal

promise to restore

compensation programs

and resources as quickly

as the business began to

rebound.

Additionally, we

continued to invest in our

employees last year. The

following are just a few of

the long-term, resource-

efcient investments in

our people:

n A performance management and employee developmentsystem that links compensation to performance and sets out

clear, individualized development plans.

n New learning and mentoring programs.

n Accelerated program/process management training

programs to enhance skills.

n Expanded Employee Stock Purchase Program.

As a result of these and other initiatives, employee

satisfaction in late 2009, as measured by our internal

survey with over 85% employee participation, improved

to year-end 2007 levels.

Customer SatisfactionCustomer satisfaction remained a focus throughout

2009, and we invested in technology and acquisitions

to improve the customer experience and reach a wider

range of potential renters. By year end 2009 customer

satisfaction had reached an all time high for several

reasons:

n We freshened the car rental eet in the second half

of the year, adding 80,000 new vehicles in December

and sold high mileage vehicles as the used car market

improved.

n We added staff at locations where demand improved.

n We reviewed service levels at under-performing locations

on a weekly basis and

implemented specic

improvement plans. We

rewarded locations which

maintained the highest

sustainable customer

satisfaction standards.

n We implemented a new

program we call The

Lighthouse at our HERClocation in Oklahoma

City and at three airports

with the most difcult

operating conditions

Chicago OHare, Boston

Logan, and San

Francisco to completely

modernize facilities and processes that

touch our customers. We will implement The

Lighthouse at more than 20 additional locations

in 2010.

n We added new products and services to meet

the needs of a wider array of customers, and

we acquired Advantage Rent A Car to serve

the growing price-focused leisure business.

n We introduced customer-centric technology

innovations to speed and enhance the rental

experience.

n We acquired Eileo, the worldwide leader

in car sharing technology, to enable Hertz

to expand our competitive edge in this

technology-driven business.

n We continued to expand our ability to

service local and international customers. We

now operate in 146 countries from approximately 8,100locations, and we have plans to add over 150 off-airport

locations in 2010.

We have developed an operating culture focused on

attaining continued improvement in operations and support

functions. We believe 2010 will provide greater revenue

growth opportunities, many of which were developed

during the recession. Our core businesses are poised for

tremendous revenue and prot growth, we believe, with just

a little help from a global economic recovery. The operating

leverage we will generate as the business grows, on what

we believe is the lowest cost base in the car and equipment

rental industries, should result in signicant shareholdervalue creation. Creating that value will be the senior

management teams top priority throughout 2010.

Mark P. Frissora

Chairman of the Board and Chief Executive Ofcer

Hertz Global Holdings, Inc.

Our Core Businessesare poised for tremendous

revenue and prot growth,

we believe, with just a little

help from a global economic

recovery. The operatingleverage generated as we

grow the business, on what

we believe is the lowest cost

base in the car and equipment

rental business, should result

in signicant shareholder

value creation.

3

Mark P. FrissoraChairman of the Board andChief Executive Ofcer

* Indicates a Non-GAAP measurement presented and reconciled within the section of the Annual Report

toStockholdersentitledDenitionsandNon-GAAPReconciliations,whichfollowstheSECBusiness

and Financial Information in this Annual Report.


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Hertz has been the innovation leader in car rental

throughout its 91 year history. In 2009, the

Company implemented or upgraded several new

customer-focused, technology-driven innovations

which enhance the rental experience.

These include:

n Hertz.com, now the best-

in-class booking engine in the

car rental industry according to

Forrester and Keynote, which

also praised Hertz for the

greatest website improvement

in the travel industry.

n Self-service rental kiosks at

36 major airports, including 11 in Europe, which

successfully completed over 500,000 transactions.

Our success rates rival the airlines which have

utilized ticketing kiosks for many years.

n Portable rental devices, enabling roving

customer service agents to address customers

needs (e.g., vehicle upgrades, optional services) in

the rental lot, were successfully piloted at Chicago

OHare and Boston Logan Airport.

n Integrated car sharing technology from

Eileo including online booking, iPhone

and Blackberry applications, RFID card-

driven vehicle entry, and two-way in-car

communication and navigation systems.

n We launched the fth generation of the

pre-installed NeverLost, GPS navigation

system with upgrades including touch

point screens, real time weather and ight

information functionality, on-line trip planning

enabling immediate uploads of multi-stop trip

itineraries.

The Lighthouse not all of our customerfocused innovations are technology dependent.

In 2009, Hertz launched the Lighthouse Project,

which is an employee-driven program predicated

on reengineering every aspect of the rental process

from the customers point of view. The Lighthouse

program not only results in a signicantly

streamlined rental process but also ensures optimal,

integrated operations which substantially improve service and lower costs. We

have already achieved signicant service and efciency improvements at theinitial Lighthouse locations: Chicago OHare, Boston Logan, San Francisco and

Frankfurt airports, as well as at our HERC facility in Oklahoma City. We are

investing in facility upgrades and service improvements which directly affect

the customers experience. The process we reengineer at one location can be

implemented elsewhere, often with only minor local revisions. Additionally,

employee engagement and satisfaction, which we measure on a regular basis as

part of the Lighthouse, have improved substantially, as employees design and

take ownership of their work processes and performance metrics.

Hertz is leading the way with High-Tech, High-Touch innovationswhich revolutionize our customers rental experiences.

Industry-leading,Customer Focused Innovations

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EuropeanLocalRentalsEuropesoff-airportrentalmarketisalmostaslargeasitsairportmarket.Hertzhasbeenaleaderinthismarketfordecadeswithmorethan700locationsacrossthecontinentfromtheselocations.HertzanditsfranchisepartnersservevacationersandbusinesspeopleforwhomcartravelisthemostefcientmeansoftransportwithinEurope.


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TotalMobilitySolutionsHertzhasdevelopedhourlycar

sharing andmulti-monthrentalsto

complimentourdailyandweekly

rentalbusiness.Withtheaddition

ofAdvantageRentACarand

rentalprogramsservingyounger

drivers,Hertzisprovidingtotal

mobilitysolutionstothebroadest

rangeofcarrentalcustomersin

theindustry.Today,customersover21incertain

marketscanrentavehicleforaslittleasonehouruptooneyeara

nd

beyond.Witharentaleetrangingfromcompactthroughluxuryc

ars,

andSUVs,superiorserviceandavarietyofpricingpoints,Hertzis

providingmorecarrentaloptionsandexibilitythananycompany

in

theindustry.

7

The U.S. airport and off-airport car rental markets

are estimated to generate annual revenues of $10

billion each. Hertz is the leading brand on-airport

with over a quarter of the market share. Over the

past ve years, the Company has rapidly gained

market share off-airport, with 11% share estimated

at the end of 2009. Despite economic conditions,

Hertz opened 109 new U.S. off-airport locations lastyear, bringing our total to 1,700. Hertz is poised to

capture a greater stake over the next few years.

Many consumers access the off-airport car

rental market after a car accident or breakdown.

The insurance replacement and repair market

is signicant for Hertz which has provider

relationships with 189 of the top 205 U.S. auto

insurers, as well as major body/repair shops across

the nation. We are particularly proud to have a

preferred vendor agreement with CARSTAR,

the largest multi-shop, collision repair franchise

(257 shops) in the U.S. Additionally, the off-airport

market serves vacationers whose primary vehicle

isnt suitable for a holiday or special trip, business

people who choose to drive rather than y to

meetings, and ex-pats or relocated business people

who need extended car rentals. In fact our multi-

month leasing program expanded by over 14%last year, and is expected to be a growth segment

throughout 2010 and beyond.

Hertz has the most diverse eet in the car rental

industry, enabling us to serve all customer segments,

meeting the needs of vacationers, business people

and local residents whose car is being serviced or

repaired. We will expand our off-airport network

again in 2010, which are included in our plans to

open an additional 150 new locations.

Off-Airport Car Rental:Our Most Advanced Revenue

Diversication Initiative

Hertz has created a $1 billion business by providing thebest service at competitive prices in the U.S. off-airport market.


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DrivingforFunHertzhas expandeditsproductofferingstocapturea greatershareoftheleisuretravelmarket. Attheendof2008,thecompanylauncheda pre-paid rentalprogram,aimedatvalueconscioustravelers,providingasubstantialdiscountinexchange

forpre-payment.This programdeliveredalmost$82millionofrevenuein2009.Hertzisalsocommittedtoattractingyoungertravelersbyopening upthe21-25yearoldmarketlastyear.


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Hertz has developed a deserved reputation

for being the preferred car rental company for

the business traveler yet today over half of our

customers are traveling on vacation or for another

special event in their lives. In 2009, and continuing

into 2010, Hertz is expanding its presence in the

leisure market which represents at least a $500

million revenue opportunity. Today Hertz is the

undisputed leader in personalized car rental service,offering a wide range of vehicles in three distinct

categories which customers can specically reserve.

n Prestige Collection: A group of high

end cars and SUVs for travelers

who want to transform their trip

into a memorable, luxurious driving

experience. Prestige Collection

brands include Mercedes, Inniti,

Volvo, Cadillac and Lincoln and, in

Europe, BMW, Audi, and Land Rover.

n Green Collection: For thetraveler focused on driving a

vehicle that maximizes economic

and environmental consciousness,

The Green Collection includes higher MPG and

lower emission vehicles which are guaranteed at

reservation. These vehicles achieve at least 28 MPG

and have lower emissions, and include the popular

Toyota Prius, Nissan Altima and Toyota Camry

hybrids, as well as the Ford Fusion and Toyota

Corolla and Camry models.

n Fun Collection: For renters seeking a uniqueholiday or memorable weekend getaway experience,

the right vehicle can set the tone and make all the

difference. The Fun Collection offers cars and SUVs,

including the Ford Mustang, Chevy Corvette ZHZ (hard

tops and convertibles) and Jeep Wrangler, guaranteed

to add a little more spice to that special trip.

Many travelers primary focus is to rent a reliable

vehicle at the lowest possible price. Service features

which are a must have for many customers may

be less critical for the price-driven consumer.

While Hertz has competitive pricing in a number of

channels, we made a major commitment to the low

price rental market last year.

In April, Hertz purchased the assets of

Advantage Rent A Car. Advantage provides

reasonably priced, reliable car rentals and is

especially popular among customers who book low

price travel online.

Advantage has exceeded all of our expectations.We expect its revenues to approach $100 million

in 2010, and the Company is already operating

from 25 locations, with

25 more scheduled to

open this year. We believe

Advantage has already

captured nearly 1% of

airport market share in

the central states. The

Advantage footprint

primarily serves thesouthern half of the

United States, covering

leisure destinations

in states like California, Florida, Texas, Colorado

and Arizona. Additionally, Advantage has been

able to redevelop and expand international afliate

programs to generate protable revenue.

We have made tremendous progress realizing

operational synergies between Advantage and Hertz.

The two operations share rental eet, with Hertz

able to provide cars after the mid-week business

travel peak to Advantage from Thursday evening

through Monday morning to serve its weekend and

holiday travelers. We have implemented a seamless

back-ofce integration, enabling both Hertz and

Advantage to operate more efciently.

With Advantage expanding into more of the top

leisure destinations in the United States, Hertz plans

to capture an even greater share of the leisure

travel market without diluting the Hertz brand or

revenue stream.

Serving The Vacation Traveler:Advantage and The Car CollectionsToday over half of our business comes from leisure travelers

ranging from price-conscious Advantage Rent A Car customers to

vacationers who want the ultimate car rental experience.


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TheElectricCarRevolution

StartsNowElectriccars,

withtheirzero-

carbonfootprint,haveab

rightlong-termfuture.

Shortterm,thelackofre

chargingoptionscould

temperearlydemandfor

electriccars,andthe

absenceofstrongdeman

dwilltemporarilyimpede

thewidespreadinstallationofrechargi

ngstations.

Hertzhasaglobalpartner

shipwithNissanand

planstointroduce,throug

hConnectbyHertz,

theLeafall-electriccarin

NorthAmericalater

thisyearandNissan-own

edRenaultelectriccars

inEuropenextyear.Cars

haringisagreatway

toexposeconsumerstoe

lectriccarsinurban/

universityenvironmentsw

hererechargingneeds

canbemanagedmostef

ciently.


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It is estimated that the global car sharing market

could exceed $1 billion by the end of the decade.

In December 2008, Hertz launched its car sharing

business Connect by Hertz in London, Paris and

New York City. The environmental benets of car

sharing are unquestionable, as it is estimated that

one car sharing vehicle can eliminate up to 14 cars

from the roads, an especially appealing prospect in

crowded urban areas.

In just one year, Connect by Hertz has attracted

over 13,000 members. Connect has over 600

vehicles equipped with industry leading technology

created by Eileo, the Paris-based company we

purchased in 2009, which pioneered integrated

car sharing technology. Eileos technology enables

Connect to track and monitor the positioning and

service needs of car sharing vehicles, and creates

a two-way communication channel between

customers and our service representatives on

a 24/7 basis. In-car technology also includes

NeverLost navigation as a standard feature as well

as Bluetooth technology and Satellite Radio service.

Connect is focused initially on four key markets:

n Urban centers: In cities with good mass

transportation, car ownership may be unnecessary

for many city residents. Car sharing is the

perfect option for these consumers, combining

the economic advantages of car sharing and the

convenience of multiple vehicle options. At the end

of 2009, Connect expanded into Madrid, Spain,

and Berlin, Germany, and will add additional North

American and European cities in 2010.

n Universities: Car sharing is ideal for university

students who cant afford a car but want a personal

mobility option, and for parents who dont want that

expense or liability. Connect is the exclusive car

sharing provider at over 30 college campuses in

North America and Europe.

n Corporate Campuses: Large and small

companies are increasingly concerned about

managing their carbon footprint, and car sharing

enables corporations to facilitate necessary, local

corporate travel in one of the most environmentally

conscious manners possible. Connect has a

presence at the corporate headquarters of Marriott,

and GE as well as at Hertz World Headquarters in

Park Ridge, New Jersey.

n Municipal Fleets: Eileo has developed a special

car sharing technology package for government-

owned eet vehicles, enabling an efcient car

sharing option for government agencies whose

employees must travel during working hours.

The Connect-2-Go technology, which is already in

use in Philadelphia, Pennsylvania, can be deployed

cost effectively to manage eet vehicles and

monitor usage.

11

Car Sharingwith Connect by Hertz

Connect by Hertz is a key link in our drive tocreate Total Mobility Solutions, and is an environmentallyfriendly, High-Tech, High-Touch rental option for

urban, university and corporate travelers.


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15/23213

The global recession has hit the construction

industry harder than most, and shows no signs of

improvement at the beginning of 2010. While we

are hopeful we will begin emerging from the trough

later this year, HERC has nevertheless steadily

diversied its revenue sources to partially offset

declining revenues attributable to the recession.

Despite adverse macroeconomic conditions,

HERC achieved 40%+ Corporate EBITDA* margins

throughout 2009 and beat its major competitors on

all important nancial metrics. HERC also continued

to right-size its business as economic conditions

deteriorated last year without sacricing customer

service or equipment quality.

HERCs growth and diversication initiatives

include:

n Industrial Segment Penetration

n Power Generation

n Entertainment Services

n Expansion into China and the Middle East

Equipment Rental RevenueGrowth and Diversication

Despite the worst economic climate ever for equipmentrental, Hertz Equipment Rental Corporation is diversifying and

developing new sources of revenue growth.

Lights, Camera, Action HERC and Hertz Rent A Carhave launched a joint product and service business servicing

the multi-billion dollar U.S. entertainment industry. Hertz has

the ability to provide not only rental vehicles for actors and

production crews, but also lighting, aerial, power generation

and other equipment lm production companies need.

* Indicates a Non-GAAP measurement presented and reconciled within the section of the

AnnualReporttoStockholdersentitledDenitionsandNon-GAAPReconciliations,

whichfollowstheSECBusinessandFinancialInformationinthisAnnualReport.


16/23214


17/23215

Hertz is the only car rental company operating on

six continents, with over 8,100 locations in 146

countries. Hertz was founded in Chicago, Illinois in

1918, expanded to Europe in the mid-1950s, and

to Latin America in the early 1960s. The Company

has a signicant presence in Asia and Africa,

primarily through licensees, and is a market leader

in Australia and New Zealand. Approximately one-

third of our revenue today is generated outside of

the United States. Hertz is the leading car rental

company for tourists and business people travelingto the United States, and for Americans traveling

overseas.

The strength of the Hertz brand is based on

our ability to provide rst-class rental experiences

worldwide, whether at corporate-owned or

franchised locations. Hertz gives vacationers and

business people condence that they can rent

a reliable vehicle and receive superior service

wherever their travels take them.

Although the global recession caused most

companies to eliminate all market expansion plans,Hertz is growing in major, developing markets

including Brazil, India and China.

n Hertz increased its presence in the fastest

growing market in the world, China, adding 5 rental

locations in Beijing and Shanghai. The country is

planning to build 48 airports and add hundreds of

thousands of highway miles over this decade. The

long term growth opportunities for car rental in

China are almost impossible to overstate.

n In January 2010, HERC nalized a joint venture

with Dayim Holdings, a Saudi Arabian-based

company, to expand our equipment rental presence

in the Middle East. In Saudi Arabia alone, $800

billion of infrastructure projects are expected to be

completed over the next ten years.

n Hertz added 100 net locations worldwide and,

through license partners, expanded its presence in

six additional African and Asian nations in 2009.

Expanding Our Global FootprintHertz continues to expand its geographic footprint and is

now operating in 146 countries, including China, the worlds fastest

growing car and equipment rental market.

Our Franchise Partners.While Hertz operates corporately

in 13 countries in North America,

Europe, Australia and New Zealand,

the Company is ably represented by

franchise partners in 136 countriesin Latin America, Europe, Asia and

Africa. Hertz is proud of its franchisees, some

of which have been with the Company for 50

years, who are committed to providing the highest

quality service to their customers. By combining

the Companys global systems and processes with

franchisees local market expertise, car rental

customers are assured they will receive the

optimal rental experience they expect from Hertz.


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Board of Directors and OfcersBoard of Directors

n Barry H. Beracha

Former Executive Vice

President, Sara Lee Corp. and

CEO, Sara Lee Bakery Group

n Brian A. Bernasek Principal, The Carlyle Group

n Carl T. Berquist

Executive Vice President and

Chie Financial Ofcer,

Marriott International, Inc.

n Michael J. Durham

Former Director, President

and CEO, Sabre, Inc.

n Robert F. End

Managing Director,

Transportation Resource

Partners

n Mark P. FrissoraChairman o the Board and

Chie Executive Ofcer,

Hertz Global Holdings, Inc.

n Gregory S. Ledford

Managing Director,

The Carlyle Group

n Angel L. Morales

Managing Director, Head

o Industrial Group, Bank

o America Merrill Lynch

Capital Partners

n Nathan K. Sleeper

Financial Principal,

Clayton, Dubilier & Rice, LLC

n George W. Tamke

Lead Director and OperatingPrincipal, Clayton, Dubilier &

Rice, LLC

n David H. Wasserman

Financial Principal,

Clayton, Dubilier & Rice, LLC

n Henry C. Wolf

Former Vice Chairman and

CFO, Norolk Southern Corp.

Executive Ofcers

n LeighAnne G. Baker

Senior Vice President,

Chie Human Resources

Ofcer

n Lois I. Boyd


Advantage Rent A Car

n Richard D. Broome


Corporate Aairs and

Communicationsn Elyse Douglas


Chie Financial Ofcer

n Joseph F. Eckroth


Chie Inormation Ofcer

n Mark P. Frissora

Chairman and Chie

Executive Ofcer

n Jatindar S. Kapur


Finance and Corporate

Controller

n R. Scott MassengillVice President and Treasurer

nGerald A. Plescia


President, Hertz Equipment

Rental Corporation

n Michael P. Senackerib


Chie Marketing Ofcer

nScott Sider


President, Car Rental and

Leasing, The Americas

n Robert J. Stuart


Global Sales

nMichel Taride Executive Vice President and

President, Hertz International

nJohn A. Thomas

Executive Vice President,

Global Supply Chain

Management

n J. Jeffrey Zimmerman


General Counsel and

Secretary

16


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SEC BUSINESS AND FINANCIAL INFORMATION

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Page

INTRODUCTORY NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1PART I

ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ITEM 1A. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ITEM 1B. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . 47

EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY

SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . 56

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . 93

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . 94

CONSOLIDATED STATEMENTS OF OPERATIONS . . . . . . . . . . . . . . . . 95

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY . . . . . . . . . . 96

CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . 98NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . 99

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . 171

ITEM 9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

ITEM 9B. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . 172

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, ANDDIRECTOR INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . 172

PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . 173

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195


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INTRODUCTORY NOTE

Unless the context otherwise requires, in this Annual Report on Form 10-K, or Annual Report, (i) HertzHoldings means Hertz Global Holdings, Inc., our top-level holding company, (ii) Hertz means TheHertz Corporation, our primary operating company and a direct wholly-owned subsidiary of HertzInvestors, Inc., which is wholly-owned by Hertz Holdings, (iii) we, us and our mean (a) prior to

December 21, 2005, Hertz and its consolidated subsidiaries and (b) on and after December 21, 2005,

Hertz Holdings and its consolidated subsidiaries, including Hertz, (iv) HERC means Hertz EquipmentRental Corporation, Hertzs wholly-owned equipment rental subsidiary, together with our various otherwholly-owned international subsidiaries that conduct our industrial, construction and material handlingequipment rental business, (v) cars means cars and light trucks (including sport utility vehicles and,outside North America, light commercial vehicles), (vi) program cars means cars purchased by car

rental companies under repurchase or guaranteed depreciation programs with car manufacturers,(vii) non-program cars mean cars not purchased under repurchase or guaranteed depreciation

programs for which the car rental company is exposed to residual risk and (viii) equipment means

industrial, construction and material handling equipment.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained In this Annual Report and in reports we subsequently file with the SEC on

Form 10-Q and file or furnish on Form 8-K, and in related comments by our management, includeforward-looking statements. Forward-looking statements include information concerning our liquidity

and our possible or assumed future results of operations, including descriptions of our businessstrategies. These statements often include words such as believe, expect, project, anticipate,intend, plan, estimate, seek, will, may, would, should, could, forecasts or similarexpressions. These statements are based on certain assumptions that we have made in light of ourexperience in the industry as well as our perceptions of historical trends, current conditions, expectedfuture developments and other factors we believe are appropriate in these circumstances. We believethese 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, that may be revised or

supplemented in subsequent reports on SEC Forms 10-K, 10-Q and 8-K. Some important factors thatcould affect our actual results include among others those that may be disclosed from time to time in

subsequent reports filed with the SEC, those described under Risk Factors set forth in Item 1A of thisAnnual Report, and the following, which were derived in part from the risks set forth in Item 1A of thisAnnual Report:

overall strength and stability of general economic conditions, both in the United States and inglobal markets;

levels of travel demand, particularly with respect to airline passenger traffic in the United Statesand in global markets;

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;

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 adecrease in the price at which we dispose of used vehicles either in the used vehicle market orunder repurchase or guaranteed depreciation programs;

our ability to accurately estimate future levels of rental activity and adjust the size of our fleetaccordingly;

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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;

financial instability of insurance companies providing financial guarantees for our asset-backedsecurities;

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, 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 future acquisitions and complete future dispositions;

costs and risks associated with litigation;

risks related to our indebtedness, including our substantial amount of debt and our ability to incur

substantially more debt; our ability to meet the financial and other covenants contained in our senior credit facilities, our

outstanding unsecured senior notes and certain asset-backed funding arrangements;

changes in accounting principles, or their application or interpretation, and our ability to makeestimates 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 ofgovernments, agencies and similar organizations where such actions may affect our operations,the cost thereof or applicable tax rates;

the effect of tangible and intangible asset impairment charges;

the impact of our derivative instruments, which can be affected by fluctuations in interest rates;

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.

You should not place undue reliance on forward-looking statements. All forward-looking statementsattributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing

cautionary statements. All such statements speak only as of the date made, and we undertake noobligation to update or revise publicly any forward-looking statements, whether as a result of new

information, future events or otherwise.

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PART I

ITEM 1. BUSINESS

Our Company

We own what we believe is the largest worldwide airport general use car rental brand and one of thelargest equipment rental businesses in the United States and Canada combined, both based on

revenues. Our Hertz brand name is one of the most recognized in the world, signifying leadership inquality rental services and products. In our car rental business segment, we and our independentlicensees and associates accept reservations for car rentals at approximately 8,100 locations inapproximately 145 countries. We are the only car rental company that has an extensive network ofcompany-operated rental locations both in the United States and in all major European markets. Wemaintain the leading airport car rental brand market share, by overall reported revenues, in the UnitedStates and at the 78 major airports in Europe where we have company-operated locations and dataregarding car rental concessionaire activity is available. We believe that we also maintain the secondlargest market share, by revenues, in the off-airport car rental market in the United States. In ourequipment rental business segment, we rent equipment through 322 branches in the United States,Canada, France, Spain and China, as well as through our international licensees. We and ourpredecessors have been in the car rental business since 1918 and in the equipment rental businesssince 1965. We have a diversified revenue base and a highly variable cost structure and are able to

dynamically manage fleet capacity, the most significant determinant of our costs. Our revenues havegrown at a compound annual growth rate of 5.2% over the last 20 years, with year-over-year growth in 16of those 20 years.

The car and equipment rental industries are significantly influenced by general economic conditions.The car rental industry is also significantly influenced by developments in the travel industry, and,particularly, in airline passenger traffic while the equipment rental segment is being impacted by thedifficult economic and business environment as investment in commercial construction and theindustrial markets slow. The United States and international markets are currently experiencing asignificant decline in economic activities, including a tightening of credit markets, reduced airlinepassenger traffic, reduced consumer spending and volatile fuel prices. During 2008 and 2009, thisresulted in a rapid decline in the volume of car rental and equipment rental transactions, soft industrypricing and lower residual values for the non-program cars that we sold. See Item 7ManagementsDiscussion and Analysis of Financial Condition and Results of Operations in this Annual Report.

Corporate History

Hertz Holdings was incorporated in Delaware in 2005 to serve as the top-level holding company for theconsolidated Hertz business. Hertz was incorporated in Delaware in 1967. Hertz is a successor tocorporations that have been engaged in the car and truck rental and leasing business since 1918 andthe equipment rental business since 1965. Ford Motor Company, Ford, acquired an ownershipinterest in Hertz in 1987. Prior to this, Hertz was a subsidiary of UAL Corporation (formerly AllegisCorporation), which acquired Hertzs outstanding capital stock from RCA Corporation in 1985.

The Acquisition

On December 21, 2005, investment funds associated with or designated by:

Clayton, Dubilier & Rice, Inc., or CD&R,

The Carlyle Group, or Carlyle, and

Merrill Lynch Global Private Equity, or MLGPE,

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ITEM 1. BUSINESS (Continued)

or collectively, the Sponsors, acquired all of Hertzs common stock from Ford Holdings LLC, or FordHoldings, for aggregate consideration of $4,379 million in cash, debt refinanced or assumed of$10,116 million and transaction fees and expenses of $447 million.

In January 2009, Bank of America Corporation, or Bank of America, acquired Merrill Lynch & Co., Inc.,

the parent company of Merrill Lynch Global Private Equity, or MLGPE. Accordingly, Bank of America isnow an indirect beneficial owner of our common stock held by MLGPE and certain of its affiliates.

Common Stock Offerings

In November 2006, we completed our initial public offering of 88,235,000 shares of our common stock.In June 2007, the Sponsors completed a secondary public offering of 51,750,000 shares of their HertzHoldings common stock. In January 2009, Bank of America Corporation, or Bank of America,acquired Merrill Lynch & Co., Inc., the parent company of MLGPE. Accordingly, Bank of America is nowan indirect beneficial owner of our common stock held by MLGPE and certain of its affiliates. In May andJune 2009, we completed a follow-on public offering of 52,900,000 shares of our common stock at aprice of $6.50 per share with proceeds before underwriting discounts and offering expenses ofapproximately $343.9 million, or the Common Stock Public Offering.

In addition, in May 2009 we entered into subscription agreements with investment funds affiliated withCD&R and Carlyle to purchase an additional 32,101,182 shares of our common stock at a price of $6.23per share (the same price per share paid to us by the underwriters in the Common Stock Public Offering)with proceeds to us of approximately $200.0 million, or the Private Offering. The Private Offeringclosed on July 7, 2009 and the 32,101,182 shares of our common stock were issued to the CD&R andCarlyle affiliated investment funds on the same date. Giving effect to the Common Stock Public Offeringand the Private Offering, the Sponsors ownership percentage in us is approximately 51%.

In May and June 2009, we also completed a public offering of an aggregate principal amount of$474,755,000 of 5.25% convertible senior notes due 2014, or the Convertible Debt Public Offering.

We used the net proceeds from the Common Stock Public Offering, the Private Offering and theConvertible Debt Public Offering, collectively the 2009 Hertz Holdings Offerings, to increase ourliquidity and for general corporate purposes, including the repayment of principal amounts with respectto debt under the fleet financing facilities of certain of our consolidated subsidiaries.

Our Markets

We operate in the global car rental industry and in the equipment rental industry.

Worldwide Car Rental

We believe that the global car rental industry exceeds $35 billion in annual revenues. According to AutoRental News, car rental revenues in the United States are estimated to be approximately $21 billion andhave declined in 2009 by 4.8%. We believe car rental revenues in Europe account for approximately$14 billion in annual revenues, with the airport portion of the industry comprising approximately 40% of

the total. Within Europe, the largest markets are France, Germany, Italy, the United Kingdom and Spain.We believe total rental revenues for the car rental industry in Europe in 2009 were approximately$10 billion in nine countriesFrance, Germany, Italy, the United Kingdom, Spain, the Netherlands,Switzerland, Belgium and Luxembourgwhere we have company-operated rental locations andapproximately $2.4 billion in eight other countriesGreece, Ireland, Portugal, Sweden, Norway,Denmark, Austria and Finlandwhere our brand is present through our licensees.

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We estimate that rentals by airline travelers at or near airports, or airport rentals, accounted forapproximately one-half of the total market in the United States in 2009. This portion of the market issignificantly influenced by developments in the travel industry and particularly in airline passenger traffic,or enplanements. We believe domestic enplanements decreased in 2009 by approximately 8.0% and

are expected to increase by 2.0% in 2010. The International Air Transport Association, or IATA,projected in December 2009 that annual global enplanements would increase 5.2% in 2010.

The off-airport portion of the industry has rental volume primarily driven by local business use, leisuretravel and the replacement of cars being repaired. Because Europe has generally demonstrated a lowerhistorical reliance on air travel, the European off-airport car rental market is significantly more developedthan it is in the United States. However, we believe that in recent years, industry revenues from off-airportcar rentals in the United States have grown faster than revenues from airport rentals.

Worldwide Equipment Rental

We estimate the size of the U.S. equipment rental industry, which is highly fragmented with few nationalcompetitors and many regional and local operators, to be approximately $29 billion in annual revenuesfor 2009, but the part of the rental industry dealing with equipment of the type HERC rents is somewhat

smaller than that. We believe that the industry grew at a 7.5% compound annual growth rate between1991 and 2009. Other market data indicates that the equipment rental industries in France, Spain andChina generate roughly $4 billion, less than $2 billion and approximately $1 billion in annual revenues,respectively, although the portions of those markets in which HERC competes are smaller.

The equipment rental industry serves a broad range of customers from small local contractors to largeindustrial national accounts and encompasses a wide range of rental equipment from small tools toheavy earthmoving equipment. We believe U.S. non-residential construction spending decreased at anannual rate of 30% in 2009 and is projected to decrease at an annual rate of 2% in 2010. We also believethat rental equipment accounted for approximately 40% of all equipment sold into the U.S. constructionindustry in 2008, up from approximately 5% to 10% in 1991. In addition, we believe that the trend towardrental instead of ownership of equipment in the U.S. construction industry will continue and that as muchas 50% of the equipment used in the industry could be rental equipment by 2012.

Our Business Segments

Our business consists of two reportable segments, car rental and equipment rental. General corporateexpenses, certain interest expense (including net interest on corporate debt), as well as other businessactivities, such as third-party claim management services are included as other reconciling items.

Car Rental: Our company-operated rental locations are those through which we, or an agent of ours,rent cars that we own or lease. We maintain a substantial network of company-operated car rentallocations both in the United States and internationally, and what we believe to be the largest number ofcompany-operated airport car rental locations in the world, enabling us to provide consistent quality andservice worldwide. For the year ended December 31, 2009, we derived approximately 67% of ourworldwide car rental revenues from airport locations. Our licensees and associates also operate rental

locations in over 140 countries and jurisdictions, including most of the countries in which we havecompany-operated rental locations.

Equipment Rental: We believe, based on an article in Rental Equipment Register published in May 2009,that HERC is one of the largest equipment rental companies in the United States and Canada combined.HERC rents a broad range of earthmoving equipment, material handling equipment, aerial and electrical

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24FEB201016285539 24FEB201016290053


equipment, air compressors, generators, pumps, small tools, compaction equipment and construction-related trucks. HERC also derives revenues from the sale of new equipment and consumables.

Set forth below are charts showing revenues by reportable segment, and revenues by geographic area,both for the year ended December 31, 2009 and revenue earning equipment at net book value as of

December 31, 2009 (the majority of our international operations are in Europe).

Revenues by Segment forYear Ended December 31, 2009(1)

$7.1 billion

Equipment

Rental

15.6%Other

Reconciling Items

0.2%

Car Rental

84.2%

Revenues by Geographic Area for Revenue Earning Equipment at net bookYear Ended December 31, 2009 value as of December 31, 2009

$7.1 billion $8.85 billion

United States

65.8%

International

34.2%Other

Equipment

20.7%

Cars

79.3%

(1) Car rental segment revenue includes fees and certain cost reimbursements from licensees. See Note 9 to the Notes to ourconsolidated financial statements included in this Annual Report under the caption Item 8Financial Statements andSupplementary Data.

For further information on our business segments, including financial information for the years endedDecember 31, 2009, 2008 and 2007, see Note 9 to the Notes to our consolidated financial statements

included in this Annual Report under the caption Item 8Financial Statements and SupplementaryData.

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Worldwide Car Rental

Operations

We rent a wide variety of makes and models of cars. We generally accept reservations only for a class of

vehicles, although we accept reservations for specific makes and models of vehicles in our PrestigeCollection national-scale luxury rental program, our Hertz Fun Collection experiential rental program, ourGreen Collection environmentally friendly rental program and a limited number of models inhigh-volume, leisure-oriented destinations. We rent cars on an hourly (in select markets), daily,weekend, weekly, monthly or multi-month basis, with rental charges computed on a limited or unlimitedmileage rate, or on a time rate plus a mileage charge. Our rates vary at different locations depending onlocal market conditions and other competitive and cost factors. While cars are usually returned to thelocations from which they are rented, we also allow one-way rentals from and to certain locations. Inaddition to car rentals and licensee fees, we generate revenues from reimbursements by customers ofairport concession fees and vehicle licensing costs, fueling charges, and charges for ancillary customerproducts and services such as supplemental equipment (child seats and ski racks), loss or collisiondamage waiver, theft protection, liability and personal accident/effects insurance coverage, HertzNeverLost navigation systems and satellite radio services.

The international car rental operations that generated the highest volumes of business from ourcompany-operated locations for the year ended December 31, 2009 were, in descending order ofrevenues, those conducted in France, Germany, Italy, Australia, the United Kingdom, Spain and Canada.We also have company-operated rental locations in the Netherlands, Switzerland, Brazil, New Zealand,Puerto Rico, Belgium, Luxembourg, the Czech Republic, the Slovak Republic, China and the U.S. VirginIslands.

As of December 31, 2009, we had approximately 2,065 staffed rental locations in the United States, ofwhich approximately one-fourth were airport locations and three-fourths were off-airport locations, andwe regularly rent cars from approximately 1,220 other locations that are not staffed. As of December 31,2009, we had approximately 1,140 staffed rental locations internationally, of which approximatelyone-fifth were airport locations and four-fifths were off-airport locations, and we regularly rent cars from

approximately 120 other locations that are not staffed. We believe that our extensive U.S. andinternational network of company-operated locations contributes to the consistency of our service, costcontrol, fleet utilization, yield management, competitive pricing and ability to offer one-way rentals.

In order to operate airport rental locations, we have obtained concessions or similar leasing, licensing orpermitting agreements or arrangements, or concessions, granting us the right to conduct a car rentalbusiness at all major, and many other, airports with regularly scheduled passenger service in eachcountry where we have company-operated rental locations, except for airports where our licenseesoperate rental locations. Our concessions were obtained from the airports operators, which are typicallygovernmental bodies or authorities, following either negotiation or bidding for the right to operate a carrental business there. The terms of an airport concession typically require us to pay the airports operatorconcession fees based upon a specified percentage of the revenues we generate at the airport, subjectto a minimum annual guarantee. Under most concessions, we must also pay fixed rent for terminal

counters or other leased properties and facilities. Most concessions are for a fixed length of time, whileothers create operating rights and payment obligations that are terminable at any time.

The terms of our concessions typically do not forbid, and in a few instances actually require, us to seekreimbursement from customers of concession fees we pay; however, in certain jurisdictions the lawlimits or forbids our doing so. Where we are required or permitted to seek such reimbursement, it is ourgeneral practice to do so. The number of car rental concessions available at airports varies considerably,

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but, except at small, regional airports, it is rarely less than four. At Orlando International Airport, where wedo not have a car rental concession, we operate an airport rental location at a facility located near theairports premises and pick up and drop off our customers at the airport under a permit from the airportsoperator. Certain of our concession agreements require the consent of the airports operator in

connection with material changes in our ownership. See Item 1ARisk FactorsRisks Related to OurBusinessIf we experience a change in ownership of a material percentage of our equity withoutobtaining certain approvals, our results of operations and financial condition could be materiallyadversely affected.

The Hertz brand is one of the most recognized brands in the world. Our customer surveys, in the UnitedStates, indicate that Hertz is the car rental brand most associated with the highest quality service. This isconsistent with numerous published best-in class car rental awards that we have won, both in the UnitedStates and internationally, over many years. We have sought to support our reputation for quality andcustomer service in car rental through a variety of innovative service offerings, such as our customerloyalty program (Hertz #1 Club), our global expedited rental program (Hertz #1 Club Gold), our one-wayrental program (Rent-it-Here/Leave-it-There), our national-scale luxury rental program (PrestigeCollection), our national-scale experiential rental program (Hertz Fun Collection), our environmentally

friendly rental program (Green Collection) and our in-car navigational services (Hertz NeverLost). Weintend to maintain our position as a premier company through an intense focus on service, quality andproduct innovation.

In late 2008, we introduced Connect by Hertz, a new global car-sharing service utilizing Eileo technology(discussed below), which rents cars by the hour at more than two dozen locations in the U.S., Canadaand Europe. Connect by Hertz allows customers to sign up for the service and start renting cars by thehour. Customers pay an annual or monthly membership fee, pick up cars in locations scattered around acity, at a university or a corporate campus without checking in at a Hertz rental office, and then pay anhourly car-rental fee.

In April 2009, we completed the acquisition of certain assets of Advantage Rent A Car, or Advantage.Advantage is a popular brand for price-oriented customers at key U.S. leisure travel destinations. Thepurchase agreement provided us with the rights to purchase certain rights, trademarks and copyrightsto use the Advantage brand name, website and phone numbers. In addition, the agreement provides uswith the option to have assigned to us certain leases, fixed assets, airport concession agreements andother agreements associated with approximately 20 locations that Advantage is or previously wasoperating. As of December 31, 2009, we had 24 corporate Advantage brand rental locations in theUnited States.

In April 2009, we completed the acquisition of Eileo, S.A.S., or Eileo, a Paris, France-based developerof car sharing technology. As discussed above, Eileos end-to-end solutions are utilized by Connect byHertz.

During 2009, we launched Rent2Buy, a new way to buy a used rental car which operates in select states,including California and Hawaii. Customers have an opportunity for a three-day test rental of acompetitively priced car from our rental fleet. If the customer purchases the car, he or she is credited with

up to three days of rental charges, and the purchase transaction is completed through the internet andby mail in those states where permitted.

In the United States, the Hertz brand had the highest market share, by revenues, in 2008 and in the firstnine months of 2009 at the approximately 190 largest airports where we operate. Out of theapproximately 170 major European airports at which we have company-operated rental locations, dataregarding car rental concessionaire activity for the year ended December 31, 2009 was available at 78 of

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these airports. Based upon this data, we believe that we were the largest airport car rental company,measured by aggregate airport rental revenues during that period, at those 78 airports taken together. Inthe United States, we intend to maintain or expand our market share in the airport rental business. For afurther description of our competitors, market share and competitive position see Competition

below. At our major airport rental locations, as well as at some smaller airport and off-airport locations,customers participating in our Hertz #1 Club Gold program are able to rent vehicles in an expeditedmanner. In the United States, participants in our Hertz #1 Club Gold program often bypass the rentalcounter entirely and proceed directly to their vehicles upon arrival at our facility. For the year endedDecember 31, 2009, rentals by Hertz #1 Club Gold members accounted for approximately 37% of ourworldwide rental transactions. We believe the Hertz #1 Club Gold program provides a significantcompetitive advantage to us, particularly among frequent travelers, and we have, through travel industryrelationships, targeted such travelers for participation in the program.

In addition to our airport locations, we operate off-airport locations offering car rental services to a varietyof customers. Our off-airport rental customers include people wishing to rent cars closer to home forbusiness or leisure purposes, as well as those needing to travel to or from airports. Our off-airport

customers also include people who have been referred by, or whose rental costs are being wholly orpartially reimbursed by, insurance companies following accidents in which their cars were damaged,those expecting to lease cars that are not yet available from their leasing companies and those needingcars while their vehicle is being repaired or is temporarily unavailable for other reasons; we call thesecustomers replacement renters. At many of our off-airport locations we will provide pick-up anddelivery services in connection with rentals.

When compared to our airport rental locations, an off-airport rental location typically services the samevariety of customers, uses smaller rental facilities with fewer employees, conducts pick-up and deliveryservices and deals with replacement renters using specialized systems and processes. In addition, onaverage, off-airport locations generate fewer transactions per period than airport locations. At the sametime, though, our airport and off-airport rental locations employ common car fleets, are supervised bycommon country, regional and local area management, use many common systems and rely oncommon maintenance and administrative centers. Moreover, airport and off-airport locations, excludingreplacement rentals, benefit from many common marketing activities and have many of the samecustomers. As a consequence, we regard both types of locations as aspects of a single, unitary, carrental business.

We believe that the off-airport portion of the car rental market offers opportunities for us on several levels.First, presence in the off-airport market can provide customers a more convenient and geographicallyextensive network of rental locations, thereby creating revenue opportunities from replacement renters,non-airline travel renters and airline travelers with local rental needs. Second, it can give us a morebalanced revenue mix by reducing our reliance on airport travel and therefore limiting our risk exposureto external events that may disrupt airline travel trends. Third, it can produce higher fleet utilization as aresult of the longer average rental periods associated with off-airport business, compared to those of

airport rentals. Fourth, replacement rental volume is far less seasonal than that of other business andleisure rentals, which permits efficiencies in both fleet and labor planning. Finally, cross-sellingopportunities exist for us to promote off-airport rentals among frequent airport Hertz #1 Club Goldprogram renters and, conversely, to promote airport rentals to off-airport renters. In view of thosebenefits, along with our belief that our market share for off-airport rentals is generally smaller than ourmarket share for airport rentals, we intend to seek profitable growth in the off-airport rental market, bothin the United States and internationally.

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Customers who rent from us for leisure purposes include not only individual travelers bookingvacation travel rentals with us but also people renting to meet other personal needs. Leisure rentals,generally, are longer in duration and generate more revenue per transaction than do business rentals,although some types of business rentals, such as rentals to replace temporarily unavailable cars, have a

long average duration. Business rentals and leisure rentals have different characteristics and placedifferent types of demands on our operations. We believe that maintaining an appropriate balancebetween business and leisure rentals is important to the profitability of our business and the consistencyof our operations.

Our business and leisure customers rent from both our airport and off-airport locations. Demand forairport rentals is correlated with airline travel patterns, and transaction volumes generally followenplanement trends on a global basis. Customers often make reservations for airport rentals when theybook their flight plans, which make our strong relationships with travel agents, associations and otherpartners (e.g., airlines) a key competitive advantage in generating consistent and recurring revenuestreams.

Off-airport rentals typically involve people wishing to rent cars closer to home for business or leisurepurposes, as well as those needing to travel to or from airports. This category also includes people who

have been referred by, or whose rental costs are being wholly or partially reimbursed by, insurancecompanies because their cars have been damaged. In order to attract these renters, we must establishagreements with the referring insurers establishing the relevant rental terms, including the arrangementsmade for billing and payment. While we estimate our share of the insurance replacement rental marketwas approximately 9% of the estimated insurance rental revenue volume for the year endedDecember 31, 2009, we have identified 209 insurance companies, ranging from local or regional carriersto large, national companies, as our target insurance replacement market. As of December 31, 2009, wewere a preferred or recognized supplier of 193 of these 209 insurance companies. Although EnterpriseRent-A-Car Company, or Enterprise, currently has the largest share of the insurance replacementmarket, we believe that many of these companies are receptive to our replacement rental offerings andprefer to have at least two national rental car suppliers.

We conduct active sales and marketing programs to attract and retain customers. Our commercial andtravel industry sales force calls on companies and other organizations whose employees and associatesneed to rent cars for business purposes, as well as on membership associations, tour operators, travelcompanies and other groups whose members, participants and customers rent cars for either businessor leisure purposes. A specialized sales force calls on companies with replacement rental needs,including insurance and leasing companies and car dealers. We also advertise our car rental offeringsthrough a variety of traditional media channels, such as television and newspapers, direct mail and theInternet. In addition to advertising, we also conduct a variety of other forms of marketing and promotion,including travel industry business partnerships and press and public relations activities.

In almost all cases, when we rent a car, we rent it directly to an individual who is identified in a writtenrental agreement that we prepare. Except when we are accommodating someone who cannot drive, theindividual to whom we rent a car is required to have a valid drivers license and meet other rental criteria

(including minimum age and creditworthiness requirements) that vary on the basis of location and typeof rental. Our rental agreements permit only the individual renting the car, people signing additionalauthorized operator forms and certain defined categories of other individuals (such as fellow employees,parking attendants and in some cases spouses or domestic partners) to operate the car.

With rare exceptions, individuals renting cars from us are personally obligated to pay all amounts dueunder their rental agreements. They typically pay us with a charge, credit or debit card issued by a thirdparty, although certain customers use a Hertz charge account that we have established for them, usually

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as part of an agreement between us and their employer. For the year ended December 31, 2009, allamounts charged to Hertz charge accounts established in the United States and by our internationalsubsidiaries, were billed directly to a company or other organization or were guaranteed by a company.We also issue rental vouchers and certificates that may be used to pay rental charges, mostly for prepaid

and tour-related rentals. In addition, where the law requires us to do so, we rent cars on a cash basis. Forthe year ended December 31, 2009, no customer accounted for more than 2.0% of our car rentalrevenues.

In the United States for the year ended December 31, 2009, 83% of our car rental revenues came fromcustomers who paid us with third-party charge, credit or debit cards, while 8% came from customersusing Hertz charge accounts, 8% came from customers using rental vouchers or another method ofpayment and 1% came from cash transactions. In our international operations for the year endedDecember 31, 2009, 52% of our car rental revenues came from customers who paid us with third-partycharge, credit or debit cards, while 27% came from customers using Hertz charge accounts, 20% camefrom customers using rental vouchers or another method of payment and 1% came from cashtransactions. For the year ended December 31, 2009, bad debt expense represented 0.2% of car rentalrevenues for our U.S. operations and 0.3% of car rental revenues for our international operations.

Reservations

When customers reserve cars for rental from us and our licensees, they may seek to do so through travelagents or third-party travel websites. In many of those cases, the travel agent or website will utilize athird-party operated computerized reservation system, also known as a global distribution system, orGDS, to contact us and make the reservation.

In major countries, including the United States and all other countries with company-operated locations,customers may also reserve cars for rental from us and our licensees worldwide through local, nationalor toll-free telephone calls to our reservations center, directly through our rental locations or, in the caseof replacement rentals, through proprietary automated systems serving the insurance industry.

Additionally, we accept reservations for rentals from us and our licensees worldwide through ourwebsites.

For the year ended December 31, 2009, approximately 31% of the worldwide reservations we acceptedcame through travel agents using GDSs, while 23% came through phone calls to our reservations center,31% through our websites, 10% through third-party websites and 5% through local booking sources.

Fleet

We believe we are one of the largest private sector purchasers of new cars in the world. During the yearended December 31, 2009, we operated a peak rental fleet in the United States of approximately 288,400cars and a combined peak rental fleet in our international operations of approximately 155,700 cars, ineach case exclusive of our licensees fleet. During the year ended December 31, 2009, our approximateaverage holding period for a rental car was fifteen months in the United States and twelve months in ourinternational operations.

Over the past five years, the percentage of our car rental fleet subject to repurchase or guaranteeddepreciation programs has substantially decreased due primarily to changes in the overall terms offeredby automobile manufacturers under repurchase programs. Accordingly, we bear increased risk relatingto the residual market value and the related depreciation on our car rental fleet and must use differentrotational techniques to accommodate our seasonal peak demand for cars.

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Over the five years ended December 31, 2009, we have acquired approximately 59% of our cars asprogram cars. Program cars as a percentage of all cars purchased by our U.S. operations, decreasedfrom 55% for the year ended December 31, 2008 to 49% for the year ended December 31, 2009.Program cars as a percentage of all cars purchased by our international operations increased from 59%

for the year ended December 31, 2008 to 61% for the year ended December 31, 2009. Taking our U.S.operations and international operations together, program cars as a percentage of all cars purchaseddecreased from 57% for the year ended December 31, 2008 to 53% for the year ended December 31,2009. Under these programs, the manufacturers agree to repurchase cars at a specified price orguarantee the depreciation rate on the cars during established repurchase or auction periods, subjectto, among other things, certain car condition, mileage and holding period requirements. Repurchaseprices under repurchase programs are based on either a predetermined percentage of original car costand the month in which the car is returned or the original capitalized cost less a set daily depreciationamount. Guaranteed depreciation programs guarantee on an aggregate basis the residual value of thecars covered by the programs upon sale according to certain parameters which include the holdingperiod, mileage and condition of the cars. These repurchase and guaranteed depreciation programslimit our residual risk with respect to cars purchased under the programs and allow us to determinedepreciation expense in advance, however, typically the acquisition cost is higher for these program

cars.

Over the five years ended December 31, 2009, approximately 31% of the cars acquired by us for our U.S.car rental fleet, and approximately 27% of the cars acquired by us for our international fleet, weremanufactured by Ford and its subsidiaries. During the year ended December 31, 2009, approximately12% of the cars acquired by us domestically were manufactured by Ford and its subsidiaries andapproximately 24% of the cars acquired by us for our international fleet were manufactured by Ford andits subsidiaries. The percentage of the fleet which we purchase from Ford has declined during the pastfive years as we try to further diversify our fleet to meet customer demands and minimize overall costs.Historically, we have also purchased a significant percentage of our car rental fleet from General MotorsCorporation and its successor, General Motors Company, together General Motors. Over the fiveyears ended December 31, 2009, approximately 21% of the cars acquired by us for our U.S. car rentalfleet, and approximately 14% of the cars acquired by us for our international fleet, were manufactured byGeneral Motors. During the year ended December 31, 2009, approximately 17% of the cars acquired byour U.S. car rental fleet, and approximately 11% of the cars acquired by us for our international fleet,were manufactured by General Motors. We have also increased the percentage of our car rental fleetpurchased from Toyota Motor Corporation, or Toyota. Over the five years ended December 31, 2009,approximately 16% of the cars acquired by us for our U.S. car rental fleet, and approximately 7% of thecars acquired by us for our international fleet, were manufactured by Toyota. During the year endedDecember 31, 2009, approximately 27% of the cars acquired by our U.S. car rental fleet, andapproximately 8% of the cars acquired by us for our international fleet, were manufactured by Toyota. Inearly 2010, Toyota announced recalls. Approximately 13% of our total U.S. car rental fleet was affectedby the largest of the recalls. This situation is now completely resolved. See Item 7ManagementsDiscussion and Analysis of Financial Condition and Results of OperationsOverview, included in this

Annual Report.

In the past several years, Ford and General Motors, which are significant suppliers of cars to us on both aprogram and non-program basis, have experienced deterioration in their operating results andsignificant declines in their credit ratings. General Motors has required significant governmentassistance to continue their operations. See Item 1ARisk FactorsRisks Related to Our BusinessIfwe are unable to purchase adequate supplies of competitively priced cars or equipment and the cost of

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the cars or equipment we purchase increases, our financial condition and results of operations may bematerially adversely affected.

Purchases of cars are financed through cash from operations and by active and ongoing globalborrowing programs. See Item 7Managements Discussion and Analysis of Financial Condition and

Results of OperationsLiquidity and Capital Resources.

We maintain automobile maintenance centers at certain airports and in certain urban and off-airportareas, which provide maintenance facilities for our car rental fleet. Many of these facilities, which includesophisticated car diagnostic and repair equipment, are accepted by automobile manufacturers aseligible to perform and receive reimbursement for warranty work. Collision damage and major repairsare generally performed by independent contractors.

We dispose of non-program cars, as well as program cars that become ineligible for manufacturerrepurchase or guaranteed depreciation programs, through a variety of disposition channels, includingauctions, brokered sales, sales to wholesalers and dealers and, to a lesser extent and primarily in theUnited States, sales at retail through a network of ten company-operated car sales locations dedicatedexclusively to the sale of used cars from our rental fleet. During the year ended December 31, 2009, of

the cars that were not repurchased by manufacturers, we sold approximately 88% at auction or on awholesale basis, while approximately 7% were sold at retail and approximately 5% through otherchannels.

Licensees

We believe that our extensive worldwide ownership of car rental operations contributes to theconsistency of our high-quality service, cost control, fleet utilization, yield management, competitivepricing and our ability to offer one-way rentals. However, in certain U.S. and international markets, wehave found it more efficient to utilize independent licensees, which rent cars that they own. Our licenseesoperate locations in over 140 countries, including most of the countries where we have company-operated locations. See Item 1ARisk FactorsRisks Related to Our BusinessMaintaining favorablebrand recognition is essential to our success, and failure to do so could materially and adversely affect

our results of operations.

We believe that our licensee arrangements are important to our business because they enable us to offerexpanded national and international service and a broader one-way rental program. Licenses are issuedprincipally by our wholly-owned subsidiaries, Hertz System, Inc., or System, in the United States, andHertz International, Ltd., or HIL, in countries outside of the United States under franchisearrangements to independent licensees and affiliates who are engaged in the car rental business in theUnited States and in many other countries.

Licensees generally pay fees based on a percentage of their revenues or the number of cars theyoperate. The operations of all licensees, including the purchase and ownership of vehicles, are financedindependently by the licensees, and we do not have any investment interest in the licensees or theirfleets. System licensees share in the cost of our U.S. advertising program, reservations system, sales

force and certain other services. Our European and other international licensees also share in the cost ofour reservations system, sales force and certain other services. In return, licensees are provided the useof the Hertz brand

Documents

Request-HTZ 2009 Annual Report