Table of Contents





UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)

Commission File NumberExact Name of Registrant as Specified in its Charter,
Principal Executive Office Address and Telephone Number		State of IncorporationI.R.S. Employer Identification No.
001-37665HERTZ GLOBAL HOLDINGS, INCDelaware61-1770902
8501 Williams Road,Estero,Florida33928
(239)301-7000
DELAWARE001-3766561-1770902
DELAWARE001-07541001-07541THE HERTZ CORPORATIONDelaware13-1938568
(State or other jurisdiction of
incorporation or organization)
(Commission File Number)(I.R.S Employer Identification No.)
8501 Williams Road,
Estero, Florida 33928
(239) 301-7000
Estero,Florida33928
8501 Williams Road
Estero, Florida 33928
(239) 301-7000
301-7000
(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)
Not Applicable
Not Applicable
(Former name, former address and
former fiscal year, if changed since last report.)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which Registered
Hertz Global Holdings, Inc.Common StockPar value $0.01 per shareHTZNasdaq Global Select
Hertz Global Holdings, Inc.Warrants to purchase common stockEach exercisable for one share of Hertz Global Holdings, Inc. common stock at an exercise price of $13.80 per share, subject to adjustmentHTZWWNasdaq Global Select
The Hertz CorporationNoneNoneNone


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Hertz Global Holdings, Inc.    Yes x☒ No o☐
The Hertz Corporation1    Yes ☐ No ☒
1As a voluntary filer, The Hertz Corporation Yes x No ois not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act. The Hertz Corporation has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it was subject to such filing requirements.




Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Hertz Global Holdings, Inc.    Yes x☒ No o☐
The Hertz Corporation    Yes x☒ No o☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer",filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Hertz Global Holdings, Inc.Large accelerated filero☒Accelerated filero☐
Non-accelerated filer

(Do not check if a smaller reporting company)
x☐
Smaller reporting company o☐Emerging growth companyo☐
If an emerging growth company, indicate by checkmarkcheck mark if the registrant has not elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o☐
The Hertz CorporationLarge accelerated filer o☐Accelerated filer o☐
Non-accelerated filer

(Do not check if a smaller reporting company)
x☒
Smaller reporting company o☐Emerging growth companyo☐
If an emerging growth company, indicate by checkmarkcheck mark if the registrant has not elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Hertz Global Holdings, Inc.    Yes o☐ No x☒
The Hertz Corporation    Yes o☐ No x☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes ☒ No ☐

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
ClassShares Outstanding atas ofOctober 31, 2017April 20, 2023
Hertz Global Holdings, Inc.Common Stock,par value $0.01 per share83,721,844315,239,847
The Hertz Corporation(1)
Common Stock,par value $0.01 per share100
100 (100%(1)(100% owned by
Rental Car Intermediate Holdings, LLC)


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



TABLE OF CONTENTS

Page
ITEM 1.
1
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
5233
ITEM 3.
7851
ITEM 4.
7951
ITEM 1.
8253
ITEM 1A.
8253
ITEM 2.
8253
ITEM 3.
8254
ITEM 4.5.
8254
ITEM 5.6.
8254
Exhibits55
82
8356
EXHIBIT INDEX
84


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



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

Index

Page
Page
Hertz Global Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2023 and December 31, 20162022
2
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
4
Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three Months Ended March 31, 2023 and 2022
5
Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
56
The Hertz Corporation and Subsidiaries
Condensed Consolidated Balance Sheets as of September 30, 2017March 31, 2023 and December 31, 20162022
78
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
89
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
910
Condensed Consolidated Statements of Changes in Stockholder's Equity (Deficit) for the Three Months Ended March 31, 2023 and 2022
11
Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
1012
Notes to the Condensed Consolidated Financial Statements
Note 1
1214
Note 2
1214
Note 3
1715
Note 4
18
Note 5
Revenue Earning Vehicles
2015
Note 5
15
Note 6
2119
Note 7
21
Note 8
Employee Retirement Benefits
28
Note 9
Stock-Based Compensation
29
Note 10
Restructuring
30
Note 11
Tangible Asset Impairments and Asset Write-downs
31
Note 12
Income Tax (Provision) Benefit
3120
Note 138
21
Note 9
22
Note 10
24
Note 11
3225
Note 1412
3327
Note 1513
3629
Note 16
Earnings (Loss) Per Share - Hertz Global
37
Note 17
Segment Information
37
Note 18
Guarantor and Non-Guarantor Condensed Consolidating Financial Information - Hertz
41
Note 19
Subsequent Events
50



1


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value)
value and share data)
September 30,
2017		 December 31, 2016March 31, 2023December 31, 2022
ASSETS   ASSETS
Cash and cash equivalents$748
 $816
Cash and cash equivalents$728 $943 
Restricted cash and cash equivalents:   Restricted cash and cash equivalents:
Vehicle149
 235
Vehicle216 180 
Non-vehicle880
 43
Non-vehicle298 295 
Total restricted cash and cash equivalents1,029
 278
Total restricted cash and cash equivalents514 475 
Total cash and cash equivalents and restricted cash and cash equivalentsTotal cash and cash equivalents and restricted cash and cash equivalents1,242 1,418 
Receivables:   Receivables:
Vehicle578
 546
Vehicle136 111 
Non-vehicle, net of allowance of $37 and $42, respectively946
 737
Non-vehicle, net of allowance of $42 and $45, respectivelyNon-vehicle, net of allowance of $42 and $45, respectively898 863 
Total receivables, net1,524
 1,283
Total receivables, net1,034 974 
Prepaid expenses and other assets519
 578
Prepaid expenses and other assets980 1,155 
Revenue earning vehicles:   Revenue earning vehicles:
Vehicles15,553
 13,655
Vehicles15,746 14,281 
Less accumulated depreciation(3,177) (2,837)
Less: accumulated depreciationLess: accumulated depreciation(1,888)(1,786)
Total revenue earning vehicles, net12,376
 10,818
Total revenue earning vehicles, net13,858 12,495 
Property and equipment:   
Land, buildings and leasehold improvements1,211
 1,165
Service equipment and other750
 724
Less accumulated depreciation(1,130) (1,031)
Total property and equipment, net831
 858
Other intangible assets, net3,234
 3,332
Property and equipment, netProperty and equipment, net642 637 
Operating lease right-of-use assetsOperating lease right-of-use assets2,067 1,887 
Intangible assets, netIntangible assets, net2,882 2,887 
Goodwill1,083
 1,081
Goodwill1,044 1,044 
Assets held for sale—
 111
Total assets$21,344
 $19,155
LIABILITIES AND EQUITY   
Total assets(1)
Total assets(1)
$23,749 $22,497 
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:   Accounts payable:
Vehicle$204
 $258
Vehicle$167 $79 
Non-vehicle750
 563
Non-vehicle553 578 
Total accounts payable954
 821
Total accounts payable720 657 
Accrued liabilities1,022
 980
Accrued liabilities926 911 
Accrued taxes, net177
 165
Accrued taxes, net173 170 
Debt:   Debt:
Vehicle10,916
 9,646
Vehicle11,789 10,886 
Non-vehicle5,003
 3,895
Non-vehicle2,975 2,977 
Total debt15,919
 13,541
Total debt14,764 13,863 
Public liability and property damage448
 407
Public WarrantsPublic Warrants735 617 
Operating lease liabilitiesOperating lease liabilities1,977 1,802 
Self-insured liabilitiesSelf-insured liabilities457 472 
Deferred income taxes, net1,958
 2,149
Deferred income taxes, net1,223 1,360 
Liabilities held for sale—
 17
Total liabilities(1)20,478
 18,080
20,975 19,852 
Commitments and contingencies
 
Commitments and contingencies
Equity:   
Preferred Stock, $0.01 par value, no shares issued and outstanding—
 —
Common Stock, $0.01 par value, 86 and 85 shares issued and 84 and 83 shares outstanding1
 1
Stockholders' equity:Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstandingPreferred stock, $0.01 par value, no shares issued and outstanding— — 
Common stock, $0.01 par value, 479,114,852 and 478,914,062 shares issued, respectively, and 317,948,320 and 323,483,178 shares outstanding, respectivelyCommon stock, $0.01 par value, 479,114,852 and 478,914,062 shares issued, respectively, and 317,948,320 and 323,483,178 shares outstanding, respectively5 5 
Treasury stock, at cost, 161,166,532 and 155,430,884 common shares, respectivelyTreasury stock, at cost, 161,166,532 and 155,430,884 common shares, respectively(3,237)(3,136)
Additional paid-in capital2,237
 2,227
Additional paid-in capital6,346 6,326 
Accumulated deficit(1,122) (882)
Retained earnings (Accumulated deficit)Retained earnings (Accumulated deficit)(60)(256)
Accumulated other comprehensive income (loss)(150) (171)Accumulated other comprehensive income (loss)(280)(294)
966
 1,175
Treasury Stock, at cost, 2 shares and 2 shares(100) (100)
Total equity866
 1,075
Total liabilities and equity$21,344
 $19,155
Total stockholders' equityTotal stockholders' equity2,774 2,645 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$23,749 $22,497 
`

(1)    Hertz Global Holdings, Inc.'s consolidated total assets as of March 31, 2023 and December 31, 2022 include total assets of variable interest entities (“VIEs”) of $1.4 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of VIEs of $1.4 billion and $1.3 billion, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information.
The accompanying notes are an integral part of these financial statements.

2


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share data)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Revenues:       
Worldwide vehicle rental$2,413
 $2,390
 $6,240
 $6,353
All other operations159
 152
 473
 441
Total revenues2,572
 2,542
 6,713
 6,794
Expenses:       
Direct vehicle and operating1,348
 1,353
 3,735
 3,778
Depreciation of revenue earning vehicles and lease charges, net700
 695
 2,144
 1,940
Selling, general and administrative217
 227
 661
 685
Interest expense, net:       
Vehicle90
 72
 242
 211
Non-vehicle86
 84
 223
 269
Total interest expense, net176
 156
 465
 480
Intangible asset impairments—
 —
 86
 —
Other (income) expense, net(12) 3
 19
 (86)
Total expenses2,429
 2,434
 7,110
 6,797
Income (loss) from continuing operations before income taxes143
 108
 (397) (3)
Income tax (provision) benefit(50) (64) 108
 (33)
Net income (loss) from continuing operations93
 44
 (289) (36)
Net income (loss) from discontinued operations—
 (2) —
 (15)
Net income (loss)$93
 $42
 $(289) $(51)
        
Weighted average shares outstanding:       
Basic83
 84
 83
 85
Diluted83
 85
 83
 85
        
Earnings (loss) per share - basic and diluted:       
Basic earnings (loss) per share from continuing operations$1.12
 $0.52
 $(3.48) $(0.42)
Basic earnings (loss) per share from discontinued operations—
 (0.02) —
 (0.18)
Basic earnings (loss) per share$1.12
 $0.50
 $(3.48) $(0.60)
        
Diluted earnings (loss) per share from continuing operations$1.12
 $0.52
 $(3.48) $(0.42)
Diluted earnings (loss) per share from discontinued operations—
 (0.03) —
 (0.18)
Diluted earnings (loss) per share$1.12
 $0.49
 $(3.48) $(0.60)
Three Months Ended
March 31,
 20232022
Revenues$2,047 $1,810 
Expenses:
Direct vehicle and operating1,221 1,053 
Depreciation of revenue earning vehicles and lease charges, net381 (59)
Non-vehicle depreciation and amortization35 33 
Selling, general and administrative221 235 
Interest expense, net:
Vehicle111 5 
Non-vehicle51 39 
Interest expense, net162 44 
Other (income) expense, net9 (2)
(Gain) on sale of non-vehicle capital assets(162)— 
Change in fair value of Public Warrants118 (50)
Total expenses1,985 1,254 
Income (loss) before income taxes62 556 
Income tax (provision) benefit134 (130)
Net income (loss)$196 $426 
Weighted-average common shares outstanding:
Basic321 432 
Diluted323 461 
Earnings (loss) per common share:
Basic$0.61 $0.99 
Diluted$0.61 $0.82 



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

3


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income (loss)$93
 $42
 $(289) $(51)
Other comprehensive income (loss):       
Foreign currency translation adjustments9
 14
 21
 32
Unrealized holding gains (losses) on securities—
 3
 —
 11
Reclassification of realized gain on securities to other (income) expense—
 —
 (3) —
Reclassification of foreign currency items to other (income) expense, net8
 —
 8
 —
Net gain (loss) on defined benefit pension plans(3)
—

(7)
(34)
Reclassification from other comprehensive income (loss) to selling, general and administrative expense for amortization of actuarial (gains) losses on defined benefit pension plans1
 2
 3
 7
Total other comprehensive income (loss) before income taxes15
 19
 22
 16
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans—
 —
 —
 14
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans—
 (1) (1) (3)
Total other comprehensive income (loss)15
 18
 21
 27
Total comprehensive income (loss)$108
 $60
 $(268) $(24)
Three Months Ended
March 31,
20232022
Net income (loss)$196 $426 
Other comprehensive income (loss):
Foreign currency translation adjustments14 (7)
Total other comprehensive income (loss)14 (7)
Total comprehensive income (loss)$210 $419 

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

4


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Unaudited
(In millions)

Preferred Stock
Shares		Preferred Stock
Amount		Common Stock SharesCommon Stock AmountAdditional
Paid-In Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)		Treasury Stock SharesTreasury Stock AmountTotal Stockholders' Equity
Balance as of:
December 31, 2021— $— 450 $5 $6,209 $(2,315)$(214)27 $(708)$2,977 
Net income (loss)— — — — — 426 — — — 426 
Other comprehensive income (loss)— — — — — — (7)— — (7)
Net settlement on vesting of restricted stock— — — — (4)— — — — (4)
Stock-based compensation charges— — — — 28 — — — — 28 
Public Warrant exercises— — — — 4 — — — — 4 
Shares repurchases— — (35)— — — — 35 (722)(722)
March 31, 2022— $— 415 $5 $6,237 $(1,889)$(221)62 $(1,430)$2,702 


Preferred Stock
Shares		Preferred Stock
Amount		Common Stock SharesCommon Stock AmountAdditional
Paid-In Capital		Accumulated DeficitAccumulated
Other
Comprehensive
Income (Loss)		Treasury Stock SharesTreasury Stock AmountTotal Stockholders' Equity
Balance as of:
December 31, 2022— $— 323 $5 $6,326 $(256)$(294)155 $(3,136)$2,645 
Net income (loss)— — — — — 196 — — — 196 
Other comprehensive income (loss)— — — — — — 14 — — 14 
Net settlement on vesting of restricted stock— — — — (1)— — — — (1)
Stock-based compensation charges— — — — 21 — — — — 21 
Share repurchases(1)
— — (5)— — — — 6 (101)(101)
March 31, 2023— $— 318 $5 $6,346 $(60)$(280)161 $(3,237)$2,774 
(1)    The amounts presented herein may be rounded to agree to amounts in the unaudited condensed consolidated balance sheet. Also see Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global."


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

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


 Three Months Ended
March 31,
 20232022
Cash flows from operating activities:
Net income (loss)$196 $426 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net466 (20)
Depreciation and amortization, non-vehicle35 33 
Amortization of deferred financing costs and debt discount (premium)14 11 
Stock-based compensation charges21 28 
Provision for receivables allowance20 13 
Deferred income taxes, net(135)103 
(Gain) loss on sale of non-vehicle capital assets(162)(2)
Change in fair value of Public Warrants118 (50)
Changes in financial instruments108 (44)
Other— 1 
Changes in assets and liabilities:
Non-vehicle receivables(50)(43)
Prepaid expenses and other assets(48)(40)
Operating lease right-of-use assets78 72 
Non-vehicle accounts payable(27)51 
Accrued liabilities29 124 
Accrued taxes, net1 30 
Operating lease liabilities(84)(80)
Self-insured liabilities(18)8 
Net cash provided by (used in) operating activities562 621 
Cash flows from investing activities:
Revenue earning vehicles expenditures(2,824)(2,985)
Proceeds from disposal of revenue earning vehicles1,206 1,471 
Non-vehicle capital asset expenditures(45)(30)
Proceeds from non-vehicle capital assets disposed of or to be disposed of175 1 
Collateral returned in exchange for letters of credit— 17 
Return of (investment in) equity investments— (15)
Net cash provided by (used in) investing activities(1,488)(1,541)
Cash flows from financing activities:
Proceeds from issuance of vehicle debt2,061 4,680 
Repayments of vehicle debt(1,190)(3,492)
Proceeds from issuance of non-vehicle debt425 — 
Repayments of non-vehicle debt(430)(5)
Payment of financing costs(8)(24)
Proceeds from exercises of Public Warrants— 3 
 Nine Months Ended
September 30,
 2017 2016
Cash flows from operating activities:   
Net income (loss)$(289) $(51)
Less: Net income (loss) from discontinued operations—
 (15)
Net income (loss) from continuing operations(289) (36)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   
Depreciation of revenue earning vehicles, net2,089
 1,887
Depreciation and amortization, non-vehicle182
 195
Amortization and write-off of deferred financing costs32
 31
Amortization and write-off of debt discount (premium)1
 5
Loss on extinguishment of debt8
 40
Stock-based compensation charges16
 16
Provision for receivables allowance28
 35
Deferred income taxes, net(138) 11
Impairment charges and asset write-downs116
 31
(Gain) loss on sale of shares in equity investment(3) (75)
(Gain) loss on sale of Brazil Operations(6) —
Other(12) —
Changes in assets and liabilities   
Non-vehicle receivables(184) (171)
Prepaid expenses and other assets(25) (14)
Non-vehicle accounts payable140
 25
Accrued liabilities(5) 16
Accrued taxes, net9
 23
Public liability and property damage18
 32
Net cash provided by (used in) operating activities1,977
 2,051
Cash flows from investing activities:   
Net change in restricted cash and cash equivalents, vehicle89
 11
Net change in restricted cash and cash equivalents, non-vehicle—
 (2)
Revenue earning vehicles expenditures(8,683) (8,710)
Proceeds from disposal of revenue earning vehicles5,285
 6,420
Capital asset expenditures, non-vehicle(124) (99)
Proceeds from disposal of property and other equipment18
 53
Proceeds from sale of Brazil Operations, net of retained cash94
 —
Sales of shares in equity investment, net of amounts invested9
 188
Other(4) —
Net cash provided by (used in) investing activities(3,316) (2,139)

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

6
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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Unaudited
(In millions)

 Three Months Ended
March 31,
 20232022
Share repurchases(118)(766)
Other(1)(4)
Net cash provided by (used in) financing activities739 392 
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents11 (1)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period(176)(529)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period1,418 2,651 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$1,242 $2,122 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized:
Vehicle$96 $39 
Non-vehicle36 17 
Income taxes, net of refunds11 6 
Supplemental disclosures of non-cash information:
Purchases of revenue earning vehicles included in accounts payable, net of incentives$148 $82 
Sales of revenue earning vehicles included in vehicle receivables117 65 
Purchases of non-vehicle capital assets included in accounts payable— 23 
Revenue earning vehicles and non-vehicle capital assets acquired through finance lease12 5 
Public Warrant exercises— 2 
Accrual for purchases of treasury shares4 10 

 Nine Months Ended
September 30,
 2017 2016
Cash flows from financing activities:   
Net change in restricted cash and cash equivalents, non-vehicle(833) —
Proceeds from issuance of vehicle debt6,907
 7,665
Repayments of vehicle debt(5,887) (7,320)
Proceeds from issuance of non-vehicle debt2,100
 2,427
Repayments of non-vehicle debt(986) (3,684)
Purchase of treasury shares—
 (100)
Payment of financing costs(43) (73)
Early redemption premium payment(5) (13)
Transfers from discontinued entities—
 2,122
Other(1) 10
Net cash provided by (used in) financing activities1,252
 1,034
Effect of foreign currency exchange rate changes on cash and cash equivalents from continuing operations19
 10
Net increase (decrease) in cash and cash equivalents during the period from continuing operations(68) 956
Cash and cash equivalents at beginning of period816
 474
Cash and cash equivalents at end of period$748
 $1,430
 
 
Cash flows from discontinued operations:   
Cash flows provided by (used in) operating activities$—
 $205
Cash flows provided by (used in) investing activities—
 (77)
Cash flows provided by (used in) financing activities—
 (97)
Net increase (decrease) in cash and cash equivalents during the period from discontinued operations$—
 $31
    
Supplemental disclosures of cash flow information for continuing operations:   
Cash paid during the period for:   
Interest, net of amounts capitalized:   
Vehicle$212
 $183
Non-vehicle164
 218
Income taxes, net of refunds40
 35
Supplemental disclosures of non-cash information for continuing operations:   
Purchases of revenue earning vehicles included in accounts payable and accrued liabilities, net of incentives$69
 $138
Sales of revenue earning vehicles included in receivables443
 603
Purchases of non-vehicle capital assets included in accounts payable49
 15
Receivable on sale of Brazil Operations13
 —
Revenue earning vehicles and property and equipment acquired through capital lease24
 16

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

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
March 31, 2023December 31, 2022
ASSETS  
Cash and cash equivalents$728 $943 
Restricted cash and cash equivalents:
Vehicle216 180 
Non-vehicle298 295 
Total restricted cash and cash equivalents514 475 
Total cash and cash equivalents and restricted cash and cash equivalents1,242 1,418 
Receivables:
Vehicle136 111 
Non-vehicle, net of allowance of $42 and $45, respectively898 863 
Total receivables, net1,034 974 
Prepaid expenses and other assets979 1,154 
Revenue earning vehicles:
Vehicles15,746 14,281 
Less: accumulated depreciation(1,888)(1,786)
Total revenue earning vehicles, net13,858 12,495 
Property and equipment, net642 637 
Operating lease right-of-use assets2,067 1,887 
Intangible assets, net2,882 2,887 
Goodwill1,044 1,044 
Total assets(1)
$23,748 $22,496 
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable:
Vehicle$167 $79 
Non-vehicle553 578 
Total accounts payable720 657 
Accrued liabilities922 890 
Accrued taxes, net172 170 
Debt:
Vehicle11,789 10,886 
Non-vehicle2,975 2,977 
Total debt14,764 13,863 
Operating lease liabilities1,977 1,802 
Self-insured liabilities457 472 
Deferred income taxes, net1,226 1,363 
Total liabilities(1)
20,238 19,217 
Commitments and contingencies
Stockholder's equity:
Common stock, $0.01 par value, 3,000 shares authorized and 100 shares issued and outstanding— — 
Additional paid-in capital4,747 4,844 
Retained earnings (Accumulated deficit)(957)(1,271)
Accumulated other comprehensive income (loss)(280)(294)
Total stockholder's equity3,510 3,279 
Total liabilities and stockholder's equity$23,748 $22,496 
 September 30,
2017		 December 31,
2016
ASSETS   
Cash and cash equivalents$748
 $816
Restricted cash and cash equivalents:   
Vehicle149
 235
Non-vehicle880
 43
Total restricted cash and cash equivalents1,029
 278
Receivables:   
Vehicle578
 546
Non-vehicle, net of allowance of $37 and $42, respectively946
 737
Total receivables, net1,524
 1,283
Prepaid expenses and other assets519
 578
Revenue earning vehicles:   
Vehicles15,553
 13,655
Less accumulated depreciation(3,177) (2,837)
Total revenue earning vehicles, net12,376
 10,818
Property and equipment:   
Land, buildings and leasehold improvements1,211
 1,165
Service equipment and other750
 724
Less accumulated depreciation(1,130) (1,031)
Total property and equipment, net831
 858
Other intangible assets, net3,234
 3,332
Goodwill1,083
 1,081
Assets held for sale—
 111
Total assets$21,344
 $19,155
LIABILITIES AND EQUITY   
Accounts payable:   
Vehicle$204
 $258
Non-vehicle750
 563
Total accounts payable954
 821
Accrued liabilities1,022
 980
Accrued taxes, net177
 165
Debt:   
Vehicle10,916
 9,646
Non-vehicle5,003
 3,895
Total debt15,919
 13,541
Public liability and property damage448
 407
Deferred income taxes, net1,959
 2,149
Liabilities held for sale—
 17
Total liabilities20,479
 18,080
Commitments and contingencies
 
Equity:   
Common Stock, $0.01 par value, 3,000 shares authorized, 100 shares issued and outstanding—
 —
Additional paid-in capital3,160
 3,150
Due from affiliate(41) (37)
Accumulated deficit(2,104) (1,867)
Accumulated other comprehensive income (loss)(150) (171)
Total equity865
 1,075
Total liabilities and equity$21,344
 $19,155
(1)    The Hertz Corporation's consolidated total assets as of March 31, 2023 and December 31, 2022 include total assets of VIEs of $1.4 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of March 31, 2023 and December 31, 2022 include total liabilities of VIEs of $1.4 billion and $1.3 billion, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information.

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

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions)

Three Months Ended
September 30,		 Nine Months Ended
September 30,		Three Months Ended
March 31,
2017 2016 2017 2016 20232022
Revenues:       
Worldwide vehicle rental$2,413
 $2,390
 $6,240
 $6,353
All other operations159
 152
 473
 441
Total revenues2,572
 2,542
 6,713
 6,794
RevenuesRevenues$2,047 $1,810 
Expenses:       Expenses: 
Direct vehicle and operating1,348
 1,353
 3,735
 3,778
Direct vehicle and operating1,221 1,053 
Depreciation of revenue earning vehicles and lease charges, net700
 695
 2,144
 1,940
Depreciation of revenue earning vehicles and lease charges, net381 (59)
Non-vehicle depreciation and amortizationNon-vehicle depreciation and amortization35 33 
Selling, general and administrative217
 227
 661
 685
Selling, general and administrative221 235 
Interest expense, net:       Interest expense, net:
Vehicle90
 72
 242
 211
Vehicle111 5 
Non-vehicle85
 84
 219
 269
Non-vehicle51 39 
Total interest expense, net175
 156
 461
 480
Intangible asset impairments—
 —
 86
 —
Interest expense, netInterest expense, net162 44 
Other (income) expense, net(12) 3
 19
 (86)Other (income) expense, net9 (2)
(Gain) on sale of non-vehicle capital assets(Gain) on sale of non-vehicle capital assets(162)— 
Total expenses2,428
 2,434
 7,106
 6,797
Total expenses1,867 1,304 
Income (loss) from continuing operations before income taxes144
 108
 (393) (3)
Income (loss) before income taxesIncome (loss) before income taxes180 506 
Income tax (provision) benefit(50) (64) 107
 (33)Income tax (provision) benefit134 (130)
Net income (loss) from continuing operations94
 44
 (286) (36)
Net income (loss) from discontinued operations—
 (2) —
 (13)
Net income (loss)$94
 $42
 $(286) $(49)Net income (loss)$314 $376 



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

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net income (loss)$94
 $42
 $(286) $(49)
Other comprehensive income (loss):       
Foreign currency translation adjustments9
 14
 21
 32
Unrealized holding gains (losses) on securities—
 3
 —
 11
Reclassification of realized gain on securities to other (income) expense—
 —
 (3) —
Reclassification of foreign currency items to other (income) expense, net8
 —
 8
 —
Net gain (loss) on defined benefit pension plans(3) —
 (7) (34)
Reclassification from other comprehensive income (loss) to selling, general and administrative expense for amortization of actuarial (gains) losses on defined benefit pension plans1
 2
 3
 7
Total other comprehensive income (loss) before income taxes15
 19
 22
 16
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans—
 —
 —
 14
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans—
 (1) (1) (3)
Total other comprehensive income (loss)15
 18
 21
 27
Total comprehensive income (loss)$109
 $60
 $(265) $(22)
 Three Months Ended
March 31,
20232022
Net income (loss)$314 $376 
Other comprehensive income (loss):
Foreign currency translation adjustments14 (7)
Total other comprehensive income (loss)14 (7)
Total comprehensive income (loss)$328 $369 


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

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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
Unaudited
(In millions, except share data)

 Common Stock SharesCommon Stock AmountAdditional
Paid-In Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Income (Loss)		Total Stockholder's Equity (Deficit)
Balance as of:
December 31, 2021100 $— $7,190 $(2,626)$(214)$4,350 
Net income (loss)— — — 376 — 376 
Other comprehensive income (loss)— — — — (7)(7)
Stock-based compensation charges— — 28 — — 28 
Dividends paid to Hertz Holdings— — (767)— — (767)
March 31, 2022100 $— $6,451 $(2,250)$(221)$3,980 

 Common Stock SharesCommon Stock AmountAdditional
Paid-In Capital		Accumulated
Deficit		Accumulated
Other Comprehensive
Income (Loss)		Total Stockholder's Equity (Deficit)
Balance as of:
December 31, 2022100 $— $4,844 $(1,271)$(294)$3,279 
Net income (loss)— — — 314 — 314 
Other comprehensive income (loss)— — — — 14 14 
Stock-based compensation charges— — 21 — — 21 
Dividends paid to Hertz Holdings(1)
— — (118)— — (118)
March 31, 2023100 $— $4,747 $(957)$(280)$3,510 
(1)    See "Share Repurchase Programs for Common Stock" in Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," for additional information.


The accompanying notes are an integral part of these financial statements.
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THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)

 Three Months Ended
March 31,
 20232022
Cash flows from operating activities:  
Net income (loss)$314 $376 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles, net466 (20)
Depreciation and amortization, non-vehicle35 33 
Amortization of deferred financing costs and debt discount (premium)14 11 
Stock-based compensation charges21 28 
Provision for receivables allowance20 13 
Deferred income taxes, net(135)103 
(Gain) loss on sale of non-vehicle capital assets(162)(2)
Changes in financial instruments108 (44)
Other(1)1 
Changes in assets and liabilities:
Non-vehicle receivables(49)(43)
Prepaid expenses and other assets(48)(40)
Operating lease right-of-use assets78 72 
Non-vehicle accounts payable(27)51 
Accrued liabilities29 124 
Accrued taxes, net— 30 
Operating lease liabilities(84)(80)
Self-insured liabilities(18)8 
Net cash provided by (used in) operating activities561 621 
Cash flows from investing activities:
Revenue earning vehicles expenditures(2,824)(2,985)
Proceeds from disposal of revenue earning vehicles1,206 1,471 
Non-vehicle capital asset expenditures(45)(30)
Proceeds from non-vehicle capital assets disposed of or to be disposed of175 1 
Collateral returned in exchange for letters of credit— 17 
Return of (investment in) equity investments— (15)
Net cash provided by (used in) investing activities(1,488)(1,541)
Cash flows from financing activities:  
Proceeds from issuance of vehicle debt2,061 4,680 
Repayments of vehicle debt(1,190)(3,492)
Proceeds from issuance of non-vehicle debt425 — 
Repayments of non-vehicle debt(430)(5)
Payment of financing costs(8)(24)
Dividends paid to Hertz Holdings(118)(767)
Net cash provided by (used in) financing activities740 392 

 Nine Months Ended
September 30,
 2017 2016
Cash flows from operating activities:   
Net income (loss)$(286) $(49)
Less: Net income (loss) from discontinued operations—
 (13)
Net income (loss) from continuing operations(286) (36)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:   
Depreciation of revenue earning vehicles, net2,089
 1,887
Depreciation and amortization, non-vehicle182
 195
Amortization and write-off of deferred financing costs32
 31
Amortization and write-off of debt discount (premium)1
 5
Loss on extinguishment of debt8
 40
Stock-based compensation charges16
 16
Provision for receivables allowance28
 35
Deferred income taxes, net(137) 10
Impairment charges and asset write-downs116
 31
(Gain) loss on sale of shares in equity investment(3) (75)
(Gain) loss on sale of Brazil Operations(6) —
Other(12) 1
Changes in assets and liabilities   
Non-vehicle receivables(184) (171)
Prepaid expenses and other assets(25) (14)
Non-vehicle accounts payable140
 25
Accrued liabilities(5) 16
Accrued taxes, net9
 23
Public liability and property damage18
 32
Net cash provided by (used in) operating activities1,981
 2,051
Cash flows from investing activities:   
Net change in restricted cash and cash equivalents, vehicle89
 11
Net change in restricted cash and cash equivalents, non-vehicle—
 (2)
Revenue earning vehicles expenditures(8,683) (8,710)
Proceeds from disposal of revenue earning vehicles5,285
 6,420
Capital asset expenditures, non-vehicle(124) (99)
Proceeds from disposal of property and other equipment18
 53
Proceeds from sale of Brazil Operations, net of retained cash94
 —
Sales of shares in equity investment, net of amounts invested9
 188
Other(4) —
Net cash provided by (used in) investing activities(3,316) (2,139)

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

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

 Three Months Ended
March 31,
 20232022
Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents11 (1)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period(176)(529)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period1,418 2,650 
Cash and cash equivalents and restricted cash and cash equivalents at end of period$1,242 $2,121 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized:
Vehicle$96 $39 
Non-vehicle36 17 
Income taxes, net of refunds11 6 
Supplemental disclosures of non-cash information:  
Purchases of revenue earning vehicles included in accounts payable, net of incentives$148 $82 
Sales of revenue earning vehicles included in vehicle receivables117 65 
Purchases of non-vehicle capital assets included in accounts payable— 23 
Revenue earning vehicles and non-vehicle capital assets acquired through finance lease12 5 


 Nine Months Ended
September 30,
 2017 2016
Cash flows from financing activities:   
Net change in restricted cash and cash equivalents, non-vehicle(833) —
Proceeds from issuance of vehicle debt6,907
 7,665
Repayments of vehicle debt(5,887) (7,320)
Proceeds from issuance of non-vehicle debt2,100
 2,427
Repayments of non-vehicle debt(986) (3,684)
Payment of financing costs(43) (73)
Early redemption premium payment(5) (13)
Transfers from discontinued entities—
 2,122
Advances to Hertz Holdings(4) (100)
Other(1) 10
Net cash provided by (used in) financing activities1,248
 1,034
Effect of foreign currency exchange rate changes on cash and cash equivalents from continuing operations19
 10
Net increase (decrease) in cash and cash equivalents during the period from continuing operations(68) 956
Cash and cash equivalents at beginning of period816
 474
Cash and cash equivalents at end of period$748
 $1,430
    
Cash flows from discontinued operations:   
Cash flows provided by (used in) operating activities$—
 $207
Cash flows provided by (used in) investing activities—
 (77)
Cash flows provided by (used in) financing activities—
 (94)
Net increase (decrease) in cash and cash equivalents during the period from discontinued operations$—
 $36
    
Supplemental disclosures of cash flow information for continuing operations:   
Cash paid during the period for:   
Interest, net of amounts capitalized:   
Vehicle$212
 $183
Non-vehicle164
 218
Income taxes, net of refunds40
 35
Supplemental disclosures of non-cash information for continuing operations:   
Purchases of revenue earning vehicles included in accounts payable and accrued liabilities, net of incentives$69
 $138
Sales of revenue earning vehicles included in receivables443
 603
Purchases of non-vehicle capital assets included in accounts payable49
 15
Receivable on sale of Brazil Operations13
 —
Revenue earning vehicles and property and equipment acquired through capital lease24
 16
Non-cash dividend paid to affiliate—
 334

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

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited



Note 1—Background


Hertz Global Holdings, Inc. ("Hertz Global" when including its subsidiaries and VIEs and "Hertz Holdings" when excluding its subsidiaries)subsidiaries and VIEs) was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns The Hertz Corporation ("Hertz" and interchangeably with Hertz Global, the "Company"), Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918.

Hertz operates its vehicle rental business globally primarily through the Hertz, Dollar and Thrifty brands from company-owned, licenseecompany-operated and franchisee locations in the United States ("U.S."), Africa, Asia, Australia, Canada, Thethe Caribbean, Europe, Latin America, the Middle East and New Zealand. Through its Donlen subsidiary,The Company also sells vehicles through Hertz provides vehicle leasing and fleet management services.Car Sales.


On June 30, 2016, former Hertz Global Holdings, Inc. (for periods on or prior to June 30, 2016, “Old Hertz Holdings” and for periods after June 30, 2016, “Herc Holdings”) completed a spin-off (the “Spin-Off”) of its global vehicle rental business through a dividend to stockholders of record of Old Hertz Holdings as of the close of business on June 22, 2016, the record date for the distribution, of all of the issued and outstanding common stock of Hertz Rental Car Holding Company, Inc. (“New Hertz”), which was re-named Hertz Global Holdings, Inc. in connection with the Spin-Off, on a one-to-five basis. New Hertz, or Hertz Global, is the “accounting successor” to Old Hertz Holdings. As such, the 2016 financial information of Hertz reflects the equipment rental business as a discontinued operation and the 2016 financial information of Hertz Global reflects the equipment rental business and certain parent legal entities as discontinued operations. See Note 3, "Discontinued Operations," for additional information. Unless noted otherwise, information disclosed in these notes to the consolidated financial statements pertain to the continuing operations of Hertz and Hertz Global.

Note 2—Basis of Presentation and Recently Issued Accounting Pronouncements


Basis of Presentation


This Quarterly Report on Form 10-Q combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2023 of Hertz Global and Hertz. Hertz Global consolidates Hertz for financial statement purposes, therefore, disclosures that relate to activities of Hertz also apply to Hertz Global. In the sections that combine disclosure of Hertz Global and Hertz, this report refers to actions as being actions of the Company, or Hertz Global, which is appropriate because the business is one enterprise and Hertz Global operates the business through Hertz. When appropriate, Hertz Global and Hertz are named specifically for their individual disclosures and any significant differences between the operations and results of Hertz Global and Hertz are separately disclosed and explained.

The Company prepares itsaccompanying unaudited condensed consolidated financial statements have been prepared in conformityaccordance with accounting principles generally accepted in the United States of AmericaU.S. (“U.S. GAAP”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The Company's vehicle rental operations are typically a seasonal business, with decreased levels of business in the winter months and heightened activity during the spring and summer months for the majority of countries where the Company generates revenues.


The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates.


The December 31, 20162022 unaudited condensed consolidated balance sheet data wasis derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with information included in the Company's Form 10‑K10-K for the year ended December 31, 20162022 (the "2016"2022 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC") on March 6, 2017.February 7, 2023.


Principles of Consolidation


The unaudited condensed consolidated financial statements of Hertz Global include the accounts of Hertz Global, and its wholly owned and majority owned U.S. and international subsidiaries.subsidiaries and its VIEs, as applicable. The unaudited condensed consolidated financial statements of Hertz include the accounts of Hertz, and its wholly owned and majority owned U.S. and international subsidiaries. Insubsidiaries and its VIEs, as applicable. The Company consolidates a VIE when it is deemed the event that the Company is a primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity are included in the Company's consolidated financial statements.VIE. The Company accounts for its investment in joint ventures using the equity method when it has significant influence but not control and is not the primary beneficiary.beneficiary of the joint venture. All significant intercompany transactions have been eliminated in consolidation.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited



Out Of Period AdjustmentsNote 3—Divestitures


TheSales of Non-vehicle Capital Assets

In 2019, the Company identified a misstatementsubstantially completed the sale of certain non-vehicle capital assets constituting real property, in an eminent domain proceeding, in its prior period financial statements, related toAmericas RAC segment. In February 2023, the income tax provision, that it correctedCompany received additional cash from the sale upon final resolution of the eminent domain proceeding and recognized an additional $29 million pre-tax gain on the sale, which is included in (gain) on sale of non-vehicle capital assets in the second quarter of 2017. The cumulative impact of the adjustment was an increase in net loss of approximately $10 million. There was no impact to pre-tax loss from continuing operations. The misstatement relates to an error in the tax provision for U.S. income of a foreign equity investment transaction for fiscal year 2016. The Company considered both quantitative and qualitative factors in assessing the materiality of the item and determined that the misstatement was not material to any prior period and not material to the nine months ended September 30, 2017.

Correction of Errors

The Company identified classification errors within the investing section of the condensed consolidated statement of cash flows for the nine months ended September 30, 2016. One of the errors related to the Company's Donlen operations and was previously disclosed in the Company's 2016 Form 10‑K. The second error related to the Company's operations in Brazil and was previously disclosed in the Company's Form 10-Q for the quarterly period ended June 30, 2017.

The Company considered both quantitative and qualitative factors in assessing the materiality of the classification errors individually, and in the aggregate, and determined that the classification errors were not material and revised the accompanying condensed consolidated statement of cash flows for the nine months ended September 30, 2016 accordingly. Correction of the errors decreased both revenue earning vehicles expenditures and proceeds from disposals of revenue earning vehicles by $540 million for the nine months ended September 30, 2016 and did not impact total operating, investing or financing cash flows. These revisions had no impact on the Company's condensed consolidated balance sheet at December 31, 2016 or itsunaudited condensed consolidated statement of operations for the three and nine months ended September 30, 2016.March 31, 2023.

Recently Issued Accounting Pronouncements

Adopted

Improvements to Employee Share-Based Payment Accounting


In March 2016,2023, the FASB issued guidance that simplifies several areasCompany sold and leased back its Los Angeles, California airport location in its Americas RAC segment. The transaction qualified for sale-leaseback accounting. The Company recognized a pre-tax gain of employee share-based payment accounting, including income taxes, forfeitures, minimum statutory withholding requirements,$133 million based on the difference in the sale amount of $143 million less $9 million net book value of assets sold and classifications within$1 million in selling costs, which is included in (gain) on sale of non-vehicle capital assets in the accompanying unaudited condensed consolidated statement of cash flows. Most significantly,operations for the new guidance eliminatesthree months ended March 31, 2023. The leaseback is classified as an operating lease with a term of 36 months.

Note 4—Revenue Earning Vehicles

The components of revenue earning vehicles, net are as follows:
(In millions)March 31,
2023		December 31,
2022
Revenue earning vehicles$15,108 $13,654 
Less accumulated depreciation(1,752)(1,649)
13,356 12,005 
Revenue earning vehicles held for sale, net(1)
502 490 
Revenue earning vehicles, net$13,858 $12,495 
(1)    Represents the need to track tax “windfalls”carrying amount of vehicles currently placed on the Company's retail lots for sale or actively in a separate pool within additional paid-in capital; instead, excess tax benefitsthe process of being sold through other disposition channels.

Depreciation of revenue earning vehicles and tax deficiencies will be recorded within income tax expense. The Company adopted this guidance in accordance withlease charges, net includes the effective date on January 1, 2017. The method of adoption with respect to the condensed consolidated balance sheet was a modified retrospective basis. Upon adoption, the Company recorded a deferred tax asset with an offsetting entry to the opening accumulated deficit to recognize net operating loss carryforwards, net of a valuation allowance, attributable to excess tax benefits on stock compensation that had not been previously recognized. Additionally, the Company has elected to continue to estimate forfeitures expected to occur.following:

Three Months Ended March 31,
(In millions)20232022
Depreciation of revenue earning vehicles$422 $322 
(Gain) loss on disposal of revenue earning vehicles(46)(387)
Rents paid for vehicles leased5 6 
Depreciation of revenue earning vehicles and lease charges, net$381 $(59)



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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 5—Debt

The impact toCompany's debt, including its available credit facilities, consists of the condensed consolidated opening balance sheetfollowing ($ in millions) as of January 1, 2017 of adopting this guidance was as follows (in millions):March 31, 2023 and December 31, 2022:


Hertz Global
FacilityWeighted-Average Interest Rate
as of
March 31, 2023		Fixed or
Floating
Interest
Rate		MaturityMarch 31,
2023		December 31,
2022
Non-Vehicle Debt
Term B Loan7.90%Floating6/2028$1,277 $1,281 
Term C Loan7.90%Floating6/2028245 245 
Senior Notes Due 20264.63%Fixed12/2026500 500 
Senior Notes Due 20295.00%Fixed12/20291,000 1,000 
First Lien RCFN/AFloating6/2026— — 
Other Non-Vehicle Debt(1)
7.64%FixedVarious8 9 
Unamortized Debt Issuance Costs and Net (Discount) Premium(55)(58)
Total Non-Vehicle Debt2,975 2,977 
Vehicle Debt
HVF III U.S. ABS Program
HVF III U.S. Vehicle Variable Funding Notes
HVF III Series 2021-A Class A(2)
6.35%Floating6/20242,452 2,363 
HVF III Series 2021-A Class B(2)
3.65%Fixed6/2023188 188 
2,640 2,551 
HVF III U.S. Vehicle Medium Term Notes
HVF III Series 2021-1(2)
1.66%Fixed12/20242,000 2,000 
HVF III Series 2021-2(2)
2.12%Fixed12/20262,000 2,000 
HVF III Series 2022-1(2)
2.44%Fixed6/2025750 750 
HVF III Series 2022-2(2)
2.42%Fixed6/2027652 652 
HVF III Series 2022-3(2)
3.89%Fixed3/2024383 383 
HVF III Series 2022-4(2)
4.22%Fixed9/2025667 667 
HVF III Series 2022-5(2)
4.03%Fixed9/2027317 317 
HVF III Series 2023-1(2)
5.91%Fixed6/2026460 — 
HVF III Series 2023-2(2)
6.30%Fixed9/2028300 — 
7,529 6,769 
Vehicle Debt - Other
Repurchase Facility6.55%Fixed4/2023114 86 
European ABS(2)
4.65%Floating11/2024843 811 
Hertz Canadian Securitization(2)
6.51%Floating6/2024288 283 
Australian Securitization(2)
5.28%Floating4/2024159 168 
New Zealand RCF7.78%Floating6/202450 54 
U.K. Financing Facility6.60%Floating4/2023-3/2027113 101 
U.K. Toyota Financing Facility2.20%Floating4/2023-11/202337 49 
16
 Deferred income taxes, net Total liabilities Accumulated deficit Total equity Total liabilities and equity
As of December 31, 2016$2,149
 $18,080
 $(882) $1,075
 $19,155
Record deferred tax asset(49) (49) 49
 49
 —
As of January 1, 2017$2,100
 $18,031
 $(833) $1,124
 $19,155


Hertz
 Deferred income taxes, net Total liabilities Accumulated deficit Total equity Total liabilities and equity
As of December 31, 2016$2,149
 $18,080
 $(1,867) $1,075
 $19,155
Record deferred tax asset(49) (49) 49
 49
 —
As of January 1, 2017$2,100
 $18,031
 $(1,818) $1,124
 $19,155

The method of adoption with respect to the condensed consolidated statement of operations and the condensed consolidated statements of cash flows pertaining to excess tax benefits or deficiencies is on a prospective basis. The method of adoption with respect to the condensed consolidated statements of cash flows pertaining to employee taxes paid is on a retrospective basis and adoption of the guidance did not impact the Company's cash flows.

Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued guidance that addresses the treatment of certain transactions in statements of cash flows, with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified. These items include, but are not limited to, debt prepayment or debt extinguishment costs, proceeds from the settlement of life insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. The Company adopted this guidance early, as permitted, on a retrospective basis, on January 1, 2017. Adoption of this guidance did not impact the Company’s financial position, results of operations or cash flows.

Accounting for Goodwill Impairment

In January 2017, the FASB issued guidance that eliminates the second step of the two-step goodwill impairment test, which requires the determination of the implied fair value of goodwill to measure an impairment. Rather, a goodwill impairment charge will be calculated as the amount by which a reporting unit's carrying amount exceeds its fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted this guidance early, as permitted, on a prospective basis, on January 1, 2017. Adoption of this guidance did not impact the Company’s financial position, results of operations or cash flows.

Scope of Modification Accounting for Share-Based Payment Awards

In May 2017, the FASB issued guidance that amends the scope of modification accounting for share-based payment arrangements. The guidance describes the types of changes to the terms or conditions of share-based payment awards where modification accounting is required to be applied. Modification accounting is not required if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The Company adopted this guidance early, as permitted, on a prospective basis, in the second quarter of 2017. Adoption of this guidance did not impact the Company’s financial position, results of operations or cash flows.

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

FacilityWeighted-Average Interest Rate
as of
March 31, 2023		Fixed or
Floating
Interest
Rate		MaturityMarch 31,
2023		December 31,
2022
Other Vehicle Debt3.33%Floating4/2023 - 2/202778 76 
1,682 1,628 
Unamortized Debt Issuance Costs and Net (Discount) Premium(62)(62)
Total Vehicle Debt11,789 10,886 
Total Debt$14,764 $13,863 

(1)Other non-vehicle debt is primarily comprised of $5 million and $6 million in finance lease obligations as of March 31, 2023 and December 31, 2022, respectively.
Not Yet Adopted(2)Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal final maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness originally expect the outstanding principal of the relevant indebtedness to be repaid in full. The legal final maturity date is the date on which the outstanding principal of the relevant indebtedness is legally due and payable in full.


Revenue from Contracts with CustomersNon-vehicle Debt


First Lien Credit Agreement

In May 2014,March 2023, Hertz increased the FASB issued guidance that will replace most existing revenue recognition guidance in U.S. GAAP. The new guidance applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. The core principleaggregate committed amount of the guidanceFirst Lien RCF from $1.9 billion to $2.0 billion.

Vehicle Debt

HVF III U.S. ABS Program

HVF III Series 2023-1 Notes: In March 2023, Hertz issued the Series 2023-1 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $500 million. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Class D Notes in an aggregate principal amount of $40 million, and accordingly, the related principal amount is thateliminated in consolidation as of March 31, 2023.

HVF III Series 2023-2 Notes: In March 2023, Hertz issued the Series 2023-1 Notes in four classes (Class A, Class B, Class C and Class D) in an entity should recognize revenue from customers foraggregate principal amount of $300 million.

There is subordination within each of the transfer of goods or services equal topreceding series based on class.

Vehicle Debt-Other
Repurchase Facilities

Beginning in 2022, Hertz entered into and in the amount that it expects to be entitled to receive for those goods or services. Also, additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The FASB has issued several amendments and updates to the new revenue standard (collectively, “Topic 606”), including guidancefuture may enter into repurchase agreements related to when an entity should recognize revenue gross asretained HVF III Series Notes (the "Repurchase Facilities"), whereby Hertz can sell and repurchase at a principal or net as an agent and how an entity should identify performance obligations. As amended, Topic 606 is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted, and allows for full retrospective adoption applied to all periods presented or a modified retrospective adoption with the cumulative effect of initially applying the new guidance as an adjustment to the opening balance of retained earnings recognized at the date of initial application. The Company intends to adopt Topic 606 when effective on January 1, 2018 using a modified retrospective approach applied to all contracts. Prior periods will not be retrospectively adjusted. The Company has reached conclusions on several key accounting assessments related to its revenue recognition, however, it is still finalizing its assessment and quantifying the impacts that adoption of Topic 606 will have on the accounting for its loyalty programs, such as Hertz Gold Plus Rewards, as further described below. The Company is still in the process of determining the level of disaggregated revenue information that it will include in its disclosures and continues to evaluate its internal controls over financial reporting to ensure that controls are in place to prevent or detect material misstatements to the consolidated financial statements upon adoption of Topic 606.

Vehicle Rental Operations

The Company has concluded that revenue earned by operations for the rental of vehicles and from other forms of rental related activities, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, will be accounted for under Topic 606, effective January 1, 2018, until the adoptionpre-determined price any of the new lease guidance that replacesretained HVF III Series Notes. Transactions occurring under the existing lease guidance in U.S. GAAP, as described in more detail in the "Leases" disclosure below.Repurchase Facilities are based on mutually agreeable terms and prevailing rates. As of March 31, 2023, transactions totaling $114 million were outstanding under Repurchase Facilities.


RecognitionNew Zealand RCF

In March 2023, Hertz New Zealand Holding Limited, an indirect, wholly-owned subsidiary of revenue from other formsHertz, amended its credit agreement to extend its seasonal commitment period and provide for aggregate maximum borrowings of rental related activities that represent a service will not be materially impacted by adoption of Topic 606.

Recognition of revenue earned through the licensing of the Hertz, Dollar and Thrifty brands under franchise agreements (“franchise fees”) is expected to remain consistent with current revenue recognition guidance except for initial and renewal franchise fees. Currently, initial franchise fees are recorded as deferred income when received and are recognized as revenue when all material upfront services and conditions related to the franchise fee have been substantially performed and renewal franchise fees are recognized as revenue when the license agreements are effective and collectability is reasonably assured. Upon adoption, revenue from initial and renewal franchise fees that relate to a future contract term, for franchises in effect as of January 1, 2018, will be deferred and recognized over the remaining contract term. However, this amount will not be material.

The Company believes that the most significant impact relates to its accounting for reward points earned by customers under its loyalty programs. Upon adoption of Topic 606, each transaction which generates reward points will result in the deferral of revenue equivalent to the retail value of the redemption of the loyalty reward points. The associated revenue will be recognized at the time the customer redeems the loyalty reward points. Under the current guidance, there is no revenue deferral and the Company records an expense associated with the incremental cost of providing the future rental at the time when the reward points are earned. The Company is in the process of quantifying the impact of adoption of Topic 606.


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Fleet Leasing and Management Operations

The Company has concluded that revenue earned by operations for the leasing of vehicles and from other forms of rental related activities wherein an identified asset is transferred to the customer and the customer has the ability to control that asset will be accounted for under the existing lease guidance until the adoption of the new lease guidance, as describedNZD$80 million with step downs in more detail in the "Leases" disclosure below. Administration fees and service revenue attributable to the Company's Donlen operations will not be materially impacted by adoption of Topic 606.

Leases

In February 2016, the FASB issued guidance that replaces the existing lease guidance in U.S. GAAP. The new guidance (Topic "842") establishes a right-of-use (“ROU”) model that requires a lessee to record on the balance sheet a ROU asset and corresponding lease liability based on the present value of future lease payments for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Topic 842 also expands the requirements for lessees to record leases embedded in other arrangements. Additionally, enhanced quantitative and qualitative disclosures surrounding leases are required which provide financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases. Topic 842 is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods with early adoption permitted. The Company intends to adopt this guidance, in accordance with the effective date, on January 1, 2019. A modified retrospective transition approach is required for both lessees and lessors for existing leases at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is still in the process of evaluating whether to avail itself of allowable practicable expedients during transition.

Lessee

Adoption of Topic 842 will result in a material increase in the Company's lease-related assets and liabilities on its balance sheet, primarily for leases of rental locations and other assets. Additionally, adoption of this guidance will impact the statement of cash flows with respect to the presentation of the Company's operating activities, but is not expected to impact its presentation of investing or financing activities. Adoption of Topic 842 is not expected to have a material impact on the Company’s results of operations. The Company has reached conclusions on key accounting assessments related to its leases and is performing an analysis of its lease portfolio to ensure proper application of the new guidance including implementation of internal controls over financial reporting.

Lessor

The Company has concluded that revenue earned by operations for the rental and leasing of vehicles and from other forms of rental related activities wherein an identified asset is transferred to the customer and the customer has the ability to control that asset is within the scope of this guidance and that additional disclosures regarding lease revenue are required upon adoption. The Company is in the process of evaluating the breakdown of its vehicle rental revenues into lease and non-lease components. There is no impact to the nature, timing or recognition of rental lease revenue upon adoption of this guidance.

Restricted Cash

In November 2016, the FASB issued guidance that clarifies existing guidance on the classification and presentation of restricted cash in the statement of cash flows. The guidance requires entities to include restricted cash and restricted cash equivalents in its cash and cash equivalents balances in the statement of cash flows. Under current guidance, the Company presents these transfers within the cash flows from investing and financing sections in its consolidated statements of cash flows. The guidance is effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods using a retrospective transition method. Adoption of this guidance will impact the reconciliation of the beginning-of-period and end-of-period total amounts shown on the Company's statement of cash flows. For the nine months ended September 30, 2017, the amount of cash and cash equivalents as presented on

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

the statement of cash flows will increase by $1.0 billion. Additionally, transfers between restricted and unrestricted cash will no longer be a component of the Company's investing or financing activities.

Clarifying the Definition of a Business

In January 2017, the FASB issued guidance that clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance requires an evaluation of whether substantially all of the fair value of assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the transaction does not qualify as a business. The guidance also requires an acquired business to include at least one substantive process and narrows the definition of outputs. The guidance is effective for annual periods beginning after December 15, 2017 and interim periods within those annual periods using a prospective transition method. Based on current operations, adoption of this guidance is not expected to impact the Company's financial position, results of operations or cash flows.

Clarifying the Scope of Nonfinancial Asset Derecognition and Accounting for Partial Sales of Nonfinancial Assets

In February 2017, the FASB issued guidance that clarifies the scope of the established guidance on nonfinancial asset derecognition as well as the accounting for partial sales of nonfinancial assets. The guidance is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The new guidance may be adopted on either a full or modified retrospective basis. Based on current operations, adoption of this guidance is not expected to impact the Company's financial position, results of operations or cash flows.

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued guidance that requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present the current-service-cost component with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if such a subtotal is presented. The guidance also requires entities to disclose the income statement lines that contain the other components if they are not presented on described separate lines. In addition, only the service-cost component of net benefit cost is eligible for capitalization, which is a change from current practice, under which entities capitalize the aggregate net benefit cost when applicable. The guidance is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. The guidance affecting the presentation of the components of net periodic benefit cost in the income statement requires use of the retrospective method of adoption and the guidance limiting the capitalization of net periodic benefit cost to the service cost component requires use of the prospective method of adoption. Adoption of this guidance will result in a reclassification of certain amounts from direct vehicle and operating expense and selling, general and administrative expense to other (income) expense, net which does not impact the Company's financial position, results of operations or cash flows. The Company does not expect the reclassified amounts to be material.

Note 3—Discontinued Operations

As further described in Note 1, "Background," on June 30, 2016, the separation of Old Hertz Holdings' global vehicle rental and equipment rental businesses was completed.


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Results of Discontinued Operations - Hertz Global

The following table summarizes the results of the equipment rental business and certain parent legal entities which are presented as discontinued operations in 2016:
(In millions)Three Months Ended
September 30, 2016		 Nine Months Ended
September 30, 2016
Total revenues$—
 $677
Direct operating expenses—
 366
Depreciation of revenue earning equipment and lease charges, net—
 181
Selling, general and administrative—
 123
Interest expense, net(1)
—
 17
Other (income) expense, net—
 (1)
Income (loss) from discontinued operations before income taxes—
 (9)
(Provision) benefit for taxes on discontinued operations(2) (6)
Net income (loss) from discontinued operations$(2) $(15)

(1)In addition to interest expense directly associated with Herc Holdings, the Company allocated interest expense related to certain debt repaid in connection with the Spin-Off to discontinued operations. For the nine months ended September 30, 2016, the amount allocated was $5 million.

Results of Discontinued Operations - Hertz

The following table summarizes the results of the equipment rental business which is presented as discontinued operations in 2016:
(In millions)Three Months Ended
September 30, 2016		 Nine Months Ended
September 30, 2016
Total revenues$—
 $677
Direct operating expenses—
 366
Depreciation of revenue earning equipment and lease charges, net—
 181
Selling, general and administrative—
 124
Interest expense, net(1)
—
 13
Other (income) expense, net—
 (1)
Income (loss) from discontinued operations before income taxes—
 (6)
(Provision) benefit for taxes on discontinued operations(2) (7)
Net income (loss) from discontinued operations$(2) $(13)

(1)In addition to interest expense directly associated with Herc Holdings, the Company allocated interest expense related to certain debt repaid in connection with the Spin-Off to discontinued operations. For the nine months ended September 30, 2016, the amount allocated was $5 million.

Note 4—Acquisitions and Divestitures

Divestitures

CAR Inc. Investment

In March 2016, the Company sold 204 million shares of common stock of CAR Inc., a publicly traded company on the Hong Kong Stock Exchange and extended its commercial agreement with CAR Inc. to 2023, in exchange for $240 million, of which $233 million was allocated to the sale of shares based on the fair value of those shares. The sale of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

shares resulted in a pre-tax gain of $75 million which has been recognized and recorded in the Company's corporate operations and is included in other (income) expense, net in the accompanying condensed consolidated statements of operations. Additionally, $7 million of the proceeds were allocated to the extension of the commercial agreement which have been deferred and are being recognized over the remaining term of the commercial agreement. The sale of the shares reduced the Company's ownership interest in CAR Inc. to 1.7% and eliminated the Company's ability to exercise significant influence over CAR Inc. As a result, the Company classifies the investment as an available for sale security which is presented within prepaid expenses and other assets in the accompanying condensed consolidated balance sheet as of December 31, 2016.

In February 2017, the Company sold its remaining shares of common stock of CAR Inc. and no longer has an ownership interest in the entity.

Brazil Operations

During the fourth quarter of 2016, the Company, along with certain of its wholly owned subsidiaries, entered into a definitive stock purchase agreement to sell Car Rental Systems do Brasil Locação de Veiculos Ltd., a wholly owned subsidiary of the Company located in Brazil ("Brazil Operations"), to Localiza Fleet S.A. (“Localiza”), a corporation headquartered in Brazil. The Brazil Operations are reported in the Company's International Rental Car reporting segment. As a result of the then pending sale, the carrying values of the assets and liabilities being sold were written down to fair value less costs to sell, which resulted in an impairment charge of $18 million based upon the estimated agreed-upon sales price and the Brazil operations were classified as held for sale in the accompanying condensed consolidated balance sheet as of December 31, 2016.

The carrying amounts of the major classes of assets and liabilities of the Brazil Operations as of December 31, 2016 were as follows:
(In millions) December 31, 2016
ASSETS  
Cash and cash equivalents $1
Receivables, net 11
Prepaid expenses and other assets 5
Revenue earning vehicles, net 86
Property and equipment, net 1
Intangibles 1
Deferred income taxes, net 6
Assets held for sale $111
LIABILITIES  
Accounts payable $11
Accrued liabilities 6
Liabilities held for sale $17

In August 2017, the Company completed the sale of its Brazil Operations to Localiza and received proceeds of $115 million, of which $13 million was placed in escrow to secure certain indemnification obligations. The proceeds from the sale are subject to post-closing adjustments. As a result of the sale, the Company recorded a $6 milliongain, net of the impact of foreign currency adjustments, which is included in other (income) expense, net in the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2017. As part of the sale, both companies entered into referral and brand cooperation agreements to govern their ongoing relationship which have an initial term of twenty years with an option to extend for another twenty years. The alliance will also involve the exchange of knowledge in areas of technology, customer service and operational excellence.


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 5—Revenue Earning Vehicles

The components of revenue earning vehicles, net are as follows:
(In millions)September 30, 2017 December 31, 2016
Revenue earning vehicles$15,055
 $13,287
Less: Accumulated depreciation(3,036) (2,678)
 12,019
 10,609
Revenue earning vehicles held for sale, net357
 209
Revenue earning vehicles, net$12,376
 $10,818

The above amounts at December 31, 2016 exclude revenue earning vehicles of the Company's Brazil Operations which are included in assets held for sale in the accompanying condensed consolidated balance sheet at December 31, 2016. The Brazil Operations were sold in August 2017, as further described in Note 4, "Acquisitions and Divestitures".

Depreciation of revenue earning vehicles and lease charges, net includes the following:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Depreciation of revenue earning vehicles$636
 $631
 $1,902
 $1,766
(Gain) loss on disposal of revenue earning vehicles(a)
43
 44
 187
 121
Rents paid for vehicles leased21
 20
 55
 53
Depreciation of revenue earning vehicles and lease charges, net$700
 $695
 $2,144
 $1,940

(a)    (Gain) loss on disposal of revenue earning vehicles by segment is as follows:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
U.S. Rental Car(i)
$43
 $43
 $187
 $124
International Rental Car—
 1
 —
 (3)
Total$43
 $44
 $187
 $121

(i)Includes costs associated with the Company's U.S. vehicle sales operations of $36 million and $27 million for the three months ended September 30, 2017 and 2016, respectively, and $99 million and $80 million, for the nine months ended September 30, 2017 and 2016, respectively.

Depreciation rates are reviewed on a quarterly basis based on management's ongoing assessment of present and estimated future market conditions, their effect on residual values at the time of disposal and the estimated holding periods for the vehicles. The impact of depreciation rate changes is as follows:
Increase (decrease)Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
U.S. Rental Car(a)
$6
 $43
 $68
 $88
International Rental Car4
 1
 5
 3
Total$10
 $44
 $73
 $91

(a)The depreciation rate changes in the U.S. Rental Car operations for the three and nine months ended September 30, 2017 include a decrease in depreciation expense of $15 million based on the review completed during the third quarter of 2017. The depreciation rate changes in the U.S. Rental Car operations for the three and nine months ended September 30, 2016 include a net increase in depreciation expense of $39 million based on the review completed during the third quarter of 2016.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 6—Goodwill and Intangible Assets

As a result of declines in revenue and profitability of the Company and a decline in the share price of Hertz Global's common stock, the Company tested the recoverability of its goodwill and indefinite-lived intangible assets as of June 30, 2017, as further described below. No events have occurred requiring the Company to test the recoverability of its goodwill and indefinite-lived intangible assets subsequent to its analysis at June 30, 2017. The Company will perform its annual impairment analysis of goodwill and indefinite-lived intangibles as of October 1, 2017 during the fourth quarter.

Goodwill

The Company performed a goodwill impairment analysis as of June 30, 2017 using the income approach, a measurement using level 3 inputs under the GAAP fair value hierarchy. In performing the impairment analysis, the Company leveraged long-term strategic plans, which are based on strategic initiatives for future profitability growth. The weighted average cost of capital used in the discounted cash flow model was calculated based upon the fair value of the Company's debt and stock price with a debt to equity ratio comparable to the vehicle rental car industry. The results of the Company's analysis indicated that the estimated fair value of each reporting unit was substantially in excess of its carrying value, therefore, the Company determined that its goodwill was not impaired.

Intangible Assets

The Company performed an impairment analysis as of June 30, 2017 of its indefinite-lived intangible assets using the relief from royalty method, a measurement using level 3 inputs under the GAAP fair value hierarchy. As a result of the analysis, the Company concluded that there was an impairment of the Dollar Thrifty tradename in its U.S. Rental Car segment and recorded a charge of $86 million. The impairment was largely due to a decrease in long-term revenue projections coupled with an increase in the weighted average cost of capital. Subsequent to recording the impairment charge, the carrying value of the Dollar Thrifty tradename was approximately $934 million, representing its estimated fair value. A change of 1 percentage point to the weighted average cost of capital assumption used in the impairment analysis would have impacted the impairment charge by approximately $80 million.

Note 7—Debt

The Company's debt, including its available credit facilities, consists of the following (in millions):
Facility Weighted Average Interest Rate at September 30, 2017 Fixed or
Floating
Interest
Rate		 Maturity September 30,
2017		 December 31,
2016
Non-Vehicle Debt          
Senior Term Loan 3.99% Floating 6/2023 $691
 $697
Senior RCF 4.49% Floating 6/2021 120
 —
Senior Notes(1)
 6.22% Fixed 4/2019–10/2024 2,950
 3,200
Senior Second Priority Secured Notes 7.63% Fixed 6/2022 1,250
 —
Promissory Notes 7.00% Fixed 1/2028 27
 27
Other Non-Vehicle Debt 1.96% Fixed Various 9
 10
Unamortized Debt Issuance Costs and Net (Discount) Premium       (44) (39)
Total Non-Vehicle Debt       5,003
 3,895

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Facility Weighted Average Interest Rate at September 30, 2017 Fixed or
Floating
Interest
Rate		 Maturity September 30,
2017		 December 31,
2016
Vehicle Debt          
HVF U.S. Vehicle Medium Term Notes        
HVF Series 2010-1(2)
 4.96% Fixed 2/2018 96
 115
HVF Series 2011-1(2)
 N/A N/A N/A —
 115
HVF Series 2013-1(2)
 1.91% Fixed 8/2018 625
 625
        721
 855
HVF II U.S. ABS Program          
HVF II U.S. Vehicle Variable Funding Notes        
HVF II Series 2013-A(2)
 2.61% Floating 1/2019 2,024
 1,844
HVF II Series 2013-B(2)
 2.51% Floating 1/2019 186
 626
HVF II Series 2017-A(2)
 N/A Floating 10/2018 —
 —
        2,210
 2,470
HVF II U.S. Vehicle Medium Term Notes        
HVF II Series 2015-1(2)
 2.93% Fixed 3/2020 780
 780
HVF II Series 2015-2(2)
 2.45% Fixed 9/2018 265
 250
HVF II Series 2015-3(2)
 3.10% Fixed 9/2020 371
 350
HVF II Series 2016-1(2)
 2.89% Fixed 3/2019 466
 439
HVF II Series 2016-2(2)
 3.41% Fixed 3/2021 595
 561
HVF II Series 2016-3(2)
 2.72% Fixed 7/2019 424
 400
HVF II Series 2016-4(2)
 3.09% Fixed 7/2021 424
 400
HVF II Series 2017-1(2)
 3.38% Fixed 10/2020 450
 —
HVF II Series 2017-2(2)
 3.57% Fixed 10/2022 350
 —
        4,125
 3,180
Donlen ABS Program          
HFLF Variable Funding Notes          
HFLF Series 2013-2(2)
 2.23% Floating 9/2018 220
 410
        220
 410
HFLF Medium Term Notes          
HFLF Series 2013-3(5)
 N/A N/A N/A —
 96
HFLF Series 2014-1(5)
 2.55% Floating 10/2017-12/2017 49
 148
HFLF Series 2015-1(5)
 1.98% Floating 10/2017-8/2019 173
 248
HFLF Series 2016-1(5)
 2.45% Both 10/2017-5/2020 355
 385
HFLF Series 2017-1(5)
 2.24% Both 6/2018-5/2020 500
 —
        1,077
 877

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Facility Weighted Average Interest Rate at September 30, 2017 Fixed or
Floating
Interest
Rate		 Maturity September 30,
2017		 December 31,
2016
Other Vehicle Debt          
U.S. Vehicle RCF(3)
 3.59% Floating 6/2021 198

193
European Revolving Credit Facility 2.75% Floating 1/2019 294
 147
European Vehicle Notes(4)
 4.29% Fixed 1/2019–10/2021 763
 677
European Securitization(2)
 1.55% Floating 10/2018 520
 312
Canadian Securitization(2)
 2.35%
Floating
1/2019
281

162
Australian Securitization(2)
 3.11% Floating 7/2018 133
 117
New Zealand RCF 4.28% Floating 9/2018 35
 41
Capitalized Leases 2.78% Floating 10/2017–12/2021 385
 244
        2,609
 1,893
Unamortized Debt Issuance Costs and Net (Discount) Premium       (46) (39)
Total Vehicle Debt       10,916
 9,646
Total Debt       $15,919
 $13,541
N/A - Not Applicable

(1)References to the "Senior Notes" include the series of Hertz's unsecured senior notes set forth on the table below. Outstanding principal amounts for each such series of the Senior Notes is also specified below:
(In millions)Outstanding Principal
Senior NotesSeptember 30, 2017 December 31, 2016
4.25% Senior Notes due April 2018$—
 $250
6.75% Senior Notes due April 2019450
 450
5.875% Senior Notes due October 2020700
 700
7.375% Senior Notes due January 2021500
 500
6.25% Senior Notes due October 2022500
 500
5.50% Senior Notes due October 2024800
 800
 $2,950
 $3,200

(2)Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness expect the relevant indebtedness to be repaid. The legal final maturity date is the date on which the relevant indebtedness is legally due and payable.
(3)Approximately $67 million of the aggregate maximum borrowingcommitted capacity under the U.S. Vehicle RCF is scheduled to expire in January 2018.
(4)References to the "European Vehicle Notes" include the series of Hertz Holdings Netherlands B.V.'s, an indirect wholly-owned subsidiary of Hertz organized under the laws of The Netherlands (“HHN BV”), unsecured senior notes (converted from Euros to U.S. dollars at a rate of 1.17 to 1 and 1.04 to 1 as of September 30, 2017 and December 31, 2016, respectively) set forth on the table below. Outstanding principal amounts for each such series of the European Vehicle Notes is also specified below:
(In millions)Outstanding Principal
European Vehicles NotesSeptember 30, 2017 December 31, 2016
4.375% Senior Notes due January 2019 (€425 million aggregate principal amount)$499
 $443
4.125% Senior Notes due October 2021 (€225 million aggregate principal amount)264
 234
 $763
 $677
(5)In the case of the Hertz Fleet Lease Funding LP ("HFLF") Medium Term Notes, such notes are repayable from cash flows derived from third-party leases comprising the underlying HFLF collateral pool. The initial maturity date referenced for each series of HFLF Medium Term Notes represents the end of the revolving period for such series, at which time the related notes begin to amortize monthly by an amount equal to the lease collections payable to that series. To the extent the revolving period already has ended, the initial maturity date reflected is October 2017. The second maturity date referenced for each series of HFLF Medium Term Notes represents the date by which

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Hertz and the investors in the related series expect such series of notes to be repaid in full, which is based upon various assumptions made at the time of pricing of such notes, including the contractual amortization of the underlying leases as well as the assumed rate of prepayments of such leases.  Such maturity reference is to the “expected final maturity date” as opposed to the subsequent “legal final maturity date”. The legal final maturity date is the date on which the relevant indebtedness is legally due and payable. Although the underlying lease cash flows that support the repayment of the HFLF Medium Term Notes may vary, the cash flows generally are expected to approximate a straight line amortization of the related notes from the initial maturity date through the expected final maturity date.

In June 2017, the Company redeemed all $250 million of its outstanding 4.25% Senior Notes due April 2018 and terminated $150 million of commitments under the senior secured revolving credit facility ("Senior RCF"), as further described below, and recorded $8 million of charges for early redemption premiums and the write off of deferred financing costs.

The Company is highly leveraged and a substantial portion of its liquidity needs arise from debt service on its indebtedness and from the funding of its costs of operations, acquisitions and capital expenditures. The Company’s practice is to maintain sufficient liquidity through cash from operations, credit facilities and other financing arrangements, to mitigate any adverse impact on its operations resulting from adverse financial market conditions.

As of September 30, 2017, approximately $2.1 billion of vehicle debt and $16 million of non-vehicle debt was due to mature between October 1, 2017 and September 30, 2018 and the Company was in compliance with its financial maintenance covenant under the Senior RCF, see "Covenant Compliance" below.

In November 2017, the Company amended its Senior Facilities (as defined below), terminated $383 million of commitments under the Senior RCF, entered into a standalone $400 million letter of credit facility (the “Letter of Credit Facility”), extended the maturities of several vehicle debt facilities and provided an irrevocable notice to the holders of its $450 million in aggregate principal amount of outstanding 6.75% Senior Notes due 2019 (the “2019 Notes”) of its election to redeem in full all of the outstanding 2019 Notes and deposited funds with the trustee under the indenture governing the 2019 Notes to effect such redemption on the redemption date, as further described in Note 19, "Subsequent Events." The amendment to the Senior Facilities, together with the aforementioned commitment reductions under the Senior RCF, created immediate debt incurrence capacity of $542 million under the $2.4 billion credit facilities basket contained in the Senior Facilities as long as such debt incurred is, among other things, junior to the Company’s first-lien debt. If the Company elects to utilize such capacity, the proceeds from such newly incurred debt would not be required to be used to refinance debt and may be used for working capital, capital expenditures and other purposes of the Company and its subsidiaries. To the extent the Company elects to utilize the Letter of Credit Facility for letters of credit issued, or relating to liabilities or obligations incurred, in the ordinary course of business, the Company would further increase such debt incurrence capacity, and the proceeds of any debt that the Company elects to incur utilizing such additional capacity would also be available for working capital, capital expenditures and other purposes of the Company and its subsidiaries. Availability under the Letter of Credit Facility is limited to an amount equal to the amount of commitments terminated under the Senior RCF. Subsequent to the completion of the aforementioned transactions in November 2017, approximately $1.7 billion of vehicle debt and $23 million of non-vehicle debt is due to mature prior to September 30, 2018. The Company has reviewed its debt facilities that will mature within this timeframe and determined that it is probable that the Company will be able, and has the intent, to refinance these facilities at such times as the Company determines appropriate prior to their maturities.

Non-Vehicle Debt

Senior Facilities

In June 2017, Hertz terminated $150 million of commitments under the Senior RCF, such that after giving effect to such termination the Senior RCF consists of a $1.55 billion senior secured revolving credit facility.

In February 2017, certain terms of the credit agreement governing the $700 million senior secured term facility (the "Senior Term Loan") and the Senior RCF (together with the Senior Term Loan, the "Senior Facilities") were amended with the consent of the required lenders under such credit agreement. The amendment, among other things, (i) amended the terms of the financial maintenance covenant for the Senior RCF to test, when applicable, Hertz’s consolidated first lien net leverage ratio in lieu of Hertz’s consolidated total net corporate leverage ratio, (ii) provided that Hertz shall not

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

make dividends and certain restricted payments unless a leverage ratio test is satisfied, (iii) added a new covenant restricting the incurrence of certain corporate indebtedness, (iv) capped the amount of unrestricted cash that may be netted for purposes of calculating the consolidated first lien net leverage ratio at $500 million unless a specified consolidated total gross corporate leverage ratio is met for a specified period and (v) amended certain financial definitions relating to the foregoing.

Senior Notes

In June 2017, Hertz redeemed all $250 million of its outstanding 4.25% Senior Notes due April 2018 (the "April 2018 Notes").

Senior Second Priority Secured Notes

In June 2017, Hertz issued $1.25 billion in aggregate principal amount of 7.625% Senior Second Priority Secured Notes due 2022 (the "Senior Second Priority Secured Notes"), the proceeds of which are restricted under the terms of the credit agreement governing the Senior Facilities, primarily related to the repayment of indebtedness. In June 2017, the Company utilized approximately $266 million of the proceeds to pay the outstanding principal and early redemption premium in connection with the redemption of the April 2018 Notes and fees and expenses in connection with the issuance of the Senior Second Priority Secured Notes. In June 2017, the Company also exercised its right to reduce the amount of available commitments under its Senior RCF by $150 million. As of September 30, 2017, approximately $833 million in proceeds remained from the issuance of the Senior Second Priority Secured Notes and is included in restricted cash and cash equivalents, non-vehicle in the accompanying condensed consolidated balance sheet.

Vehicle Debt

HVF II U.S. Vehicle Variable Funding Notes

HVF II Series 2017-A Notes: In May 2017, Hertz Vehicle Financing II LP, a bankruptcy remote, indirect, wholly owned, special purpose subsidiary of Hertz ("HVF II") issued the Series 2017-A Variable Funding Rental Car Asset Backed Notes (the “HVF II Series 2017-A Notes”) with an aggregate maximum principal amount of $500 million and a maturity date of October 2018.

HVF II Series 2013 Notes: In February 2017, HVF II extended the maturities of the HVF II Series 2013-A Notes and the HVF II Series 2013-B (the "HVF II Series 2013 Notes") Notes from October 2017 to January 2019. In April 2017, HVF II increased the commitments of the HVF II Series 2013 Notes by $250 million. In June 2017, HVF II transitioned approximately $300 million of commitments available under the HVF II Series 2013-B Notes to the HVF Series 2013-A Notes. After giving effect to the above transactions, the aggregate maximum principal amount of the HVF II Series 2013-A Notes and HVF II 2013-B Notes was approximately $3.4 billion and $291 million, respectively. In September 2017, the net proceeds from the issuance of the HVF II Series 2017-1 Notes and HVF II Series 2017-2 Notes (as defined below) were used to repay $770 million of the outstanding principal amount of the HVF II Series 2013-A Notes.

HVF II U.S. Vehicle Medium Term Notes

HVF II Series 2017-1 Notes and HVF II Series 2017-2 Notes: In September 2017, HVF II issued the Series 2017-1 Rental Car Asset Backed Notes, Class A, Class B, Class C, and Class D (collectively, the "HVF II Series 2017-1 Notes") and the Series 2017-2 Rental Car Asset Backed Notes, Class A, Class B, Class C, and Class D (collectively, the "HVF II Series 2017-2 Notes") in an aggregate principal amount of $820 million. There is subordination within the HVF II Series 2017-1 Notes and the HVF II Series 2017-2 Notes based on class. An affiliate of HVF II purchased the HVF II Series 2017-2 Class D Notes and as a result, approximately $20 million of the aggregate principal amount is eliminated in consolidation. Net proceeds from the issuance of the HVF II Series 2017-1 and HVF II Series 2017-2 Notes were used to reduce amounts outstanding under the HVF II Series 2013-A Notes.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

HVF II Various Series Class D Notes: In August 2017, Hertz sold the below notes, which it had acquired at the time of the respective HVF II initial offerings and which were previously eliminated in consolidation, to third parties. The interest terms and the maturity of the notes sold remained consistent with the terms per the respective initial offerings. The Class D Notes are subordinate to the Class A Notes, the Class B Notes and the Class C Notes of their respective series.
(In millions) Aggregate Principal Amount
HVF II Series 2015-2 Class D Notes $15
HVF II Series 2015-3 Class D Notes 21
HVF II Series 2016-1 Class D Notes 27
HVF II Series 2016-2 Class D Notes 34
HVF II Series 2016-3 Class D Notes 24
HVF II Series 2016-4 Class D Notes 24
Total $145

HFLF Medium Term Notes

HFLF Series 2016-1 Notes: In May 2017, Hertz sold approximately $15 million of the HFLF Series 2016-1 Class E Notes, which it had acquired at the time of the initial offering in April 2016 and which were previously eliminated in consolidation, to third parties. The interest terms and the maturity of the notes sold remained consistent with the terms per the initial offering. The HFLF Series 2016-1 Class E Notes are subordinate to the Class A Notes, the Class B Notes, the Class C and the Class D Notes of the series.

HFLF Series 2017-1 Notes: In April 2017, HFLF, a bankruptcy remote, indirect, wholly-owned, special purpose subsidiary of Donlen, issued the Series 2017-1 Asset-Backed Notes, Class A, Class B, Class C, Class D, and Class E (collectively, the “HFLF Series 2017-1 Notes”) in an aggregate principal amount of $500 million. There is subordination within the HFLF Series 2017-1 Notes based on class. The HFLF Series 2017-1 Notes are fixed rate, except for the Class A-1 Notes which are floating rate and carry an interest rate based upon a spread to one-month LIBOR. The proceeds of this issuance, together with available cash, were used to reduce amounts outstanding under the HFLF Series 2013-2 Notes.

Vehicle Debt-Other

European Revolving Credit Facility

In February 2017, HHN BV amended its credit agreement (the "European Revolving Credit Facility") to extend the maturity of €235 million of the aggregate maximum borrowings available from October 2017 to January 2019.

Canadian Securitizations

In February 2017, TCL Funding Limited Partnership, a bankruptcy remote, indirect, wholly-owned, special purpose subsidiary of Hertz ("Funding LP") amended its securitization platform in Canada (the "Canadian Securitization") to extend the maturity of CAD$350 million aggregate maximum borrowings available from January 2018 to January 2019.

Capitalized Leases-U.K. Leveraged Financing

In February 2017, the capitalized lease financings outstanding in the United Kingdom ("U.K. Leveraged Financing") were amended to extend the maturity of £250 million aggregate maximum borrowings available from October 2017 to January 2019. In May 2017, the U.K. Leveraged Financing was amended to provide for aggregate maximum leasing capacity (subject to asset availability) of up to £287.5 million during the peak season, for a seasonal commitment period into September 2017.2023. Following the expiration of the seasonal commitment period, aggregate maximum borrowings available under the U.K Leveraged Financing will revert to up to £250NZD$60 million.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

See also Note 19, "Subsequent Events " regarding financing transactions occurring subsequent to September 30, 2017.

Borrowing Capacity and Availability


Borrowing capacity and availability comes from the Company's "revolvingrevolving credit facilities," which are a combination of variable funding asset-backed securitization facilities, cash-flow-basedcash-flow based revolving credit facilities, asset-based revolving credit facilities and asset-based revolving credit facilities.the First Lien RCF. Creditors under each such asset-backed securitization facility and asset-based revolving credit facility have a claim on a specific pool of assets as collateral. The Company's ability to borrow under each such asset-backed securitization facility and asset-based revolving credit facility is a function of, among other things, the value of the assets in the relevant collateral pool. With respect to each such asset-backed securitization facility and asset-based revolving credit facility, the Company refers to the amount of debt it can borrow given a certain pool of assets as the borrowing base.


The Company refers to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., with respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the amount of debt the Company could borrow assuming it possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility.facility and, in the case of the First Lien RCF, less any issued standby letters of credit. With respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the Company refers to "Availability Under Borrowing Base Limitation" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt that can be borrowed given the collateral possessed at such time). With respect to the Senior RCF, "Availability Under Borrowing Base Limitation" is the same as "Remaining Capacity" since borrowings under the Senior RCF are not subject to a borrowing base.


The following facilities were available to the Company as of September 30, 2017,March 31, 2023 and are presented net of any outstanding letters of credit:
(In millions)Remaining
Capacity		Availability Under
Borrowing Base
Limitation
Non-Vehicle Debt 
First Lien RCF$1,512 $1,512 
Total Non-Vehicle Debt1,512 1,512 
Vehicle Debt  
HVF III Series 2021-A1,267 — 
European ABS350 — 
Hertz Canadian Securitization— — 
Australian Securitization8 — 
U.K. Financing Facility10 3 
U.K. Toyota Financing Facility14 2 
Total Vehicle Debt1,649 5 
Total$3,161 $1,517 
(In millions)
Remaining
Capacity
 
Availability Under
Borrowing Base
Limitation
Non-Vehicle Debt   
Senior RCF$644
 $644
Total Non-Vehicle Debt644
 644
Vehicle Debt   
U.S. Vehicle RCF2
 2
HVF II U.S. Vehicle Variable Funding Notes1,955
 —
HFLF Variable Funding Notes280
 5
European Revolving Credit Facility—
 —
European Securitization20
 —
Canadian Securitization—
 —
Australian Securitization63
 1
Capitalized Leases—
 —
New Zealand RCF8
 —
Total Vehicle Debt2,328
 8
Total$2,972
 $652


Letters of Credit


As of September 30, 2017,March 31, 2023, there were outstanding standby letters of credit totaling $799 million.$749 million comprised primarily of $245 million issued under the term loan "C" facility (the "Term C Loan") and $488 million issued under the First Lien RCF. As of March 31, 2023, no capacity remains to issue letters of credit under the Term C Loan. Such letters of credit have been issued primarily to provide credit enhancement for the Company's asset-backed securitization facilities and to support the Company's insurance programs, as well as to support the Company's vehicle rental concessions and leaseholds as well as to provide credit enhancement for its asset-backed securitization facilities. Of this amount $786 million was issued under the Senior RCF.leaseholds. As of September 30, 2017,March 31, 2023, none of the issued letters of credit have been drawn upon.were drawn.



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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Pledges Related to Vehicle Financing
Special Purpose Entities


Substantially all of the Company's revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of the lenders under the various credit facilities, other secured financings andor asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing II LP, Hertz Vehicle FinancingIII LLC Rental Car Finance LLC, DNRS II LLC, HFLF, Donlen Trust and various other domestic and international subsidiaries that facilitate the Company's international securitizations) arewill be available to satisfy the claims of general creditors.unsecured creditors unless the secured creditors are paid in full.


These special purpose entities are consolidated variableThe Company has a 25% ownership interest entities, of which the Company is the primary beneficiary,in IFF No. 2, whose sole purpose is to provide commitments to lend under the European ABS in various currencies subject to borrowing bases comprised of revenue earning vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. IFF No. 2 is a VIE and the Company is the primary beneficiary; therefore, the assets, liabilities and results of operations of IFF No. 2 are included in the accompanying unaudited condensed consolidated financial statements. As of September 30, 2017March 31, 2023 and December 31, 2016, its International Vehicle Financing2022, IFF No. 1 B.V., International Vehicle Financing No. 2 B.V. and HA Funding Pty, Ltd. variable interest entities had total assets of $775 million$1.4 billion and $454 million,$1.3 billion, respectively, comprised primarily comprised of loans receivable and revenue earning vehicles,intercompany receivables, and total liabilities of $775 million$1.4 billion and $454 million,$1.3 billion, respectively, comprised primarily comprised of debt.


Covenant Compliance


In February 2017,The First Lien RCF credit agreement (the "First Lien Credit Agreement") requires Hertz amendedto comply with the termsfollowing financial covenant: a First Lien Ratio of less than or equal to 3.00 to 1.00 in the first and last quarters of the financial maintenance covenant containedcalendar year and 3.50 to 1.00 in the Senior RCF to test, when applicable, Hertz’s consolidated first lien net leverage ratio.second and third quarters of the calendar year. The amended financial covenant provides that Hertz’s consolidated first lien net leverage ratio, as definedwas effective beginning in the credit agreement governing the Senior RCF, asthird quarter of the last day2021. As of any fiscal quarter (the "Covenant Leverage Ratio"), may not exceed the ratios indicated below:
Fiscal Quarter(s) Ending Maximum Ratio
September 30, 2017 3.25to1.00
December 31, 2017 and each March 31, June 30, September 30 and December 31 ending thereafter 3.00to1.00

At September 30, 2017,March 31, 2023, Hertz was in compliance with the Covenant LeverageFirst Lien Ratio.


In addition to the financial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and the granting of security interests for the benefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement also contains customary negative covenants, including, among other things, restrictions on the incurrence of liens, indebtedness, asset dispositions and restricted payments. As of March 31, 2023, the Company was in compliance with all covenants in the First Lien Credit Agreement.

Note 8—Employee Retirement Benefits6—Leases


The Company enters into certain agreements as a lessor under which it rents vehicles and leases fleets to customers. The following tables sets forthtable summarizes the net periodic pension expense:amount of operating lease income and other income included in total revenues in the accompanying unaudited condensed consolidated statements of operations:
Three Months Ended
March 31,
(In millions)20232022
Operating lease income from vehicle rentals$1,859 $1,721 
Variable operating lease income132 44 
Revenue accounted for under Topic 8421,991 1,765 
Revenue accounted for under Topic 60656 45 
Total revenues$2,047 $1,810 

19

 Pension Benefits
 U.S. Non-U.S.
 Three Months Ended September 30,
(In millions)2017 2016 2017 2016
Components of Net Periodic Benefit Cost:       
Service cost$1
 $1
 $—
 $—
Interest cost5
 5
 2
 2
Expected return on plan assets(7) (7) (3) (3)
Net amortizations1
 2
 —
 —
Net periodic pension expense (benefit)$—
 $1
 $(1) $(1)


28

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 7—Income Tax (Provision) Benefit

 Pension Benefits
 U.S. Non-U.S.
 Nine Months Ended September 30,
(In millions)2017 2016 2017 2016
Components of Net Periodic Benefit Cost:       
Service cost$1
 $2
 $1
 $1
Interest cost16
 16
 5
 6
Expected return on plan assets(20) (21) (8) (9)
Net amortizations3
 6
 1
 —
Settlement loss1
 1
 —
 —
Net periodic pension expense (benefit)$1
 $4
 $(1) $(2)
Hertz Global


For the three months ended March 31, 2023, Hertz Global recorded a tax benefit of $134 million which resulted in an effective tax rate of (214%).1 For the three months ended March 31, 2022, Hertz Global recorded a tax provision of $130 million, which resulted in an effective tax rate of 23%.
Note 9—Stock-Based Compensation


The non-cash stock-based compensation expense associated withchange in tax in the Hertz Holdings stock-based compensation plansthree months ended March 31, 2023 compared to 2022 is recorded atdriven by recognition of uncertain tax benefits related to our tax restructuring of European operations and lower pre-tax income, offset by the Hertz level.

Effective January 1, 2017, the Company's boardnon-deductibility of directors adopted the 2017 Executive Incentive Compensation Plan ("2017 EICP"). The provisions of the plan provide for the pay out of any bonus earnedchange in either cash or performance stock units ("PSUs") for certain groups of employees. The decision regarding the form of payout will be made after the bonus has been earned and as such, the grant date of the PSUs is not established until vested. The potential PSU awards will be based on a monetary amount equivalent to a percentage of employees’ salaries that will be based on the achievement of specific performance metrics in 2017. The specific monetary amount will be calculated at the time of grant. The PSUs are intended to be granted in place of cash bonus awards and, therefore, qualify as equity awards. Compensation cost for these awards is recognized over the requisite service period based on the fair value of warrants.

As previously disclosed, Hertz Global filed a request for a pre-filing agreement with the award atInternal Revenue Service ("IRS") in December 2021 to determine whether the endloss related to our tax restructuring of each reporting period. The Company calculatesEuropean operations qualified as an ordinary loss. On February 9, 2023, Hertz Global and the anticipated number of awardsIRS agreed to be granted based on the bonus dollars expected to be earned divided by the stock price ascharacter and amount of the reporting date.loss. This resulted in an additional $163 million of ordinary loss recognized in the three months ended March 31, 2023.

On August 16, 2022, the Inflation Reduction Act ("IRA") of 2022 was enacted into law. It includes a 15% corporate alternative minimum tax and a 1% excise tax on corporate stock buybacks, both of which are effective after December 31, 2022. Hertz Global does not currently anticipate a material impact to its results of operations, cash flows or financial position related to these provisions. The anticipated awards are usedIRA also included income tax incentives associated with electric vehicles placed in service after December 31, 2022. An estimate of these credits has been included in the tax calculation for the three months ended March 31, 2023.

Hertz

For the three months ended March 31, 2023, Hertz recorded a tax benefit of $134 million which resulted in an effective tax rate of (74%). For the three months ended March 31, 2022, Hertz recorded a tax provision of $130 million, which resulted in an effective tax rate of 26%.

The change in tax in the three months ended March 31, 2023 compared to estimate2021 is driven by recognition of uncertain tax benefits related to our tax restructuring of European operations and lower pre-tax income.

As previously disclosed, Hertz filed a request for a pre-filing agreement with the compensation expenseIRS in December 2021 to determine whether the loss related to our tax restructuring of European operations qualified as an ordinary loss. On February 9, 2023, Hertz and the IRS agreed to the character and amount of the reporting date. Compensation charges will accumulateloss. This resulted in an additional $163 million of ordinary loss.

On August 16, 2022, the IRA of 2022 was enacted into law. It includes a 15% corporate alternative minimum tax and a 1% excise tax on corporate stock buybacks, both of which are effective after December 31, 2022. Hertz does not currently anticipate a material impact to its results of operations, cash flows or financial position related to these provisions. The IRA also included income tax incentives associated with electric vehicles placed in service after December 31, 2022. An estimate of these credits has been included in the tax calculation for the three months ended March 31, 2023.





1    Amounts are calculated from the underlying numbers in thousands, and as a liability untilresult, may not agree to the grant date, at which time the liability will be reclassified to equity. During the three and nine months ended September 30, 2017, the Company recognized approximately $1 million and $5 million, respectively, of stock-based compensation expense associated with the 2017 EICP. The Company expects approximately 274,000 shares will be grantedamounts shown in connection with this program based on the Company’s stock price as of September 30, 2017.

Under the Hertz Global Holdings, Inc. 2016 Omnibus Incentive Plan, (the "2016 Omnibus Plan"), during the nine months ended September 30, 2017, Hertz Global granted 573,432 non-qualified stock options to certain executives and employees at a weighted average grant date fair valueStatement of $9.33 as determined using the Black Scholes option pricing model; 621,910 restricted stock units ("RSUs") at a weighted average grant date fair value of $19.20; 423,052 PSUs at a weighted average grant date fair value of $22.08 and 664,643 performance stock awards ("PSAs") at a weighted average grant date fair value of $22.19, with vesting terms of three to five years. None of the PSUs associated with the 2017 EICP plan are includedOperations when calculated in the grant amounts above. During the three and nine months ended September 30, 2017, the Company recognized approximately $3 million and $11 million, respectively, of stock-based compensation expense associated with the 2016 Omnibus Plan.

A summary of the total compensation expense and associated income tax benefits recognized under all plans, including the cost of stock options, RSUs, PSUs and PSAs is as follows:millions.
20

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Compensation expense$4
 $5
 $16
 $16
Income tax benefit(2) (2) (6) (6)
Total$2
 $3
 $10
 $10

29

Table of Contents
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 8—Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global


Public Warrants

During the three months ended March 31, 2023, 27,897 Public Warrants were exercised of which 19,444 were cashless exercises and 8,453 were exercised for $13.80 per share. As of September 30, 2017, there was $23 millionMarch 31, 2023, a cumulative 6,314,136 Public Warrants have been exercised since their original issuance in June 2021. The Public Warrants are recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022. See Note 11, "Fair Value Measurements."

Share Repurchase Programs for Common Stock

In November 2021, Hertz Global's Board of Directors approved a share repurchase program (the "2021 Share Repurchase Program") that authorized the repurchase of up to $2.0 billion worth of shares of Hertz Global's outstanding common stock. During the second quarter of 2022, the Company completed the 2021 Share Repurchase Program. A total unrecognized compensation cost related to non-vested stock options, RSUs, PSUs and PSAs granted byof 97,783,047 shares of Hertz Global under all plans. The total unrecognized compensation cost is expected to be recognized overcommon stock were repurchased since the remaining 1.6 years, on a weighted average basis,inception of the requisite service period2021 Share Repurchase Program for an aggregate purchase price of $2.0 billion.

In June 2022, Hertz Global's Board of Directors approved a new share repurchase program (the "2022 Share Repurchase Program") that began on the grant dates.

Note 10—Restructuring

The Company continuously evaluates its workforce, product offerings and operationsauthorized additional repurchases of up to determine when headcount reductions, business process re-engineering, asset impairments or outsourcing arrangements are necessary. There were no significant restructuring programs initiated duringan incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. During the three and nine months ended September 30, 2017.March 31, 2023, a total of 5,735,648 shares of Hertz Global's common stock were repurchased under the 2022 Share Repurchase Program at an average share price of $17.44 for an aggregate purchase price of $100 million. As of March 31, 2023, a total of 53,038,657 shares of Hertz Global's common stock have been repurchased since the inception of the 2022 Share Repurchase Program for an aggregate purchase price of $935 million.


Restructuring chargesCommon shares repurchased are included in treasury stock in the accompanying Hertz Global unaudited condensed consolidated balance sheet as of March 31, 2023 and December 31, 2022.

Between April 1, 2023 and April 20, 2023, a total of 2,691,587 shares of Hertz Global's common stock were repurchased at an average share price of $15.60 for an aggregate purchase price of $42 million.

Hertz Global funded the periods shown areshare repurchases with available cash and dividend distributions from Hertz.

Any repurchases will be made at the discretion of Hertz Global's management through a variety of methods, such as follows:open-market transactions (including pre-set trading plans pursuant to Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, and other transactions in accordance with applicable securities laws. The share repurchase authorization has no initial time limit, does not obligate Hertz Global to acquire any particular amount of common stock, and can be discontinued at any time. There can be no assurance as to the timing or number of shares of any repurchases.

Computation of Earnings (Loss) Per Common Share

Basic earnings (loss) per common share has been computed based upon the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share has been computed based upon the weighted-average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, including Public Warrants, except when the effect would be anti-dilutive. Additionally, the Company removes the change in fair value of Public Warrants when computing diluted earnings (loss) per common share, when the impact of Public Warrants is dilutive.

21
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
By Type:       
Termination benefits$—
 $7
 $3
 $23
Impairments and asset write-downs—
 28
 —
 31
Facility closure and lease obligation costs—
 2
 —
 7
Other—
 —
 —
 1
Total$—
 $37
 $3
 $62


 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
By Caption:       
Direct vehicle and operating$—
 $29
 $—
 $38
Selling, general and administrative—
 8
 3
 24
Total$—
 $37
 $3
 $62

 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
By Segment:       
U.S. Rental Car$—
 $30
 $1
 $51
International Rental Car—
 3
 1
 7
Corporate—
 4
 1
 4
Total$—
 $37
 $3
 $62


30

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

The following table sets forth the activity duringcomputation of basic and diluted earnings (loss) per common share:
Three Months Ended
March 31,
(In millions, except per share data)(1)
20232022
Numerator:
Net income (loss) available to Hertz Global common stockholders, basic$196 $426 
Change in fair value of Public Warrants— (50)
Net income (loss) available to Hertz Global common stockholders, diluted$196 $376 
Denominator:
Basic weighted-average common shares outstanding321 432 
Dilutive effect of stock options, RSUs and PSUs1 — 
Dilutive effect of Public Warrants— 29 
Diluted weighted-average shares outstanding323 461 
Antidilutive Public Warrants17 — 
Antidilutive stock options, RSUs and PSUs6 5 
Total antidilutive23 5 
Earnings (loss) per common share:
Basic$0.61 $0.99 
Diluted$0.61 $0.82 
(1)    The table above is denoted in millions, excluding earnings (loss) per common share. Amounts are calculated from the nine months ended September 30, 2017 affectingunderlying numbers in thousands, and as a result, may not agree to the restructuring accrual, which is included in accrued liabilitiesamounts shown in the accompanying condensed consolidated balance sheets. table when calculated in millions.

Note 9—Stock-Based Compensation

The Company expectsstock-based compensation expense associated with the Hertz Holdings stock-based compensation plans is pushed down from Hertz Global and recorded at Hertz. In 2021, Hertz Global's Board of Directors approved the Hertz Global Holdings, Inc. 2021 Omnibus Incentive Plan (the "2021 Omnibus Plan"). As of March 31, 2023, 46,486,293 shares of the Company's common stock are authorized and remain available for future grants under the 2021 Omnibus Plan. Vesting of the outstanding equity awards is also subject to payaccelerated vesting as set forth in the remaining restructuring obligations relating2021 Omnibus Plan.

A summary of the total compensation expense and related income tax benefits recognized for grants made under the 2021 Omnibus Plan is as follows:
Three Months Ended March 31,
(In millions)20232022
Compensation expense$21 $28 
Income tax benefit(5)(1)
Total$16 $27 

As of March 31, 2023, there was $231 million of total unrecognized compensation cost expected to termination benefits within the next two years. Other is primarily comprised of future lease obligations which will be paidrecognized over the remaining term2.3 years, on a weighted average basis, of the applicable leases.requisite service period that began on the grant dates.

22
(In millions)Termination
Benefits		 Other Total
Balance as of December 31, 2016$13
 $14
 $27
Charges incurred3
 —
 3
Cash payments(8) (3) (11)
Other non-cash changes1
 —
 1
Balance as of September 30, 2017$9
 $11
 $20


Note 11—Tangible Asset Impairments and Asset Write-downs

In the third quarter of 2016, the Company performed an impairment assessment of certain assets used in its U.S. Rental Car segment in connection with a restructuring program resulting in an impairment charge of $26 million which is included in direct vehicle and operating expense in the accompanying consolidated statements of operations.

Note 12—Income Tax (Provision) Benefit

Hertz Global

The effective tax rate for the three months ended September 30, 2017 and 2016 was (35)% and (59)%, respectively. The effective tax rate for the nine months ended September 30, 2017 and 2016 was 27% and (1,100)%, respectively.

The Company recorded a tax provision of $50 million for the three months ended September 30, 2017, compared to $64 million for the three months ended September 30, 2016. The decrease was the result of composition of earnings and lower worldwide pre-tax income, and other discrete items in the period.

The Company recorded a tax benefit of $108 million for the nine months ended September 30, 2017, compared to a provision of $33 million for the nine months ended September 30, 2016. The change was the result of composition of earnings and lower worldwide pre-tax income, and discrete items in the period, including the impact of the adoption of Employee Share-Based Payment Accounting guidance effective January 1, 2017 and the out of period adjustment recorded in second quarter of 2017, both of which are discussed in Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements".

Hertz

The effective tax rate for the three months ended September 30, 2017 and 2016 was (35)% and (59)%, respectively. The effective tax rate for the nine months ended September 30, 2017 and 2016 was 27% and (1,100)%, respectively.

The Company recorded a tax provision of $50 million for the three months ended September 30, 2017, compared to $64 million for the three months ended September 30, 2016. The decrease was the result of composition of earnings and lower worldwide pre-tax income, and other discrete items in the period.

The Company recorded a tax benefit of $107 million for the nine months ended September 30, 2017, compared to a provision of $33 million for the nine months ended September 30, 2016. The change was the result of composition of earnings and lower worldwide pre-tax income, and discrete items in the period, including the impact of the adoption of Employee Share-Based Payment Accounting guidance effective January 1, 2017 and the out of period adjustment recorded in second quarter of 2017, both of which are discussed in Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements".


31

Table of Contents
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Stock Options and Stock Appreciation Rights

A summary of stock option activity for the three months ended March 31, 2023 is presented below:
OptionsSharesWeighted-
Average
Exercise
Price		Weighted-
Average
Remaining
Contractual
Term (years)		Aggregate Intrinsic
Value (In millions)
Outstanding as of January 1, 20233,144,983 $26.17 8.2$— 
Granted— — — — 
Exercised— — — — 
Forfeited or Expired(130,548)26.17 — — 
Outstanding as of March 31, 20233,014,435 26.17 8.2— 
Exercisable as of March 31, 2023(1,302,809)26.17 7.7— 
Non-vested as of March 31, 20231,711,626 

Performance Stock Awards ("PSAs"), Performance Stock Units ("PSUs") and Performance Units ("PUs")

A summary of the PSU activity for the three months ended March 31, 2023 is presented below:
SharesWeighted-
Average
Fair Value		Aggregate Intrinsic
Value (In millions)
Outstanding as of January 1, 20239,292,749 $17.62 $143 
Granted(1)
523,128 17.32 — 
Vested— — — 
Forfeited or Expired(6,259)19.44 — 
Outstanding as of March 31, 20239,809,618 17.60 160 
(1)    Presented assuming the issuance at the original target award amount (100%).

Compensation expense for PSUs is based on the grant date fair value. For grants issued in 2023, vesting eligibility is based on market, performance and service conditions of two to three years. Accordingly, the number of shares issued at the end of the performance period could range between 0% and 200% of the original target award amount (100%) disclosed in the table above.

As of March 31, 2023, there were no issued or outstanding grants of PSAs or PUs under the 2021 Omnibus Plan.

Restricted Stock and Restricted Stock Units ("RSUs")

A summary of RSU activity for the three months ended March 31, 2023 is presented below:
SharesWeighted-
Average
Fair Value		Aggregate Intrinsic
Value (In millions)
Outstanding as of January 1, 20233,412,763 $20.82 $53 
Granted1,730,336 17.69 — 
Vested(238,266)20.27 — 
Forfeited or Expired(18,505)22.86 — 
Outstanding as of March 31, 20234,886,328 19.73 80 

23

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
Additional information pertaining to RSU activity is as follows:
Three Months Ended March 31,
20232022
Total fair value of awards that vested (in millions)$5 $13 
Weighted-average grant-date fair value of awards granted$17.69 $20.60 

RSU grants issued in 2023 vest ratably over a period of three to four years.

Deferred Stock Units

As of March 31, 2023, there were approximately 80,000 outstanding shares of deferred stock units under the 2021 Omnibus Plan.

Note 13—10—Financial Instruments

The Company employs established risk management policies and procedures, and, under the terms of our ABS facilities, may be required to enter into interest rate derivatives, which seek to reduce the Company’s commercial risk exposure to fluctuations in interest rates and currency exchange rates. Although the instruments utilized involve varying degrees of credit, market and interest risk, the Company contracts with multiple counterparties to mitigate concentrations of risk and the counterparties to the agreements are expected to perform fully under the terms of the agreements. The Company monitors counterparty credit risk, including lenders, on a regular basis, but cannot be certain that all risks will be discerned or that its risk management policies and procedures will always be effective. Additionally, upon the occurrence of an event of default under the Company’s International Swaps and Derivatives Association ("ISDA") master derivative agreements, the non-defaulting party generally has the right, but not the obligation, to set-off any early termination amounts under any such agreements against any other amounts owed with regard to any other agreements between the parties to each such agreement.

None of the Company's financial instruments have been designated as hedging instruments as of March 31, 2023 and December 31, 2022. The Company classifies cash flows from the financial instruments according to the classification of the cash flows of the economic hedged item(s).

Interest Rate Risk

The Company uses a combination of interest rate caps and swaps to manage its exposure to interest rate movements and to manage its mix of floating and fixed-rate debt.

Currency Exchange Rate Risk

The Company uses foreign currency exchange rate derivative financial instruments to manage its currency exposure resulting from intercompany transactions and other cross currency obligations.

24

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
Fair Value

The following table summarizes the estimated fair value of financial instruments:
Fair Value of Financial Instruments
Asset Derivatives(1)
Liability Derivatives(1)
(In millions)March 31, 2023December 31, 2022March 31, 2023December 31, 2022
Interest rate instruments(2)
$21 $140 $— $— 
Foreign currency forward contracts3 1 4 2 
Total$24 $141 $4 $2 
(1)     All asset derivatives are recorded in prepaid expenses and other assets and all liability derivatives are recorded in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.
(2)     The activity in the first quarter of 2023 is primarily due to net cash received on monthly settlements, including the sale of interest rate caps disclosed below.

The following table summarizes the gains or (losses) on financial instruments for the period indicated:
Location of Gain (Loss) Recognized on DerivativesAmount of Gain (Loss) Recognized in Income on Derivatives
Three Months Ended March 31,
(In millions)20232022
Interest rate instrumentsVehicle interest expense, net$4 $44 
Foreign currency forward contractsOther (income) expense, net(5)(1)
Total$(1)$43 

In the first quarter of 2023, the Company sold certain of its interest rate caps resulting in a net gain of $10 million based on the recognition of a $98 million realized gain on the unwind, of which $88 million was previously unrealized.

The Company's foreign currency forward contracts and certain interest rate instruments are subject to enforceable master netting agreements with their counterparties. The Company does not offset such derivative assets and liabilities in its unaudited condensed consolidated balance sheets, and the potential effect of the Company’s use of the master netting arrangements is not material.

Note 11—Fair Value Measurements


AssetsUnder U.S. GAAP, entities are allowed to measure certain financial instruments and Liabilities Measuredother items at fair value. The Company has not elected the fair value measurement option for any of its assets or liabilities that meet the criteria for this option. Irrespective of the fair value option previously described, U.S. GAAP requires certain financial and non-financial assets and liabilities of the Company to be measured on either a recurring basis or on a nonrecurring basis.

Fair Value on a Recurring BasisDisclosures


The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued expenses,liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments.

Cash Equivalents and Investments

The Company’s cash equivalents primarily consist of money market accounts. The Company determines the fair value of cash equivalents using a market approach based on quoted prices in active markets.

Investments in equity and other securities that are measured at fair value on a recurring basis consist of available for sale securities. The valuation of these securities is based on Level 1 inputs whereby all significant inputs are observable or can be derived from or corroborated by observable market data.

The following table summarizes the ending balances of the Company's cash equivalents and investments:
25

  September 30, 2017 December 31, 2016
(In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Money market funds $38
 $260
 $—
 $298
 $213
 $393
 $—
 $606
Equity and other securities —
 —
 —
 —
 9
 —
 —
 9
Total $38
 $260
 $—
 $298
 $222
 $393
 $—
 $615

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
Debt Obligations


The fair value of the debt facilities is estimated based on quoted market rates as well as borrowing rates currently available to the Company for loans with similar terms and average maturities (Level(i.e. Level 2 inputs).
March 31, 2023December 31, 2022
(In millions)Nominal Unpaid Principal BalanceAggregate Fair ValueNominal Unpaid Principal BalanceAggregate Fair Value
Non-Vehicle Debt$3,030 $2,802 $3,035 $2,685 
Vehicle Debt11,851 11,313 10,948 10,304 
Total$14,881 $14,115 $13,983 $12,989 
 As of September 30, 2017 As of December 31, 2016
(In millions)Nominal Unpaid Principal Balance Aggregate Fair Value Nominal Unpaid Principal Balance Aggregate Fair Value
Non-vehicle Debt$5,047
 $4,962
 $3,934
 $3,791
Vehicle Debt10,962
 10,946
 9,685
 9,670
Total$16,009
 $15,908
 $13,619
 $13,461


Assets and Liabilities Measured at Fair Value on a Non-RecurringRecurring Basis
         Fair Value (Income)/Loss Adjustment
(In millions)Fair Value Level 1 Level 2 Level 3 Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Brazil Operations$115
 $—
 $115
 $—
 $(6) $(6)
Equity method investments$8
 $—
 $—
 $8
 $(4) $26
Intangible assets$934
 $—
 $—
 $934
 $—
 $86

Brazil Operations


The Companyfollowing table summarizes the Company's cash equivalents, restricted cash equivalents and Public Warrants that are measured the assets and liabilities of its Brazil Operations at fair value on a recurring basis and are categorized using the fair value hierarchy as follows:
March 31, 2023December 31, 2022
(In millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Cash equivalents and restricted cash equivalents$453 $— $— $453 $443 $— $— $443 
Liabilities:
Public Warrants$735 $— $— $735 $617 $— $— $617 

Cash Equivalents and Restricted Cash Equivalents

The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and bank money market and interest-bearing accounts. The Company determines the fair value of cash equivalents and restricted cash equivalents using a market approach based on quoted prices in active markets (i.e. Level 1 inputs).

Public Warrants

Hertz Global's Public Warrants are classified as liabilities and recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of March 31, 20172023 and June 30, 2017, while heldDecember 31, 2022 in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity. See Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," for sale,additional information. The Company calculates the fair value based on the end-of-day quoted market price, a Level 1 input of the fair value hierarchy. For the three months ended March 31, 2023 and recorded2022, the fair value adjustment was a loss of $118 million and a gain of $4$50 million, respectively, and a lossis recorded in change in fair value of $4 million, respectively. Public Warrants in the accompanying unaudited condensed consolidated statement of operations for Hertz Global for the three months ended March 31, 2023 and 2022.

Financial Instruments

The Brazil Operations were sold in August 2017fair value of the Company's financial instruments as of March 31, 2023 and the Company recorded a pre-tax gain of $6 million as further describedDecember 31, 2022 are disclosed in Note 4, "Acquisitions10, "Financial Instruments." The Company's financial instruments are classified as Level 2 assets and Divestitures."liabilities and are priced using quoted market prices for similar assets or liabilities in active markets.



32
26


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Investments in Related Parties

Investments in related parties are accounted for under the equity method and are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. The Company recognizes an impairment charge whenever there is a decline in value that is determined to be other than temporary.

In April 2016, the Company paid approximately $45 million for an equity method investment. In March 2017, the Company determined it had an other than temporary loss in value of its investment and recorded an impairment charge of $30 million which is included in other (income) expense in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2017. In September 2017, the investee was dissolved which resulted in a return of capital to the Company and a pre-tax gain of $4 million, which is included in other (income) expense, net in the accompanying condensed consolidated statement of operations for the three and nine months ended September 30, 2017. The amounts noted in the table above were attributable to the Company's Corporate operations and were therefore not recorded in the Company's operating segments.

Intangible Assets

In June 2017, the Company recorded impairment charges for the Dollar Thrifty tradename as further described in Note 6, "Goodwill and Intangible Assets".

Note 14—12—Contingencies and Off-Balance Sheet Commitments


Legal Proceedings


Public Liability and Property DamageSelf-Insured Liabilities


The Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet been commenced for public liability and property damageself-insured liabilities arising from the operation of motor vehicles rented from the Company. The obligation for public liability and property damageself-insured liabilities on self-insured U.S. and international vehicles, as stated onin the accompanying condensed consolidated balance sheets, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded on a non-discounted basis. Reserve requirementsan undiscounted basis and are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. At September 30, 2017As of March 31, 2023 and December 31, 2016,2022, the Company's liability recorded for public liability and property damage mattersself-insured liabilities was $448$457 million and $407$472 million, respectively. The Company believes that its analysis is based on the most relevant information available, combined with reasonable assumptions, and that the Company may prudently rely on this information to determine the estimated liability.assumptions. The liability is subject to significant uncertainties. The adequacy of the liability reserve is regularly monitored based on evolving accident claim history and insurance related state legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.


Other MattersLoss Contingencies


From time to time the Company is a party to various legal proceedings, and governmental investigations.typically involving operational issues common to the vehicle rental business. The Company has summarized below the most significantmaterial legal proceedings to which the Company was and/or is a party to during the ninethree months ended September 30, 2017March 31, 2023 or the period after September 30, 2017,March 31, 2023, but before the filing of this Report on Form 10‑Q.Quarterly Report.


Concession Fee RecoveriesMake-Whole and Post-Petition Interest Claims - In October 2006, Janet Sobel, Daniel Dugan, PhD.On July 1, 2021, Wells Fargo Bank, N.A., in its capacity as indenture trustee of (1) 6.250% Unsecured Notes due 2022 (the "2022 Notes"), (2) 5.500% Unsecured Notes due 2024 (the "2024 Notes"), (3) 7.125% Unsecured Notes due 2026 (the "2026 Notes"), and Lydia Lee, individually(4) 6.000% Unsecured Notes due 2028 (the "2028 Notes") issued by The Hertz Corporation (collectively, the “Notes”), filed a complaint (the “Complaint”) against The Hertz Corporation and on behalfmultiple direct and indirect subsidiaries thereof (collectively referred to in this summary as “Defendants”). The filing of all others similarly situatedthe Complaint initiated the adversary proceeding captioned Wells Fargo Bank, National Association v. The Hertz Corporation, and Enterprise Rent-A-Car Company (“Enterprise”) was filed et al. in the U.S. DistrictUnited States Bankruptcy Court for the District of Nevada (Enterprise becameDelaware, Adv. Pro. No. 21-50995 (MFW). The Complaint seeks a defendantdeclaratory judgment that the holders of the Unsecured Notes are entitled to payment of certain redemption premiums and post-petition interest that they assert total approximately $272 million or, in the alternative, are entitled to payment of post-petition interest at a separate action whichcontractual rate that they assert totals approximately $125 million. The Complaint also asserts the right to pre-judgment interest from July 1, 2021, to the date of any judgment. On December 22, 2021, the Bankruptcy Court dismissed Wells Fargo’s claims with respect to (i) the redemption premium allegedly owed on the 2022 and 2024 Notes and (ii) post-petition interest at the contract rate. On November 9, 2022, the Bankruptcy Court ruled that the make-whole premium is the same as unmatured interest and is disallowed under the U.S. Bankruptcy Code, granting summary judgment in the Defendants’ favor. The Bankruptcy Court certified the matter directly to the U.S. Court of Appeals for the Third Circuit (the “Third Circuit”) and, on January 25, 2023, the Third Circuit accepted Wells Fargo’s appeal. Oral argument is scheduled for October 26, 2023 before a panel of Third Circuit judges. The Defendants intend to continue to vigorously defend against the claims in this matter through the appellate process. The Company cannot predict the ultimate outcome or timing of this litigation.

Claims Related to Alleged False Arrests - A group of claims involving allegations that the police detained or arrested individuals in error after the Company reported rental cars as stolen have now settled.)been advanced against the Company. These claims first arose from actions allegedly taken by the Company prior to its emergence from bankruptcy reorganization; some claims allege post-emergence behavior by the Company. These claims have been the subject of press coverage and the Company has received government inquiries on the matter. The Sobel case is a consumer class action on behalfCompany has policies to help ensure the proper treatment of all persons who rented vehicles from Hertz at airports in Nevadaits customers and were separately charged airport concession

to seek to protect itself against the theft of its services or
33
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Unaudited

recovery fees by Hertz as partassets, and has taken significant steps to modernize and update those policies. In December 2022, the Company entered into settlement agreements with 364 claimants in full and final resolutions of their rental charges during the class period. In October 2014, the court entered final judgment againstclaims for an aggregated amount of approximately $168 million (the "Settlement"), all of which amount was paid by the Company and directed Hertz to payduring December 2022. The Settlement resolved nearly all of the class approximately $42 millionfalse arrest-related claims being advanced in restitution and $11 million in prejudgment interest, and to pay attorney's fees of $3 million with an additional $3 million to be paid to class counsel from the restitution fund. In November 2014, Hertz timely filed an appeal of that final judgment with the U.S. Bankruptcy Court of Appeals for the Ninth CircuitDistrict of Delaware, Adv. Pro. No. 20-11247 (MFW) and the plaintiffs cross appealed the court's judgment seeking to challenge the lower court's ruling that Hertz did not deceive or mislead the class members. Following briefing and oral argument, on January 5, 2017, the Ninth Circuit issued an opinion reversing the District Court’s holdings on liability and remedy and vacating the judgment. The Ninth Circuit also rejected plaintiffs’ cross-appeal, finding that Hertz’s actions were not deceptive or misleading. On January 19, 2017, plaintiffs asked the entire Ninth Circuit, sitting en banc, to rehear the appeal. That petition was rejected on February 15, 2017. Plaintiffs elected not to file a petition seeking a non-mandatory further review by the United States Supreme Court, so this matter is now concluded.

In re Hertz Global Holdings, Inc. Securities Litigation - In November 2013, a purported shareholder class action, Pedro Ramirez, Jr.state court in Delaware (captioned Flannery, et al. v. Hertz Global Holdings, Inc., et al., was commenced in the U.S. District Court for the District of New Jersey naming OldC.A. No. N22C-07-100 and Okoasia, et al. v. Hertz Global Holdings, and certain of its officersInc., et al., C.A. No. N22C-09-531). Also as defendants and alleging violationsa result of the federal securities laws. The complaint alleged that OldSettlements, state court matters pending in Pennsylvania, captioned Lovelace, et al. v. Hertz Global Holdings, made material misrepresentations and/or omissions of material factInc., et al., Case No. 220801729, and in its public disclosures during the period from February 25, 2013 through November 4, 2013, in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The complaint sought an unspecified amount of monetary damages on behalf of the purported class and an award of costs and expenses, including counsel fees and expert fees. In June 2014, OldFlorida, captioned Lizasoain, et al. v. Hertz Global Holdings, responded to the amended complaint by filing a motion to dismiss. After a hearing in October 2014, the court granted Old Hertz Holdings’ motion to dismiss the complaint. The dismissal was without prejudice and plaintiff was granted leave to file a second amended complaint within 30 days of the order. In November 2014, plaintiff filed a second amended complaint which shortened the putative class period such that it was not alleged to have commenced until May 18, 2013 and made allegations that Inc., et al., Case No. 2022-015316-CA-1, were not substantively very different than the allegations in the prior complaint. In early 2015, this case was assigned to a new federal judge in the District of New Jersey, and Old Hertz Holdings responded to the second amended complaint by filing another motion to dismiss. On July 22, 2015, the court granted Old Hertz Holdings’ motion to dismiss without prejudice and ordered that plaintiff could file a third amended complaint on or before August 22, 2015. On August 21, 2015, plaintiff filed a third amended complaint. The third amended complaint included additional allegations, named additional current and former officers as defendants and expanded the putative class period such that it was alleged to span from February 14, 2013 to July 16, 2015. On November 4, 2015, Old Hertz Holdings filed its motion to dismiss. Thereafter, a motion was made by plaintiff to add a new plaintiff, because of challenges to the standing of the first plaintiff. The court granted plaintiffs leave to file a fourth amended complaint to add the new plaintiff, and the new complaint was filed on March 1, 2016. Old Hertz Holdings and the individual defendants moved to dismiss the fourth amended complaint in its entirety with prejudice on March 24, 2016, and plaintiff filed its opposition to same on May 6, 2016. On June 13, 2016, Old Hertz Holdings and the individual defendants filed their reply briefs in support of their motions to dismiss. The matter is now fully briefed. On April 28, 2017, the court issued an order wherein Old Hertz Holdings' and the individual defendants' motions to dismiss were granted and the plaintiffs’ fourth amended complaint to add a new plaintiff was dismissed with prejudice (the “Order”). On May 30, 2017,prejudice. In the plaintiffs filed a Noticesmall number of Appeal with the U. S. Court of Appeals for the Third Circuit. The Third Circuit has now released a partial briefing schedule for this appeal with the plaintiffs' Opening Brief expected to be filed on or before November 29, 2017.

Ryanair - In July 2015, Ryanair Ltd. ("Ryanair") filed a complaint against Hertz Europe Limited, a subsidiary ofclaims remaining, the Company in the High Court of Justice, Queen’s Bench Division, Commercial Court, Royal Courts of Justice of the United Kingdom alleging breach of contract in connection with Hertz Europe Limited’s termination of its vehicle hire agreement with Ryanair following a contractual dispute with respectcontinues to Ryanair’s agreement to begin using third party ticket distributors. The complaint seeks damages, interestvigorously defend itself and costs, together with attorney fees. The Company believes that it has valid and meritorious defenses and, to that end, it has filedthe ultimate resolution of such remaining claims will not have a Defense and Counterclaim. In addition, there have been detailed and intensive exchanges of documents by both parties and taking and exchanging of Witness Statements. The Court has decided to postpone the next hearing date to March/April 2018. In the meantime, the parties participated in a mediation in late July 2017

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Unaudited

which resulted in no resolution being reached by the parties. The Company has established a reserve for the matter which is not material.

The Company intends to assert that it has meritorious defenses in the foregoing matters and the Company intends to defend itself vigorously.

Governmental Investigations - In June 2014, the Company was advised by the staff of the New York Regional Office of the Securities and Exchange Commission (“SEC”) that it is investigating the events disclosed in certain ofmaterial adverse effect on the Company’s filings with the SEC. In addition, in December 2014 a state securities regulator requested information - an investigation that has since closed - and starting in June 2016 the Company has had communications with the United States Attorney’s Office for the District of New Jersey regarding the same or similar events. The investigations and communications generally involve the restatements included in the Old Hertz Holdings Form 10-K for the year ended December 31, 2014, as filed with the SEC on July 16, 2015 (the “Old Hertz Holdings 2014 10-K”) and related accounting for prior periods. The Company has and intends to continue to cooperate with all requests related to the foregoing. Due to the stage at which the proceedings are, Hertz is currently unable to predict the likely outcome of the proceedings or estimate the range of reasonably possible losses, which may be material. Among other matters, the restatements included in the Old Hertz Holdings 2014 Form 10-K addressed a variety of accounting matters involving the Company’s Brazil vehicle rental operations.

Additionally, the Company has identified certain activities in Brazil that raise issues under the Foreign Corrupt Practices Act and may raise issues under other federal and local laws, which the Company has self-reported to appropriate government entities and the processes with these government entities continue. The Company is continuing to investigate these issues. The Company has established a reserve relating to the activities in Brazil which is not material. However, it is possible that an adverse outcome with respect to the activities in Brazil and the other issues discussed herein could exceed the amount accrued in an amount that could be material to the Company's consolidatedbusiness, financial condition, results of operations or cash flowsflows. Relatedly, in any particular reporting period.

French Road Tax - The French Tax Authority has challenged the historic practice of several vehicle rental companies, including Hertz France, of registering vehicles in jurisdictions where it is established and where the road tax payable with respect to those vehicles is lower than the road tax payable in the jurisdictions where the vehicles will primarily be used. In respect of a period in 2005,May 2022, the Company has unsuccessfully appealed the French Tax assessment to the highest Administrative court in France. In respectfiled a complaint against several of its insurers seeking a period from 2003 to 2005, following an adverse judgment, the Company appealed the French Tax Authority’s assessment to the Civil Courtdetermination of Appeal. On March 2, 2017, the Company received an adverse judgment in the road tax appeal from the Civil Court of Appeal in the 2003 to 2005 years. In the third quarter of 2015, following an adverse decision against another industry participant involvedits rights under its commercial general liability, and directors and officers liability, insurance policies for these alleged claims in a similardeclaratory judgment action pending in Delaware Superior Court, Hertz Global Holdings, Inc., et al. v. ACE American Insurance Co., et al., C.A. No. N22C-05-130 MMJ (CCLD). The Company believes that a meaningful portion of the Company recorded charges with respect to this matter of approximately $23 million. In January 2016,amount being paid for the Company made a payment of approximately $9 million.Settlements will ultimately be recovered from its insurance carriers.

In addition to the matters described above, the Company maintains an internal compliance program through which it from time to time identifies other potential violations of laws and regulations applicable to the Company. When the Company identifies such matters, the Company conducts an internal investigation and otherwise cooperates with governmental authorities, as appropriate.


The Company has established reserves for matters where the Company believes that losses are probable and can be reasonably estimated. Other than the aggregate reserve established for claims for public liability and property damage,self-insured liabilities, none of those reserves are material. For matters including certain of those described above, where the Company has not established a reserve, the ultimate outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any, cannot be reasonably estimated. These matters are subject to many uncertainties and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings including those discussed above, could be decided unfavorably to the Company or any of its subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding could

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Unaudited

exceed the amount accrued in an amount that could be material to the accompanyingCompany's consolidated financial condition, results of operations or cash flows in any particular reporting period.


Other Proceedings

Litigation Against Former Executives - The Company filed litigation in the U.S. District Court for the District of New Jersey against former executives Mark Frissora, Elyse Douglas and John Jefferey Zimmerman on March 25, 2019, and in state court in Florida against former executive Scott Sider on March 28, 2019. The complaints predominantly alleged breach of contract and sought repayment of incentive-based compensation received by the defendants in connection with restatements included in the former Hertz Global Holdings, Inc. ("Old Hertz Holdings") Form 10-K for the year ended December 31, 2014 and related accounting for prior periods. The complaints also sought recovery for the costs of an SEC investigation that resulted in an administrative order on December 31, 2018 with respect to events generally involving the restatements included in Old Hertz Holdings Form 10-K for the year ended December 31, 2014 and other damages resulting from the necessity of the restatements. The Company is pursuing these legal proceedings in accordance with its clawback policy and contractual rights. In October 2019, the Company entered into a confidential settlement agreement with Elyse Douglas and, on April 14, 2021, the Bankruptcy Court approved a Settlement Agreement between the Company and Scott Sider, closing the Florida action. Additionally, on December 29, 2021, the Company entered into a confidential settlement agreement with Jeff Zimmerman, leaving Mark Frissora as the sole remaining defendant in the New Jersey action. Fact and expert discovery have been completed and competing dispositive motions were fully briefed as of October 26, 2022. Pursuant to the agreements governing the separation of Herc Holdings Inc. from Hertz Global that occurred on June 30, 2016, Herc Holdings Inc. is entitled to 15% of the net proceeds of any repayment or recovery from these cases.

Indemnification Obligations


In the ordinary course of business, the Company has executed contracts involving indemnification obligations customary in the relevant industry and indemnifications specific to a transaction such as the sale of a business. These indemnification obligations might include claims relating to the following: environmental matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other
28

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
commercial contractual relationships;relationships and financial matters. Specifically, the Company has indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which the Company may be held responsible could be substantial. In addition, Hertz entered into customary indemnification agreements with Hertz Holdings and certain of the Company's stockholders and their affiliates pursuant to which Hertz Holdings and Hertz will indemnify those entities and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of such entities and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. The Company has entered into customary indemnification agreements with each of its directors and certain of its officers. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third partythird-party claim. In connection with the Spin-Off,separation of the car rental business in 2016, the Company executed an agreement with Herc Holdings Inc. that contains mutual indemnification clauses and a customary indemnification provision with respect to liability arising out of or resulting from assumed legal matters. The Company regularly evaluates the probability of having to incur costs associated with these indemnification obligations and havehas accrued for expected losses that are probable and estimable.


Note 15—Related Party Transactions13—Segment Information

Agreements with the Icahn Group

In the normal course of business, the Company purchases goods and services and leases property from entities controlled by Carl C. Icahn and his affiliates, including The Pep Boys - Manny, Moe & Jack. During the three and nine months ended September 30, 2017, the Company purchased approximately $3 million and $8 million, respectively, worth of goods and services from these related parties.

Transactions between Hertz Holdings and Hertz

On June 30, 2016, Hertz signed a master loan agreement with Hertz Holdings for a facility size of $425 million with an expiration in June 2017 (the "Old Master Loan"). The interest rate is based on the U.S. Dollar LIBOR rate plus a margin.

In June 2017, upon expiration of the Old Master Loan, Hertz signed a new master loan agreement with Hertz Holdings for a facility size of $425 million with an expiration in June 2018 (the "Master Loan" and together with the Old Master Loan, the "Loan") where amounts outstanding under the Old Master Loan were transferred to the Master Loan. The interest rate is based on the U.S. Dollar LIBOR rate plus a margin. As of September 30, 2017 and December 31, 2016, there was $106 million and $102 million, respectively outstanding under the Loan representing advances and any accrued but unpaid interest.

As of both periods ended September 30, 2017 and December 31, 2016, Hertz has a due to affiliate in the amount of $65 million which represents its tax related liability to Hertz Holdings.


The above amounts are included in equity in the accompanying condensed consolidated balance sheets of Hertz.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 16—Earnings (Loss) Per Share - Hertz Global

Basic earnings (loss) per share has been computedCompany’s chief operating decision maker ("CODM") assesses performance and allocates resources based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share has been computed based uponfinancial information for the weighted average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, except when the effect would be anti-dilutive.

As described in Note 9, "Stock-Based Compensation", the Company adopted the 2017 EICP on January 1, 2017. PSU awards issued under the 2017 EICP will be included in the denominator of diluted earnings (loss) per share when the required minimum threshold to receive the awards is met. There are no PSU awards issued under the 2017 EICP included in the computation of diluted earnings (loss) per share during the three and nine months ended September 30, 2017.

The following table sets forth the computation of basic and diluted earnings (loss) per share:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions, except per share data)2017 2016 2017 2016
Basic and diluted earnings (loss) per share:       
Numerator:       
Net income (loss) from continuing operations$93
 $44
 $(289) $(36)
Net income (loss) from discontinued operations—
 (2) —
 (15)
Net income (loss), basic$93
 $42
 $(289) $(51)
Denominator:       
Basic weighted average common shares83
 84
 83
 85
Dilutive stock options, RSUs, PSUs and PSAs—
 1
 —
 —
Weighted average shares used to calculate diluted earnings per share83
 85
 83
 85
Antidilutive stock options, RSUs, PSUs and PSAs3
 1
 3
 2
Earnings (loss) per share:       
Basic earnings (loss) per share from continuing operations$1.12
 $0.52
 $(3.48) $(0.42)
Basic earnings (loss) per share from discontinued operations—
 (0.02) —
 (0.18)
Basic earnings (loss) per share$1.12
 $0.50
 $(3.48) $(0.60)
        
Diluted earnings (loss) per share from continuing operations$1.12
 $0.52
 $(3.48) $(0.42)
Diluted earnings (loss) per share from discontinued operations—
 (0.03) —
 (0.18)
Diluted earnings (loss) per share$1.12
 $0.49
 $(3.48) $(0.60)

Note 17—Segment Information

Company’s reportable segments. The Company has identified threetwo reportable segments, which are consistent with its operating segments and organized based on the products and services provided by its operating segments and the geographic areas in which its operating segments conduct business is conducted, as follows:


U.S. Rental Car ("U.S. RAC") -•Americas RAC – rental of vehicles (cars, crossovers, vans and light trucks), as well as sales of ancillary products andvalue-added services, in the United StatesU.S., Canada, Latin America and consists of the Company's United States operating segment;Caribbean; and


•International Rental Car ("International RAC") -RAC – rental and leasing of vehicles (cars, crossovers, vans crossovers and light trucks), as well as sales of ancillary productsvalue-added services, in locations other than the U.S., Canada, Latin America and services, internationally and consists of the Company's Europe and Other International operating segments, which are aggregated into a reportable segment basedCaribbean.

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Unaudited

primarily upon similar economic characteristics, products and services, customers, delivery methods and general regulatory environments;

All Other Operations - primarily consists of the Company's Donlen business, which provides vehicle leasing and fleet management services, together with other business activities which represent less than 2% of revenues and expenses of the segment.


In addition to the aboveits reportable segments and other operating activities, the Company has corporate operations ("Corporate") which includes general corporate assets and expenses and certain interest expense (including net interest on non-vehicle debt). Corporate includes other items necessary to reconcile the reportable segments to the Company's total amounts.


The following tables provide significant statement of operations and balance sheet information by reportable segment for each of Hertz Global and Hertz, as well as adjusted pretax income (loss),Adjusted EBITDA, the segment measure ofused to determine segment profitability.
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Revenues       
U.S. Rental Car$1,685
 $1,707
 $4,557
 $4,697
International Rental Car728
 683
 1,683
 1,656
All Other Operations159
 152
 473
 441
Total Hertz Global and Hertz$2,572
 $2,542
 $6,713
 $6,794
Depreciation of revenue earning vehicles and lease charges, net       
U.S. Rental Car$455
 $462
 $1,478
 $1,298
International Rental Car126
 116
 311
 300
All Other Operations119
 117
 355
 342
Total Hertz Global and Hertz$700
 $695
 $2,144
 $1,940
Adjusted pre-tax income (loss)(a)
       
U.S. Rental Car$158
 $173
 $5
 $312
International Rental Car147
 142
 200
 179
All Other Operations20
 19
 59
 53
Corporate(137) (122) (371) (385)
Total Hertz Global188
 212
 (107) 159
Corporate - Hertz1
 —
 4
 —
Total Hertz$189
 $212
 $(103) $159

Three Months Ended March 31,
(In millions)20232022
Revenues
Americas RAC$1,730 $1,558 
International RAC317 252 
Total Hertz Global and Hertz$2,047 $1,810 
Depreciation of revenue earning vehicles and lease charges, net
Americas RAC$349 $(93)
International RAC32 34 
Total Hertz Global and Hertz$381 $(59)
29
(In millions)September 30, 2017 December 31, 2016
Total Assets   
U.S. Rental Car$13,000
 $12,876
International Rental Car4,706
 3,578
All other operations1,629
 1,612
Corporate2,009
 1,089
Total Hertz Global and Hertz$21,344
 $19,155



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Three Months Ended March 31,
(In millions)20232022
Adjusted EBITDA
Americas RAC$261 $641 
International RAC53 27 
Total reportable segments314 668 
Corporate(77)(54)
Total Hertz Global and Hertz$237 $614 
(a)Adjusted pre-tax income (loss), the Company's segment profitability measure, is calculated as income (loss) from continuing operations before income taxes plus non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off

As of
(In millions)March 31, 2023December 31, 2022
Revenue earning vehicles, net
Americas RAC$12,119 $10,813 
International RAC1,739 1,682 
Total Hertz Global and Hertz$13,858 $12,495 
Total assets
Americas RAC$18,923 $17,645 
International RAC3,596 3,638 
Total reportable segments22,519 21,283 
Corporate1,230 1,214 
Total Hertz Global(1)
23,749 22,497 
Corporate - Hertz(1)(1)
Total Hertz(1)
$23,748 $22,496 
(1)    The consolidated total assets of debt financing costs and debt discounts, intangible and tangible asset impairments and write downs and certain one-time charges and non-operational items.

Reconciliation of adjusted pre-tax income (loss) by segment to consolidated amounts are summarized below.

Hertz Global and Hertz as of March 31, 2023 and December 31, 2022 include total assets of VIEs of $1.4 billion and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. See "Pledges Related to Vehicle Financing" in Note 5, "Debt," for further information.

30
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Adjusted pre-tax income (loss):       
U.S. Rental Car$158
 $173
 $5
 $312
International Rental Car147
 142
 200
 179
All Other Operations20
 19
 59
 53
Total reportable segments325
 334
 264
 544
Corporate(1)
(137) (122) (371) (385)
Adjusted pre-tax income (loss)188
 212
 (107) 159
Adjustments:       
Acquisition accounting(2)
(15) (16) (47) (49)
Debt-related charges(3)
(12) (11) (33) (36)
Loss on extinguishment of debt(4)
—
 (20) (8) (40)
Restructuring and restructuring related charges(5)
(2) (11) (14) (41)
Sale of CAR Inc. common stock(6)
—
 —
 3
 75
Impairment charges and asset write-downs(7)
—
 (28) (116) (31)
Finance and information technology transformation costs(8)
(15) (14) (55) (40)
Other(9)
(1)
(4)
(20)
—
Income (loss) before income taxes$143
 $108
 $(397) $(3)



39

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Reconciliations of Adjusted EBITDA by reportable segment to consolidated amounts are summarized below:

Hertz Global

Three Months Ended
March 31,
(In millions)20232022
Adjusted EBITDA:
Americas RAC$261 $641 
International RAC53 27 
Total reportable segments314 668 
Corporate(1)
(77)(54)
Total Hertz Global237 614 
Adjustments:
Non-vehicle depreciation and amortization(35)(33)
Non-vehicle debt interest, net(51)(39)
Vehicle debt-related charges(2)
(10)(7)
Restructuring and restructuring related charges(3)
(3)(6)
Change in fair value of Public Warrants(4)
(118)50 
Unrealized gains (losses) on financial instruments(5)
(108)44 
Gain on sale of non-vehicle capital assets(6)
162 — 
Other items(7)
(12)(67)
Income (loss) before income taxes$62 $556 

31
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Adjusted pre-tax income (loss):       
U.S. Rental Car$158
 $173
 $5
 $312
International Rental Car147
 142
 200
 179
All Other Operations20
 19
 59
 53
Total reportable segments325
 334
 264
 544
Corporate(1)
(136) (122) (367) (385)
Adjusted pre-tax income (loss)189
 212
 (103) 159
Adjustments:       
Acquisition accounting(2)
(15) (16) (47) (49)
Debt-related charges(3)
(12) (11) (33) (36)
Loss on extinguishment of debt(4)
—
 (20) (8) (40)
Restructuring and restructuring related charges(5)
(2) (11) (14) (41)
Sale of CAR Inc. common stock(6)
—
 —
 3
 75
Impairment charges and asset write-downs(7)
—
 (28) (116) (31)
Finance and information technology transformation costs(8)
(15) (14) (55) (40)
Other(9)
(1)
(4)
(20)
—
Income (loss) before income taxes$144
 $108
 $(393) $(3)


(1)Represents general corporate expenses, non-vehicle interest expense, as well as other business activities.
(2)Represents incremental expense associated with amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
(3)Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
(4)In 2017, represents $6 million of early redemption premium and write-off of deferred financing costs associated with the redemption of the outstanding 4.25% Senior Notes due April 2018 and a $2 million write-off of deferred financing costs associated with the termination of commitments under the Senior RCF incurred during the second quarter. In 2016, primarily represents the second quarter write-off of $18 million in deferred financing costs as a result of paying off the Senior Term Facility and various vehicle debt refinancings, as well as the third quarter early redemption premium of $13 million and write-off of $5 million in deferred financing costs associated with the redemption of all of the 7.50% Senior Notes.
(5)Represents expenses incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs, when applicable. For further information on restructuring costs, see Note 10, "Restructuring." Also represents certain other charges such as incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes. Also includes consulting costs and legal fees related to the previously disclosed accounting review and investigation.
(6)Represents the pre-tax gain on the sale of CAR Inc. common stock.
(7)In 2017, primarily represents a second quarter $86 million impairment of the Dollar Thrifty tradename and a first quarter impairment of $30 million related to an equity method investment. In 2016, primarily represents the third quarter impairment of certain tangible assets used in the U.S. RAC segment in conjunction with a restructuring program.
(8)Represents external costs associated with the Company’s finance and information technology transformation programs, both of which are multi-year initiatives that commenced in 2016 to upgrade and modernize the Company’s systems and processes.
(9)Represents miscellaneous, non-recurring and other non-cash items. In 2017, includes a $6 million gain on the sale of the Company's Brazil Operations and a return of capital from an equity method investment resulting in a $4 million gain, offset by net expenses of $13 million associated with the impact of the hurricanes in the third quarter. Also includes second quarter charges of $5 million relating to PLPD as a result of a terrorist event. For 2016, includes a $9 million settlement gain recorded in the first quarter from an eminent domain case related to one of the Company's airport locations.


40

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Hertz
Note 18—Guarantor
Three Months Ended
March 31,
(In millions)20232022
Adjusted EBITDA:
Americas RAC$261 $641 
International RAC53 27 
Total reportable segments314 668 
Corporate(1)
(77)(54)
Total Hertz237 614 
Adjustments:
Non-vehicle depreciation and amortization(35)(33)
Non-vehicle debt interest, net(51)(39)
Vehicle debt-related charges(2)
(10)(7)
Restructuring and restructuring related charges(3)
(3)(6)
Unrealized gains (losses) on financial instruments(5)
(108)44 
Gain on sale of non-vehicle capital assets(6)
162 — 
Other items(7)
(12)(67)
Income (loss) before income taxes$180 $506 
(1)Represents other reconciling items primarily consisting of general corporate expenses, non-vehicle interest expense, as well as other business activities.
(2)Represents vehicle debt-related charges relating to the amortization of deferred financing costs and Non-Guarantor Condensed Consolidating Financial Information - Hertzdebt discounts and premiums.

(3)Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.
The following condensed consolidating financial information presents(4)Represents the Condensed Consolidating Balance Sheets as of September 30, 2017 and December 31, 2016,change in fair value during the Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)reporting period for the three and nine months ended September 30, 2017 and 2016 andCompany's outstanding Public Warrants.
(5)Represents unrealized gains (losses) on derivative financial instruments. In 2023, also includes the Statementsrealization of Cash Flows for$88 million of previously unrealized gains resulting from the nine months ended September 30, 2017 and 2016unwind of (a) The Hertz Corporation, ("Parent”); (b) the Parent's subsidiaries that guarantee the Senior Notes issued by the Parent ("Guarantor Subsidiaries"); (c) the Parent's subsidiaries that do not guarantee the Senior Notes issued by the Parent ("Non-Guarantor Subsidiaries"); (d) elimination entries necessary to consolidate the Parent with the Guarantor Subsidiaries and Non-Guarantor Subsidiaries ("Eliminations"); andcertain interest rate caps. See Note 10, "Financial Instruments."
(6)Represents gain on sale of (e) Hertz on a consolidated basis.certain non-vehicle capital assets sold in March 2023. See Note 3, "Divestitures."

Investments in subsidiaries are accounted for using the equity method for purposes of the consolidating presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. The Guarantor Subsidiaries are 100% owned by the Parent and all guarantees are full and unconditional and joint and several. Additionally, substantially all of the assets of the Guarantor Subsidiaries are pledged under the Senior Facilities and Senior Second Priority Secured Notes, and consequently will not be available to satisfy the claims of Hertz's general creditors. In lieu of providing separate unaudited financial statements for the Guarantor Subsidiaries, Hertz has included the accompanying condensed consolidating financial statements based on Rule 3-10 of the SEC's Regulation S-X. Management of Hertz does not believe that separate financial statements of the Guarantor Subsidiaries are material to Hertz's investors; therefore, separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented.

During the preparation of the condensed consolidating financial information of The Hertz Corporation and Subsidiaries as of and for(7)Represents miscellaneous items. For the three months ended March 31, 2017, it was determined that prepaid expenses2023, primarily includes certain IT related charges. For the three months ended March 31, 2022 primarily includes bankruptcy claims, certain non-cash stock-based compensation charges, certain professional fees and other assets, deferred income taxes, net, due from affiliates and duecharges related to affiliates, and the related eliminations at December 31, 2016 as filed in the Company’s 2016 Form 10-K were improperly calculated, resulting in a $915 million overstatementsettlement of prepaid expenses and other assets and due to affiliates of the Parent and an overstatement of due from affiliates and deferred income taxes, net of the Guarantor Subsidiaries. The errors, which the Company has determined are not material to this disclosure, had no impact on the net assets of the Parent or the Guarantor Subsidiaries and are eliminated upon consolidation, and therefore have no impact on the Company’s consolidated financial condition, results of operations or cash flows. The Company has revised the Condensed Consolidating Balance Sheets for the Parent, Guarantor Subsidiaries and Eliminations as of December 31, 2016 to correct for these errors.bankruptcy claims.


41
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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2017
(In millions)

 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
ASSETS         
Cash and cash equivalents$456
 $13
 $279
 $—
 $748
Restricted cash and cash equivalents877
 4
 148
 —
 1,029
Receivables, net of allowance388
 159
 977
 —
 1,524
Due from affiliates3,337
 4,447
 9,187
 (16,971) —
Prepaid expenses and other assets5,541
 76
 229
 (5,327) 519
Revenue earning vehicles, net286
 8
 12,082
 —
 12,376
Property and equipment, net625
 63
 143
 —
 831
Investment in subsidiaries, net6,262
 732
 —
 (6,994) —
Other intangible assets, net126
 3,097
 11
 —
 3,234
Goodwill102
 943
 38
 —
 1,083
Total assets$18,000
 $9,542
 $23,094
 $(29,292) $21,344
LIABILITIES AND EQUITY         
Due to affiliates$10,692
 $2,088
 $4,191
 $(16,971) $—
Accounts payable409
 123
 422
 —
 954
Accrued liabilities570
 78
 374
 —
 1,022
Accrued taxes, net91
 22
 3,352
 (3,288) 177
Debt5,200
 —
 10,719
 —
 15,919
Public liability and property damage173
 45
 230
 —
 448
Deferred income taxes, net—
 2,120
 1,878
 (2,039) 1,959
Total liabilities17,135
 4,476
 21,166
 (22,298) 20,479
Equity:         
Stockholder's equity865
 5,066
 1,928
 (6,994) 865
Total liabilities and equity$18,000
 $9,542
 $23,094
 $(29,292) $21,344


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2016
(In millions)
 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
ASSETS         
Cash and cash equivalents$458
 $12
 $346
 $—
 $816
Restricted cash and cash equivalents53
 5
 220
 —
 278
Receivables, net of allowance752
 167
 364
 —
 1,283
Due from affiliates3,668
 3,823
 9,750
 (17,241) —
Prepaid expenses and other assets4,821
 83
 199
 (4,525) 578
Revenue earning vehicles, net361
 7
 10,450
 —
 10,818
Property and equipment, net656
 70
 132
 —
 858
Investment in subsidiaries, net6,114
 598
 —
 (6,712) —
Other intangible assets, net89
 3,223
 20
 —
 3,332
Goodwill102
 943
 36
 —
 1,081
Assets held for sale—
 —
 111
 —
 111
Total assets$17,074
 $8,931
 $21,628
 $(28,478) $19,155
LIABILITIES AND EQUITY         
Due to affiliates$10,833
 $1,900
 $4,508
 $(17,241) $—
Accounts payable279
 90
 452
 —
 821
Accrued liabilities557
 103
 320
 —
 980
Accrued taxes, net78
 18
 2,881
 (2,812) 165
Debt4,086
 —
 9,455
 —
 13,541
Public liability and property damage166
 43
 198
 —
 407
Deferred income taxes, net—
 2,065
 1,797
 (1,713) 2,149
Liabilities held for sale—
 —
 17
 —
 17
Total liabilities15,999
 4,219
 19,628
 (21,766) 18,080
Equity:         
Stockholder's equity1,075
 4,712
 2,000
 (6,712) 1,075
Total liabilities and equity$17,074
 $8,931
 $21,628
 $(28,478) $19,155



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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended September 30, 2017
(In millions)

 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
Total revenues$1,296
 $394
 $1,861
 $(979) $2,572
Expenses:         
Direct vehicle and operating772
 188
 388
 —
 1,348
Depreciation of revenue earning vehicles and lease charges, net826
 98
 669
 (893) 700
Selling, general and administrative151
 9
 57
 —
 217
Interest expense, net108
 (26) 93
 —
 175
Intangible asset impairments—
 —
 —
 —
 —
Other (income) expense, net(4) —
 (8) —
 (12)
Total expenses1,853
 269
 1,199
 (893) 2,428
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of subsidiaries(557) 125
 662
 (86) 144
Income tax (provision) benefit188
 (43) (195) —
 (50)
Equity in earnings (losses) of subsidiaries, net of tax463
 37
 —
 (500) —
Net income (loss) from continuing operations94
 119
 467
 (586) 94
Net income (loss) from discontinued operations—
 —
 —
 —
 —
Net income (loss)94
 119
 467
 (586) 94
Other comprehensive income (loss), net of tax15
 4
 14
 (18) 15
Comprehensive income (loss)$109
 $123
 $481
 $(604) $109


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended September 30, 2016
(In millions)

 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
Total revenues$1,273
 $425
 $1,872
 $(1,028) $2,542
Expenses:         
Direct vehicle and operating782
 206
 365
 —
 1,353
Depreciation of revenue earning vehicles and lease charges, net871
 192
 660
 (1,028) 695
Selling, general and administrative153
 12
 62
 —
 227
Interest expense, net103
 (17) 70
 —
 156
Other (income) expense, net3
 —
 —
 —
 3
Total expenses1,912
 393
 1,157
 (1,028) 2,434
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of subsidiaries(639) 32
 715
 —
 108
Income tax (provision) benefit416
 (26) (454) —
 (64)
Equity in earnings (losses) of subsidiaries, net of tax265
 117
 —
 (382) —
Net income (loss) from continuing operations42
 123
 261
 (382) 44
Net income (loss) from discontinued operations—
 (2) —
 —
 (2)
Net income (loss)42
 121
 261
 (382) 42
Other comprehensive income (loss), net of tax18
 —
 16
 (16) 18
Comprehensive income (loss)$60
 $121
 $277
 $(398) $60


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Nine Months Ended September 30, 2017
(In millions)

 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
Total revenues$3,516
 $1,055
 $5,109
 $(2,967) $6,713
Expenses:         
Direct vehicle and operating2,201
 538
 996
 —
 3,735
Depreciation of revenue earning vehicles and lease charges, net2,587
 313
 2,004
 (2,760) 2,144
Selling, general and administrative457
 28
 176
 —
 661
Interest expense, net290
 (73) 244
 —
 461
Intangible asset impairments—
 86
 —
 —
 86
Other (income) expense, net30
 —
 (11) —
 19
Total expenses5,565
 892
 3,409
 (2,760) 7,106
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of subsidiaries(2,049) 163
 1,700
 (207) (393)
Income tax (provision) benefit760
 (57) (596) —
 107
Equity in earnings (losses) of subsidiaries, net of tax1,003
 100
 —
 (1,103) —
Net income (loss) from continuing operations(286) 206
 1,104
 (1,310) (286)
Net income (loss) from discontinued operations—
 —
 —
 —
 —
Net income (loss)(286) 206
 1,104
 (1,310) (286)
Other comprehensive income (loss), net of tax21
 6
 19
 (25) 21
Comprehensive income (loss)$(265) $212
 $1,123
 $(1,335) $(265)



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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Nine Months Ended September 30, 2016
(In millions)

 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
Total revenues$3,532
 $1,150
 $4,803
 $(2,691) $6,794
Expenses:         
Direct vehicle and operating2,200
 587
 992
 (1) 3,778
Depreciation of revenue earning vehicles and lease charges, net2,252
 540
 1,836
 (2,688) 1,940
Selling, general and administrative456
 36
 195
 (2) 685
Interest expense, net310
 (39) 209
 —
 480
Other (income) expense, net4
 (10) (80) —
 (86)
Total expenses5,222
 1,114
 3,152
 (2,691) 6,797
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of subsidiaries(1,690) 36
 1,651
 —
 (3)
Income tax (provision) benefit831
 (28) (836) —
 (33)
Equity in earnings (losses) of subsidiaries, net of tax810
 317
 —
 (1,127) —
Net income (loss) from continuing operations(49) 325
 815
 (1,127) (36)
Net income (loss) from discontinued operations—
 (3) (10) —
 (13)
Net income (loss)(49) 322
 805
 (1,127) (49)
Other comprehensive income (loss), net of tax27
 (5) 45
 (40) 27
Comprehensive income (loss)$(22) $317
 $850
 $(1,167) $(22)



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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2017
(In millions)
 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
Net cash provided by (used in) operating activities$(80) $17
 $3,255
 $(1,211) $1,981
Cash flows from investing activities:         
Net change in restricted cash and cash equivalents, vehicle9
 1
 79
 —
 89
Revenue earning vehicles expenditures(195) (5) (8,483) —
 (8,683)
Proceeds from disposal of revenue earning vehicles123
 —
 5,162
 —
 5,285
Capital asset expenditures, non-vehicle(82) (8) (34) —
 (124)
Proceeds from disposal of property and other equipment7
 —
 11
 —
 18
Proceeds from sale of Brazil Operations, net of retained cash—
 —
 94
 —
 94
Sales of shares in equity investment—
 —
 9
 —
 9
Other—
 —
 (4) —
 (4)
Capital contributions to subsidiaries(2,224) —
 —
 2,224
 —
Return of capital from subsidiaries2,263
 —
 —
 (2,263) —
Loan to Parent/Guarantor from Non-Guarantor—
 —
 80
 (80) —
Net cash provided by (used in) investing activities(99) (12) (3,086) (119) (3,316)
Cash flows from financing activities:         
Net change in restricted cash and cash equivalents, non-vehicle(833) —
 —
 —
 (833)
Proceeds from issuance of vehicle debt1,133
 —
 5,774
 —
 6,907
Repayments of vehicle debt(1,129) —
 (4,758) —
 (5,887)
Proceeds from issuance of non-vehicle debt2,100
 —
 —
 —
 2,100
Repayments of non-vehicle debt(986) —
 —
 —
 (986)
Payment of financing costs(18) (4) (21) —
 (43)
Early redemption premium payment(5) —
 —
 —
 (5)
Advances to Hertz Holdings(4) —
 —
 —
 (4)
Other(1) —
 —
 —
 (1)
Capital contributions received from parent—
 —
 2,224
 (2,224) —
Payment of dividends and return of capital
—
 —
 (3,474) 3,474
 —
Loan to Parent/Guarantor from Non-Guarantor(80) —
 —
 80
 —
Net cash provided by (used in) financing activities177
 (4) (255) 1,330
 1,248
Effect of foreign currency exchange rate changes on cash and cash equivalents—
 —
 19
 —
 19
Net increase (decrease) in cash and cash equivalents during the period(2) 1
 (67) —
 (68)
Cash and cash equivalents at beginning of period458
 12
 346
 —
 816
Cash and cash equivalents at end of period$456
 $13
 $279
 $—
 $748

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

THE HERTZ CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2016
(In millions)
 
Parent
(The Hertz
Corporation)
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 Eliminations 
The Hertz
Corporation &
Subsidiaries
Net cash provided by (used in) operating activities from continuing operations$(2,129) $61
 $4,838
 $(719) $2,051
Cash flows from investing activities:         
Net change in restricted cash and cash equivalents, vehicle(36) —
 47
 —
 11
Net change in restricted cash and cash equivalents, non-vehicle—
 —
 (2) —
 (2)
Revenue earning vehicles expenditures(285) (51) (8,374) —
 (8,710)
Proceeds from disposal of revenue earning vehicles219
 —
 6,201
 —
 6,420
Capital asset expenditures, non-vehicle(56) (13) (30) —
 (99)
Proceeds from disposal of property and other equipment29
 2
 22
 —
 53
Sales of shares in equity investment, net of amounts invested(45) —
 233
 —
 188
Capital contributions to subsidiaries(1,260) —
 —
 1,260
 —
Return of capital from subsidiaries2,516
 —
 —
 (2,516) —
Loan to Parent/Guarantor from Non-Guarantor—
 —
 (973) 973
 —
Net cash provided by (used in) investing activities from continuing operations1,082
 (62) (2,876) (283) (2,139)
Cash flows from financing activities:         
Proceeds from issuance of vehicle debt442
 —
 7,223
 —
 7,665
Repayments of vehicle debt(433) —
 (6,887) —
 (7,320)
Proceeds from issuance of non-vehicle debt2,427
 —
 —
 —
 2,427
Repayments of non-vehicle debt(3,684) —
 —
 —
 (3,684)
Payment of financing costs(45) (3) (25) —
 (73)
Early redemption premium payment(13) —
 —
 —
 (13)
Transfers from discontinued entities2,122
 —
 —
 —
 2,122
Advances to Hertz Holdings(100) —
 —
 —
 (100)
Other10
 —
 —
 —
 10
Capital contributions received from parent—
 —
 1,260
 (1,260) —
Payment of dividends and return of capital(1) —
 (3,234) 3,235
 —
Loan to Parent/Guarantor from Non-Guarantor973
 —
 —
 (973) —
Net cash provided by (used in) financing activities from continuing operations1,698
 (3) (1,663) 1,002
 1,034
Effect of foreign currency exchange rate changes on cash and cash equivalents from continuing operations—
 —
 10
 —
 10
Net increase (decrease) in cash and cash equivalents during the period from continuing operations651
 (4) 309
 —
 956
Cash and cash equivalents at beginning of period179
 17
 278
 —
 474
Cash and cash equivalents at end of period$830
 $13
 $587
 $—
 $1,430
          
Cash flows from discontinued operations:         
Cash flows provided by (used in) operating activities$—
 $59
 $148
 $—
 $207
Cash flows provided by (used in) investing activities—
 (75) (2) —
 (77)
Cash flows provided by (used in) financing activities—
 44
 (138) —
 (94)
Net increase (decrease) in cash and cash equivalents during the period from discontinued operations$—
 $28
 $8
 $—
 $36

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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Note 19—Subsequent Events

Non-vehicle debt

Senior Facilities

In October 2017, Hertz repaid $120 million of borrowings outstanding under the Senior RCF, and after giving effect to such repayment, the Senior RCF was undrawn.

On November 2, 2017, Hertz entered into an agreement amending certain terms of the credit agreement governing its Senior Facilities. The amendment, among other things, (i) amends a covenant to restrict the incurrence of certain non-vehicle indebtedness and to permit the incurrence of additional junior indebtedness to the extent the amount outstanding under the Senior Facilities is less than $2.4 billion, (ii) provides that Hertz shall not make certain dividends and certain restricted payments unless a leverage ratio test is satisfied, (iii) amends the amortization of the Senior Term Loan such that it will amortize, payable in equal quarterly installments, in annual amounts equal to 2% per annum of the original principal amount of the term loans until the maturity date, and (v) amends certain definitions relating to the foregoing. The amendment also provides that Hertz may enter into the Letter of Credit Facility, which Hertz executed simultaneously with the amendment.

In addition, concurrently with the execution of the amendment described above, Hertz exercised its right to permanently reduce the amount of available commitments under the Senior RCF by $383 million, such that after giving effect to such reduction the Senior RCF consists of a $1.167 billion senior secured revolving credit facility.

Senior Notes

On November 3, 2017, Hertz provided an unconditional notice of full redemption to the holders of its $450 million in aggregate principal amount of outstanding 6.75% Senior Notes due 2019. The redemption price for the 2019 Notes will be equal to 100% of the principal amount of the 2019 Notes, plus accrued but unpaid interest thereon to the date of redemption. Hertz has deposited funds with the trustee of the 2019 Notes to effect such redemption. The redemption date is December 3, 2017.

Letter of Credit Facility

On November 2, 2017, Hertz entered into a letter of credit agreement with respect to a new standalone letter of credit facility. At Hertz’s option and subject to certain conditions, Hertz may request the issuing banks party to the Letter of Credit Facility to issue letters of credit for itself and on behalf of certain of Hertz’s domestic subsidiaries. The Letter of Credit Facility consists of $400 million of commitments from the issuing banks party thereto. Availability under the Letter of Credit Facility will be limited to an amount equal to the amount of commitments terminated under the Senior RCF. The Letter of Credit Facility will mature on June 30, 2021. As of November 2, 2017, there was no availability under the Letter of Credit Facility and no letters of credit were issued thereunder on such date.

Senior Second Priority Secured Notes

Hertz has utilized all $833 million of the remaining net proceeds from the June 2017 issuance of the Senior Second Priority Secured Notes that it was holding as restricted cash to reduce commitments under the Senior RCF and to effect the redemption of the 2019 Notes as described above.


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THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited

Vehicle debt

HVF II U.S. Vehicle Variable Funding Notes
On November 2, 2017, HVF II entered into various amendment agreements pursuant to which certain terms of the HVF II Series 2013-A Notes and the HVF II Series 2013-B Notes were amended. The amendments, among other things, extended the maturities of $3.415 billion aggregate maximum principal amount available under the HVF II Series 2013-A Notes and HVF II Series 2013-B Notes from January 2019 to March 2020.
European Revolving Credit Facility

On November 2, 2017, HHN BV amended the European Revolving Credit Facility to extend the maturity of €153 million aggregate maximum borrowings available under the European Revolving Credit Facility from January 2019 to March 2020. An additional €82 million aggregate maximum borrowings available under the European Revolving Credit Facility, which are not subject to the maturity extension described above, will mature in January 2019.

HFLF Variable Funding Notes

On November 2, 2017, HFLF amended the HFLF Series 2013-2 Notes to extend the end of the revolving period of $500 million aggregate maximum borrowings available under the HFLF Series 2013-2 Notes from September 2018 to March 2020.

Canadian Securitization

On November 2, 2017, Funding LP amended the Canadian Securitization to extend the maturity of CAD$350 million aggregate maximum borrowings available under the Canadian Securitization from January 2019 to March 2020.

Capitalized Leases - UK Leveraged Financing

On November 2, 2017, the U.K. Leveraged Financing was amended to extend the maturity of £213 million aggregate maximum available borrowings from January 2019 to March 2020. An additional £37 million aggregate maximum available borrowings, which are not subject to the maturity extension described above, will mature in January 2019.

European Securitization

On November 2, 2017, the European Securitization was amended to extend the maturity of €345 million aggregate maximum available borrowings from October 2018 to March 2020. An additional €115 million aggregate maximum available borrowings, which are not subject to the maturity extension described above, will mature in October 2018.

Australian Securitization

On November 2, 2017, HA Fleet Pty, Limited, an indirect, wholly-owned, special purpose subsidiary of Hertz, amended the Australian Securitization to extend the maturity of AUD$250 million aggregate maximum available borrowings from July 2018 to March 2020.

New Zealand Revolving Credit Facility

On November 1, 2017, Hertz New Zealand Holdings Limited, an indirect wholly-owned subsidiary of Hertz, amended the New Zealand Revolving Credit Facility to extend the maturity of NZD$60 million from September 2018 to March 2020.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Hertz Global Holdings, Inc. (together with its consolidated subsidiaries and variable interest entities, "Hertz Global" or the "Company") is a holding company and its principal, wholly-owned subsidiary is The Hertz Corporation (together with its consolidated subsidiaries and variable interest entities, "Hertz"). As Hertz Global consolidates Hertz for financial statement purposes, disclosures that relate to activities of Hertz also apply to Hertz Global, unless otherwise noted.and Hertz comprises approximately the entire balance of Hertz Global'sGlobal’s assets, liabilities and operating cash flows. In addition, Hertz'sHertz’s operating revenues and operating expenses comprise nearly 100% of Hertz Global'sGlobal’s revenues and operating expenses. As such, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") that follows herein is for Hertz and also applies to Hertz Global in all material respects, and differencesunless otherwise noted. Differences between the operations and results of Hertz and Hertz Global are separately disclosed and explained. We sometimes use the words "we", "our," "us,"“we,” “our,” “us,” and the "Company"“Company” in this MD&A for disclosures that relate to all of Hertz and Hertz Global.


Management’s discussionThe statements in this MD&A regarding industry outlook, our expectations regarding the performance of our business and analysis ("the other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. The following MD&A")&A provides information that we believe to be relevant to an understanding of our consolidated financial condition and results of operations. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

This MD&A should be read in conjunction with the MD&A presented in our 20162022 Form 10‑K10-K together with the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” Part II, Item 1A, "Risk Factors,” and theour unaudited condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017March 31, 2023 (this "Report""Quarterly Report"), which include additional information about our accounting policies, practices and the transactions underlying our financial results. The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in our unaudited condensed consolidated financial statements and the accompanying notes including revenue earning vehicle depreciation and various claims and contingencies related to lawsuits, taxes environmental and other matters arising during the normal course of business. We apply our best judgment, our knowledge of existing facts and circumstances and our knowledge of actions that we may undertake in the future in determining the estimates that will affect our unaudited condensed consolidated financial statements. We evaluate our estimates on an ongoing basis using our historical experience, as well as other factors we believe to be appropriate under the circumstances, such as current economic conditions, and adjust or revise our estimates as circumstances change. As future events and their effects cannot be determined with precision, actual results may differ from these estimates.


In this MD&A we refer to certainthe following non-GAAP measure and key metrics and Non-GAAP measures, including the following:metrics:
•Adjusted Pre-Tax Income -Corporate EBITDA – important non-GAAP measure to management because it allows management to assess the operational performance of our business, exclusive of certain items, and allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows theminvestors to assess our operational performance on the same basis that management uses internally. Adjusted EBITDA, the segment measure of profitability and accordingly a GAAP measure, is calculated exclusive of certain items which are largely consistent with those used in the calculation of Adjusted Corporate EBITDA.
Total Revenue Per Transaction Day ("Total RPD", also referred to as "pricing") -•Vehicle Utilization – important key metric to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
Total Revenue Per Unit Per Month ("Total RPU") - important to management and investors as it provides a measure of revenue productivity relative to the total number of vehicles in our fleet whether owned or leased ("average vehicles" or "fleet capacity").
Transaction Days - important to management and investors as it represents the number of revenue generating days ("volume"). It is used as a component to measure Total RPD and vehicle utilization. Transaction days represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period.
Vehicle Utilization - important to management and investors because it is the measurement of the proportion of our vehicles that are being used to generate revenues relative to rentable fleet capacity. Higher vehicle utilizationVehicle Utilization means more vehicles are being utilized to generate revenue.revenues.
Net •Depreciation Per Unit Per Month -– important key metric to management and investors as depreciation of revenue earning vehicles and lease charges is one of our largest expenses for the vehicle rental business and is driven by the number of vehicles, expected residual values at the expected time of disposal and expected hold period of the vehicles. Net depreciation per unit per monthDepreciation Per Unit Per Month is reflective of how we are managing the costs of our vehicles and facilitates a comparison with other participants in the vehicle rental industry.

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Key
•Total Revenue Per Transaction Day ("Total RPD," also referred to as "pricing") – important key metric to management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control.
•Total Revenue Per Unit Per Month ("Total RPU") – important key metric to management and investors as it provides a measure of revenue productivity relative to the number of vehicles in our rental fleet whether owned or leased ("Average Rentable Vehicles"). Average Rentable Vehicles excludes vehicles for sale on the Company’s retail lots or actively in the process of being sold through other disposition channels.
•Transaction Days – important key metric to management and investors as it represents the number of revenue generating days ("volume"). It is used as a component to measure Total RPD and Vehicle Utilization. Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.

Our non-GAAP measure and key metrics and Non-GAAP measures should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S. GAAP. The above non-GAAP measure and key metrics and Non-GAAP measures are defined, and the Non-GAAP measures arenon-GAAP measure is reconciled to theirits most comparable U.S. GAAP measure, in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.


OUR COMPANY


Hertz Global Holdings Inc. was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns Hertz, Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918.


We operate our vehicle rental business globally through the Hertz, Dollar and Thrifty brands from approximately 9,700 corporatecompany-owned, licensee and franchisee locations in North America, Europe, Latin America, Africa, Asia, Australia, Thethe Caribbean, the Middle East and New Zealand. We are one of the largest worldwide airport general use vehicle rental companies and ouralso sell vehicles through Hertz brand name is one of the most recognized in the world, signifying leadership in quality rental services and products. We have an extensive network of rental locations in the United States ("U.S.") and in all major European markets. We believe that we maintain one of the leading airport vehicle rental brand market shares, by overall reported revenues, in the U.S. and at major airports in Europe where data regarding vehicle rental concessionaire activity is available. We are a leading provider of comprehensive, integrated vehicle leasing and fleet management solutions through our Donlen subsidiary.Car Sales.


OVERVIEW OF OUR BUSINESS AND OPERATING ENVIRONMENT


Our Business

We are engaged principally in the business of renting and leasing vehicles primarily through our Hertz, Dollar and Thrifty brands. In addition to vehicle rental, we provide comprehensive, integrated vehicle leasing and fleet management solutions through our Donlen subsidiary. We have a diversified revenue base and a highly variable cost structure and are able to adjust fleet capacity, the most significant determinant of our costs, over time to meet expectations of market demand. Our profitability is primarily a function of the volume, mix and pricing of rental transactions and the utilization of vehicles, the related ownership cost of vehicles and other operating costs. Significant changes in the purchase price or residual values of vehicles or interest rates can have a significant effect on our profitability depending on our ability to adjust pricing for these changes. We continue to balance our mix of non-program and program vehicles based on market conditions.conditions, including residual values. Our business requires significant expenditures for vehicles, and consequentlyas such, we require substantial liquidity to finance such expenditures. See "Liquidity and Capital Resources" below.


Our strategy includes optimizationis focused on excellence in execution of our vehicle rental operations, disciplined performance managementelectrification of the fleet, shared mobility, connected cars and evaluation of all locations andselling vehicles from the pursuit of same-store sales growth.fleet directly to consumers.


Our total revenues are primarily are derived from rental and related charges and consist of:

Vehicleof worldwide vehicle rental revenues - revenues from all company-operated vehicle rental operations includingand charges to customers for the reimbursement of costs incurred relating to airport concession fees and vehicle license fees, the fueling of vehicles and revenues associated with ancillary products associated with vehicle rentals,value-added services, including the sale of loss or collision damage waivers, theft protection, liability and personal accident/effects insurance coverage, parkingpremium emergency roadside service and other products and fees, ancillary products associated with the retail vehicle sales channel and certain royalty fees from our franchisees (such fees, including initial franchise fees, are less than 2% of total revenues each period);

All other operations revenues - revenues from vehicle leasing and fleet management services and other business activities.


fees.
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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Also included are ancillary revenues associated with retail vehicle sales and certain royalty fees from our franchisees (such fees are approximately 2% of total revenues each period).

Our expenses primarily consist of:

•Direct vehicle and operating expenses (primarilyexpense ("DOE"), primarily wages and related benefits; commissions and concession fees paid to airport authorities, travel agents and others; facility, self-insurance and reservation costs; and other costs relating to the operation and rental of revenue earning vehicles, such as damage, maintenance and fuel costs);costs;

•Depreciation expense and lease charges, net relating to revenue earning vehicles, (including netincluding gains orand losses onand related costs associated with the disposal of such vehicles);vehicles;

•Depreciation and amortization expense relating to non-vehicle assets;
•Selling, general and administrative expenses;expense ("SG&A"), which includes advertising costs and administrative personnel costs, along with costs for information technology and finance transformation programs; and

•Interest expense, net.

Our Business Segments

We have identified three reportable segments, which are organized based on the products and services provided by our operating segments and the geographic areas in which our operating segments conduct business, as follows:
U.S. Rental Car ("U.S. RAC") - Rental of vehicles, as well as sales of ancillary products and services, in the U.S.;
International Rental Car ("International RAC") - Rental and leasing of vehicles, as well as sales of ancillary products and services, internationally; and
All Other Operations - Comprised of our Donlen business, which provides vehicle leasing and fleet management services, and other business activities.
In addition to the above reportable segments, we have Corporate operations. We assess performance and allocate resources based upon the financial information for our operating segments.

Fleet

We periodically review and adjust the mix between program and non-program vehicles in our fleet in an effort to optimize the mix of vehicles. Program vehicles generally provide us with flexibility to increase or reduce the size of our fleet based on economic demand. When we increase the percentage of program vehicles, the average age of our fleet decreases since the average holding period for program vehicles is shorter than for non-program vehicles. We dispose of our non-program vehicles via auction, dealer-direct and our retail locations. Non-program vehicles disposed of through our retail outlets allow us the opportunity for ancillary revenue, such as warranty and financing and title fees. We adjust the ratio of program and non-program vehicles in our fleet as needed based on contract negotiations and the economic environment pertaining to our industry.

Seasonality


Our vehicle rental operations are a seasonal business, with decreased levels of business in the winter months and heightened activity during the spring and summer peakmonths ("our peak season") for the majority of countries where we generate our revenues. To accommodate increased demand, we increase our available fleet and staff during the second and third quarters of the year.staff. As business demand declines, vehiclesfleet and staff are decreased accordingly. A number of our other major operating costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes. In addition, our management expects to utilize enhanced process improvements, including utilization initiatives and the use of our information technology systems, to help manage our variable costs. Generally, between 70% and 75% of our annual operating costs represent variable costs, while the remaining costs are fixed or semi-fixed. We also maintain a flexible workforce, with a significant number of part-time and seasonal workers. Certain operating expenses, including real estate taxes, rent, insurance, utilities, maintenance and other facility-related expenses, the costs of operating our information technology systems and minimum staffing costs, remain fixed and cannot be adjusted for seasonal demand.


Our Reportable Segments

We have identified two reportable segments, which are consistent with our operating segments and organized based on the products and services provided and the geographic areas in which business is conducted, as follows:

•Americas RAC – Rental of vehicles, as well as sales of value-added services, in the U.S., Canada, Latin America and the Caribbean; and
•International RAC – Rental of vehicles, as well as sales of value-added services, in locations other than the U.S., Canada, Latin America and the Caribbean.

In addition to the above reportable segments, we have corporate operations. We assess performance and allocate resources based upon the financial information for our operating segments.

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


2017Three Months Ended March 31, 2023 Operating Overview


The following provides an overview of our business and financial performance andcharts provide the period-over-period change for several key factors influencing our results:

Total revenues for U.S. RACresults for the third quarter of 2017 decreased by 1% compared to 2016 driven by a 4% decrease in transaction days, partially offset by a 2% increase in Total RPD. Total revenues for U.S. RAC for the ninethree months of 2017 decreased by 3% as compared to the nine months of 2016 driven by a 1% decline in Total RPDended March 31, 2023 and a 3% decrease in transaction days;2022.

Revenue_Transax Days_RPD 4.16.2023 .gif
Depreciation of revenue earning vehicles and lease charges, net for U.S. RAC decreased 2% to $455 million from $462 million for the third quarter of 2017 versus 2016 and increased 14% to $1.5 billion from $1.3 billion for the nine months of 2017 versus 2016. Net depreciation per unit per month in U.S. RAC increased 1% to $306 from $304 for the third quarter of 2017 versus 2016 and increased 14% to $336 from $295 for the nine months of 2017 versus 2016.
RPU_DPU_Ute 4.18.2023 .gif


Total revenues for International RAC increased 7% for the third quarter of 2017 versus 2016. Excluding the(1)    Includes impact of foreign currency exchange at average rates total revenues for International RAC increased $17 million, or 2% for the third quarter 2017("fx").
(2)    Results shown are in constant currency as of December 31, 2022.
(3)    The percentages shown in this chart reflect Vehicle Utilization versus 2016, driven by a 5%increase in transaction days, partially offset by a 2% decrease in Total RPD. Total revenues for International RAC increased 2% for the nine months of 2017 versus 2016. Excluding the impact of foreign currency exchange rates, total revenues for International RAC increased $23 million, or 1% for the nine months of 2017 versus 2016, driven by a 4% increase in transaction days, partially offset by a 3% decrease in Total RPD;
period-over-period change.

Depreciation of revenue earning vehicles and lease charges, net for International RAC increased 9% to $126 million from $116 million for the third quarter of 2017 versus 2016 and excluding the $5 million impact of foreign currency exchange rates, increased $5 million or 4%. For the nine months of 2017 versus 2016, depreciation of revenue earning vehicles and lease charges, net increased 4% to $311 million from $300 million and excluding the $1 million impact of foreign currency exchange rates, increased $12 million or 4%. Net depreciation per unit per month for International RAC decreased 1% to $177 from $178 for the third quarter of 2017 versus 2016 and increased1% to $177 from $176 for the nine months of 2017 versus 2016;

International RAC's public liability and property damage (“PLPD”) expense decreased $5 million in the third quarter of 2017 versus 2016 and decreased $25 million during the nine months of 2017 versus 2016. The decrease in the third quarter of 2017 was a result of utilizing a third party insurance carrier in a certain country. The decrease in the nine months ended September 30, 2017 was primarily related to $20 million of charges recorded in the second quarter of 2016 resulting from adverse experience and case development of historical claims and decreased expense in 2017 from utilizing a third party insurance carrier in a certain country, partially offset by a $5 million accrual for PLPD related to a terrorist event in the second quarter of 2017;

Recorded $28 million of net impairments and asset write-downs in the third quarter of 2016 with no comparable charges in the third quarter of 2017. Recorded $116 million of impairment charges during the nine months of 2017 resulting from the $86 million impairment of the Dollar Thrifty tradename and a $30 million impairment of an equity method investment recorded in the second and first quarter, respectively, compared to $31 million of net impairments and asset write-downs during the nine months of 2016;

Recorded $15 million and $55 million during the third quarter and nine months of 2017, respectively, in expenses associated with our finance and information technology transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company's systems and processes, compared to $14 million and $40 million during the third quarter and nine months of 2016, respectively;

During the third quarter of 2017, we incurred approximately $13 million of hurricane related expenses, primarily comprised of transportation and damage costs, which is net of expected insurance recoveries. We estimate

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

that the hurricanes negatively impacted revenue by approximately $15 million due to the loss of revenue from business interruption.

During the third quarter of 2017, we completed the sale of our Brazil Operations to Localiza, received proceeds of $115 million, of which $13 million was placed in escrow to secure certain indemnification obligations, and recorded a pre-tax gain of $6 million.

During the nine months of 2017, we sold approximately 9 million shares of common stock of CAR Inc., a publicly traded company on the Hong Kong Stock Exchange, for net proceeds of approximately $9 million, recognizing a pre-tax gain of $3 million in the first quarter. During the nine months of 2016, we sold 204 million shares of common stock of CAR Inc. for net proceeds of approximately $233 million, recognizing a pre-tax gain of $75 million. There were no sales of common stock of CAR Inc. in the third quarter of 2017 or 2016;

During the third quarter of 2017, we issued $800 million of HVF II Series2017-1 and 2017-2 Rental Car Asset Backed Notes to third parties utilizing approximately $770 million of the proceeds to decrease near term maturities of the HVF II Series 2013-A Notes. In addition, during the nine months of 2017 we issued $1.25 billion in aggregate principal amount of 7.625% Senior Second Priority Secured Notes due 2022, utilizing a portion of the proceeds to decrease near term debt maturities by approximately $250 million resulting from the redemption of the 4.25% Senior Notes due April 2018 and to terminate $150 million of commitments under the Senior RCF. Also, during the nine months of 2017 we issued $500 million in aggregate principal of HFLF Series 2017-1 Rental Car Asset Backed Notes and $500 million aggregate principal of HVF II Series 2017-A Rental Car Asset Backed Notes; and

Recorded $8 million of charges for early redemption premiums and write off of deferred financing costs for the nine months of 2017 as a result of redeeming the 4.25% Senior Notes due April 2018 and terminating commitments under the Senior RCF. For the nine months of 2016, recorded $40 million of charges as a result of paying off the Senior Term Facility and various vehicle debt refinancings in the second quarter of 2016 and redemption of the 7.50% Senior Notes in the third quarter of 2016. There were no comparable charges during the third quarter of 2017.


For more information on the above, highlights, see the discussion of our results on a consolidated basis and by segment that follows herein. In this MD&A, certain amounts in the following tables are denoted as in millions. Amounts such as percentages are calculated from the underlying numbers in thousands, and as a result, may not agree to the amount when calculated from the tables in millions.




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

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

CONSOLIDATED RESULTS OF OPERATIONS -– HERTZ
 Three Months Ended
March 31,		Percent Increase/(Decrease)
($ In millions)20232022
Total revenues$2,047 $1,810 13%
Direct vehicle and operating expenses1,221 1,053 16
Depreciation of revenue earning vehicles and lease charges, net381 (59)NM
Non-vehicle depreciation and amortization35 33 7
Selling, general and administrative expenses221 235 (6)
Interest expense, net:
Vehicle111 5 NM
Non-vehicle51 39 30
Interest expense, net162 44 NM
Other (income) expense, net9 (2)NM
(Gain) from the sale of non-vehicle capital assets(162)— NM
Income (loss) before income taxes180 506 (64)
Income tax (provision) benefit134 (130)NM
Net income (loss)$314 $376 (17)
Adjusted Corporate EBITDA(a)
$237 $614 (61)
The footnote in the table above is shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.
NM - Not meaningful

Three Months Ended March 31, 2023 Compared with Three Months Ended March 31, 2022

Total revenues increased $237 million in the first quarter of 2023 compared to 2022 due primarily to increased travel demand. Total revenues increased $172 million and $64 million in our Americas RAC and International RAC segments, respectively. Excluding an unfavorable $17 million fx impact, revenues for our International RAC segment increased $81 million due primarily to higher volume and pricing. Americas RAC revenues increased due primarily to higher volume.

DOE increased $168 million in the first quarter of 2023 compared to 2022 due primarily to increases of $136 million and $32 million in our Americas RAC and International RAC segments, respectively. DOE in our Americas RAC segment increased due primarily to fleet-related costs driven by increased volume, higher collision and maintenance costs. Excluding an unfavorable $10 million fx impact, DOE in our International RAC segment increased $42 million due primarily to higher volume.

Depreciation of revenue earning vehicles and lease charges, net increased $440 million in the first quarter of 2023 compared to 2022 of which $443 million can be attributed to our Americas RAC segment and is due primarily to lower per unit gains recognized on vehicle dispositions and higher vehicle acquisition costs, partially offset by the impact of an extension of the estimated holding period on various portions of our fleet in the first quarter of 2023. This resulted in lower gross depreciation of revenue earning vehicles and lease charges, net over the estimated holding period as described in Note 2, "Significant Accounting Policies," in Part II, Item 8 of our 2022 Form 10-K.

SG&A decreased $14 million in the first quarter of 2023 compared to 2022 due primarily to decreased non-cash stock-based compensation costs in our corporate operations, partially offset by increased personnel and IT costs in our Americas RAC segment.

Vehicle interest expense, net increased $105 million in the first quarter of 2023 compared to 2022 due primarily to the realization of $88 million of previously unrealized gains resulting from the unwind of certain interest rate caps in
37

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

 Three Months Ended September 30, Percent Increase/(Decrease) Nine Months Ended
September 30,		 Percent Increase/(Decrease)
($ in millions)2017 2016  2017 2016 
Total revenues$2,572
 $2,542
 1 % $6,713
 $6,794
 (1)%
Direct vehicle and operating expenses1,348
 1,353
 —
 3,735
 3,778
 (1)
Depreciation of revenue earning vehicles and lease charges, net700
 695
 1
 2,144
 1,940
 11
Selling, general and administrative expenses217
 227
 (4) 661
 685
 (4)
Interest expense, net:           
Vehicle90
 72
 25
 242
 211
 15
Non-vehicle85
 84
 1
 219
 269
 (19)
Interest expense, net175
 156
 12
 461
 480
 (4)
Intangible asset impairments—
 —
 —
 86
 —
 —
Other (income) expense, net(12) 3
 NM
 19
 (86) NM
Income (loss) from continuing operations, before income taxes144
 108
 33
 (393) (3) NM
Income tax (provision) benefit(50) (64) (22) 107
 (33) NM
Net income (loss) from continuing operations94
 44
 114
 (286) (36) 694
Net income (loss) from discontinued operations—
 (2) NM
 —
 (13) NM
Net income (loss)$94
 $42
 124
 $(286) $(49) 484
Adjusted pre-tax income (loss)(a)
$189
 $212
 (11) $(103) $159
 NM
the first quarter of 2023, higher debt levels and higher average interest rates primarily in our Americas RAC segment resulting from the issuance of the HVF III Series 2023 Notes and higher benchmark rates on the HVF III 2021-A Notes. This was partially offset by a $98 million realized gain on the unwind of certain interest rate caps in the first quarter of 2023.

Non-vehicle interest expense, net increased $12 million in the first quarter of 2023 compared to 2022 due primarily to higher benchmark rates.

In the first quarter of 2023, we recognized a gain of $162 million on the sale of certain non-vehicle capital assets in our Americas RAC segment, as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report.

For the three months ended March 31, 2023, we recorded a tax benefit of $134 million which resulted in an effective tax rate of (74%). For the three months ended March 31, 2022, we recorded a tax provision of $130 million, which resulted in an effective tax rate of 26%. The change in tax in the three months ended March 31, 2023 compared to 2022 is driven primarily by recognition of uncertain tax benefits related to our tax restructuring of European operations and lower pre-tax income.

CONSOLIDATED RESULTS OF OPERATIONS – HERTZ GLOBAL

The above discussion for Hertz also applies to Hertz Global.

Hertz Global had a loss of $118 million and a gain of $50 million from the change in fair value of Public Warrants that was incremental to Hertz for the three months ended March 31, 2023 and 2022, respectively.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS AND SELECTED OPERATING DATA BY SEGMENT

Americas RAC
Three Months Ended
March 31,		Percent Increase/(Decrease)
($ In millions, except as noted)20232022
Total revenues$1,730 $1,558 11%
Depreciation of revenue earning vehicles and lease charges, net$349 $(93)NM
Direct vehicle and operating expenses$1,039 $903 15
Direct vehicle and operating expenses as a percentage of total revenues60 %58 %
Non-vehicle depreciation and amortization$28 $26 6
Selling, general and administrative expenses$105 $86 22
Selling, general and administrative expenses as a percentage of total revenues6 %6 %
Vehicle interest expense$93 $2 NM
Adjusted EBITDA$261 $641 (59)
Transaction Days (in thousands)(b)
27,87925,5799
Average Vehicles (in whole units)(f)
412,983397,6204
Average Rentable Vehicles (in whole units)(c)
393,512373,1535
Vehicle Utilization(c)
79 %76 %
Total RPD (in whole dollars)(d)
$62.03 $60.81 2
Total RPU Per Month (in whole dollars)(e)
$1,465 $1,390 5
Depreciation Per Unit Per Month (in whole dollars)(f)
$282 $(78)NM
Percentage of program vehicles as of period end1 %— %
Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.
NM - Not meaningful


Three Months Ended September 30, 2017March 31, 2023 Compared with Three Months Ended September 30, 2016March 31, 2022


Total Americas RAC revenues increased $30$172 million or 1%,in the first quarter of 2023 compared to 2022 due primarily to an increase of $45 million in our International RAC segment and a $7 millionhigher volume. The increase in our All Other Operations segment, partially offset by a decrease in our U.S. RAC revenues of $22 million. Excluding a $28 million impact of foreign currency exchange rates, International RAC revenues increased $17 million, or 2%,Transaction Days was driven by a 5% increase in transaction days partially offset by a 2% decrease involume increases across most leisure and business categories due to increased travel demand. Total RPD in the first quarter of 2023 was largely consistent with 2022. Airport revenues comprised 68% of total revenues for the segment. Total revenues in our All Other Operations segment increased primarily due to an increase in Donlen's leasing and services volume. U.S. RAC revenues decreased due to 4% lower volume, comprised of a decrease of 6% for our airport business and a 1% increase for our off airport business, partially offset by a 2% increase in pricing. We estimate that the hurricanes negatively impacted revenue in our U.S. RAC segment by approximately $15 million due to the loss of revenue from business interruption.

Direct vehicle and operating expenses ("DOE") was comparable year over year primarily due to decreases of $16 million in our U.S. RAC segment and $5 million in our Corporate operations, offset by increases in our International RAC segment of $13 million and $3 million in our All Other Operations segment. The decrease in our U.S. RAC segment is due to a $28 million decrease in other direct vehicle and operating expenses and a $7 million decrease in transaction variable expenses, partially offset by a $12 million increase in personnel related expenses and a $7 million increase in vehicle related expenses. Excluding the $14 million impact of foreign currency exchange rates, DOE for International RAC remained flat due to an increase of $6 million in transaction variable expenses from higher rental volume in the thirdfirst quarter of 2017 versus 2016, offset by a $5 milliondecrease in PLPD expense.2023 compared to 71% the first quarter of 2022.


Depreciation of revenue earning vehicles and lease charges, net for Americas RAC increased $5$443 million or 1%, primarily duein the first quarter of 2023 compared to 2022. Depreciation Per Unit Per Month increased to $282 in the first quarter of 2023 compared to a $10 million increasenegative expense of $78 in our International RAC segment resulting from an increase in average vehicles,the first quarter of 2022 due primarily to lower per unit gains recognized on vehicle dispositions and higher vehicle acquisition costs, partially offset by slightlythe impact of an extension of the estimated holding period on various portions of our fleet in the first quarter of 2023. This resulted in lower per vehiclegross depreciation rates. The increaseof revenue earning vehicles and lease charges, net over the estimated holding period as described in Note 2, "Significant Accounting Policies," in Part II, Item 8 of our International2022 Form 10-K. Average Vehicles increased in the first quarter of 2023 compared to 2022 due to travel demand.

DOE for Americas RAC segment was partially offsetincreased $136 million in the first quarter of 2023 compared to 2022 due primarily to higher fleet-related costs driven by a $7increased volume discussed above, higher collision and maintenance costs.

SG&A for Americas RAC increased $19 million decrease in our U.S. RAC segment resulting from lower average vehicles as the Company right-sized the fleet, partially offset by slightly higher per vehicle depreciation rates.

first quarter of 2023 compared to 2022 due primarily to increased personnel and IT costs.
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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Selling, general and administrative expenses (“SG&A”) decreased $10
Vehicle interest expense for Americas RAC increased $91 million or 4%, in the thirdfirst quarter of 20172023 compared to 2022 due primarily to the thirdrealization of $88 million of previously unrealized gains resulting from the unwind of certain interest rate caps in the first quarter of 2016, primarily due to a decrease2023, higher debt levels and higher average interest rates resulting from the issuance of approximately $30 million in restructuring related, consultingthe HVF III Series 2023 Notes and other expenses,higher benchmark rates on the HVF III 2021-A Notes. This was partially offset by a $20$98 million increase in advertising, information technology ("IT"), incentive compensation and other expenses recorded during the quarter. The above changes are primarily related to our All Other Operations segment and Corporate operations.

Vehicle interest expense, net increased $18 million, or 25%, in the third quarter of 2017 compared to the third quarter of 2016 primarily due to higher market interest rates, higher rates associated with increasing the mix of medium term funding and interest related to the European Vehicle Notes that were issued in the third quarter of 2016.

Non-vehicle interest expense, net increased $1 million, or 1%, in the third quarter of 2017 compared to the third quarter of 2016, primarily due to the issuance of the Senior Second Priority Secured Notes in the second quarter of 2017, partially offset by redemption of certain Senior Notes and lower losses on the extinguishment of debt in the third quarter of 2017 versus 2016.

We had other income of $12 million for the third quarter of 2017, primarily comprised of a $6 million pre-taxrealized gain on the saleunwind of our Brazil operations recordedinterest rate caps in the International RAC segment and a return of capital from an equity method investment resulting in a $4 million gain, compared to other expense of $3 million in the thirdfirst quarter of 2016.2023.


The effective tax rate in the third quarter of 2017 was (35)% compared to (59)% in the third quarter of 2016. The Company recorded a tax provision of $50 million in the third quarter of 2017 and $64 million in the third quarter of 2016. The $14 million decrease in the income tax provision is the result of composition of earnings and lower worldwide pre-tax income, and other discrete items in the period.

Adjusted pre-tax income was $189 million in the third quarter of 2017 compared to $212 million in the third quarter of 2016. See footnote (a) in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" for a summary and description of reconciling adjustments on a consolidated basis.

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

Total revenues decreased $81 million, or 1%, due primarily to decreases in our U.S. RAC revenues of $140 million, partially offset by a $32 million increase in our All Other Operations segment revenues and a $27 million increase in our International RAC segment. Volume for U.S. RAC decreased 3% driven by declines of 4% in our airport business and 1% in our off airport businesses. Total RPD in our U.S. RAC segment decreased 1%. We estimate that the hurricanes negatively impacted revenue in our U.S. RAC segment by approximately $15 million due to the loss of revenue from business interruption. Total revenues in our All Other Operations segment increased primarily due to an increase in Donlen's leasing and services volume. Excluding a $4 million impact of foreign currency exchange rates, International RAC revenues increased $23 million, or 1%, driven by a 4% increase in transaction days partially offset by a 3% decrease in pricing for the segment.


The decrease in DOE of $43 million, or 1%, was primarily due to a decrease in our U.S. RAC segment and our International RAC segment of $22 million and $17 million, respectively and a decrease of $5 million due to Spin-Off related charges in the nine months of 2016 with no comparable charges in the nine months of 2017. The decreases were partially offset by an increase in our All Other Operations segment of $11 million in the nine months of 2017 compared to 2016. The decrease for our U.S. RAC segment is mainly comprised of a $21 million decrease in other direct vehicle and operating expenses and a $23 million decrease in transaction variable expenses, partially offset by a $20 million increase in personnel related expenses. Excluding the $3 million impact of foreign currency exchange rates, DOE for International RAC decreased $14 million, or 1%, due to a $25 milliondecrease in PLPD expense and an $8 million decrease in vehicle damage expense, partially offset by an increase of $14 million in transaction variable expenses due to higher rental volume and an increase of $5 million in restructuring related expenses. The increase in our All Other Operations segment is due to charges related to new leases entered into during the nine months of 2017.


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

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Depreciation of revenue earning vehicles and lease charges, net increased $204 million, or 11%, primarily due to a $180 million increase in our U.S. RAC segment resulting from higher per vehicle depreciation rates due in part to a richer vehicle mix, combined with a slightly larger fleet and lower residual values, as well as a $13 million increase in our All Other Operations segment and an $11 million increase in our International RAC segment due to an increase in average vehicles and slightly higher per vehicle depreciation rates.

SG&A decreased $24 million, or 4%, in the nine months of 2017 compared to 2016, primarily due to a decrease of approximately $72 million in restructuring related, incentive compensation and other expenses, partially offset by a $33 million increase in advertising expense, charges for labor-related matters and litigation settlements related to various cases and other expenses and a $15 million net increase in finance and information technology transformation program costs recorded during the nine months of 2017. The above changes are primarily related to our U.S. RAC segment and our Corporate operations. As discussed above, we incurred higher information technology transformation program costs in the nine months of 2017 versus 2016, and we expect to see continued increases in SG&A expenses for information technology investments for the remainder of 2017 and in 2018.

Vehicle interest expense, net increased $31 million, or 15%, in the nine months of 2017 compared to 2016 primarily due to higher market interest rates and higher rates associated with increasing the mix of medium term funding and interest related to the European Vehicle Notes that were issued in the third quarter of 2016, partially offset by a loss on extinguishment of debt for terminated vehicle debt in the nine months of 2016 with no comparable loss recorded in the nine months of 2017.

Non-vehicle interest expense, net decreased $50 million, or 19%, in the nine months of 2017 compared to 2016, primarily due to the termination of the $2.1 billion of Senior Credit Facilities in June 2016, the 2016 refinancings of certain Senior Notes with the lower rate Senior Term Loan, and lower losses on the extinguishment of debt in the nine months of 2017 versus 2016, partially offset by the issuance of the Senior Second Priority Secured Notes in the second quarter of 2017.

We had intangible asset impairments of $86 million related to an impairment recorded in the second quarter of 2017 related to the the Dollar Thrifty tradename.

We had other expense of $19 million for the nine months of 2017, primarily comprised of a $30 million impairment of an equity method investment partially offset by a return of capital resulting in a $4 million gain and a $6 million pre-tax gain on the sale of our Brazil Operations recorded in the International RAC segment. Other income of $86 million for the nine months of 2016 was primarily comprised of a $75 million gain on the sale of common stock of CAR Inc. and a $9 million settlement gain from an eminent domain case at one of our airport locations.

The effective tax rate in the nine months of 2017 was 27% compared to (1,100)% in the nine months of 2016. The Company recorded a tax benefit of $107 million in the nine months of 2017 and a provision of $33 million in the nine months of 2016. The change was the result of composition of earnings and lower worldwide pre-tax income, and discrete items in the period, including the impact of the adoption of Employee Share-Based Payment Accounting guidance effective January 1, 2017 and the out of period adjustment recorded in second quarter of 2017

The results for discontinued operations are associated with the activities of the Old Hertz Holdings equipment rental business which was spun-off on June 30, 2016.

Adjusted pre-tax loss was $103 million in the nine months of 2017 compared to adjusted pre-tax income of $159 million in the nine months of 2016. See footnote (a) in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" for a summary and description of reconciling adjustments on a consolidated basis.

CONSOLIDATED RESULTS OF OPERATIONS - HERTZ GLOBAL

The above discussion for Hertz also applies to Hertz Global.


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

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

For the third quarter and nine months of 2017, Hertz Global has interest expense, net of $1 million and $4 million, respectively that is incremental to the amounts shown for Hertz. These amounts represent interest associated with amounts outstanding under the master loan agreement between the companies. Hertz includes this amount as interest income in its statement of operations but this amount is eliminated in consolidation for purposes of Hertz Global.

Hertz Global has net losses from discontinued operations of $2 million for the nine months of 2016 that are incremental to the amounts shown for Hertz. These amounts represent the net losses of the parent legal entities of Old Hertz Holdings which are deemed discontinued operations of Hertz Global but not Hertz. There are no incremental net losses for Hertz Global in the third quarter of 2016.

RESULTS OF OPERATIONS AND SELECTED OPERATING DATA BY SEGMENT

U.S. Rental Car
 Three Months Ended
September 30,		 Percent Increase/(Decrease)  Nine Months Ended
September 30,		 Percent Increase/(Decrease) 
($ in millions, except as noted)2017 2016   2017 2016  
Total revenues$1,685
 $1,707
 (1)%  $4,557
 $4,697
 (3)% 
Direct vehicle and operating expenses$970
 $986
 (2)  $2,750
 $2,772
 (1) 
Depreciation of revenue earning vehicles and lease charges, net$455
 $462
 (2)  $1,478
 $1,298
 14
 
Income (loss) before income taxes$131
 $124
 6
  $(147) $207
 NM
 
Adjusted pre-tax income (loss)(a)
$158
 $173
 (9)  $5
 $312
 (98) 
Transaction days (in thousands)(b)
36,879
 38,280
 (4)  105,424
 108,212
 (3) 
Average vehicles(c)
495,000
 505,800
 (2)  489,300
 488,700
 —
 
Vehicle utilization(c)
81% 82% (130)bps 79% 81% (190)bps
Total RPD (in whole dollars)(d)
$45.04
 $44.10
 2
  $42.56
 $42.89
 (1) 
Total RPU (in whole dollars)(e)
$1,119
 $1,112
 1
  $1,019
 $1,055
 (3) 
Net depreciation per unit per month (in whole dollars)(f)
$306
 $304
 1
  $336
 $295
 14
 
Percentage of program vehicles at period end9% 8% 100
bps 9% 8% 100
bps
Three Months Ended
March 31,		Percent Increase/(Decrease)
($ in millions, except as noted)20232022
Total revenues$317 $252 25%
Depreciation of revenue earning vehicles and lease charges, net$32 $34 (8)
Direct vehicle and operating expenses$182 $151 21
Direct vehicle and operating expenses as a percentage of total revenues58 %60 %
Non-vehicle depreciation and amortization$2 $3 (29)
Selling, general and administrative expenses$37 $42 (11)
Selling, general and administrative expenses as a percentage of total revenues12 %17 %
Vehicle interest expense$18 $3 NM
Adjusted EBITDA$53 $27 97
Transaction Days (in thousands)(b)
5,908 5,042 17
Average Vehicles (in whole units)(f)
91,545 83,591 10
Average Rentable Vehicles (in whole units)(c)
89,776 82,364 9
Vehicle Utilization(c)
72 %68 %
Total RPD (in whole dollars)(d)
$53.18 $47.00 13
Total RPU Per Month (in whole dollars)(e)
$1,167 $959 22
Depreciation Per Unit Per Month (in whole dollars)(f)
$115 $129 (11)
Percentage of program vehicles as of period end26 %29 %
Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.
NM - Not meaningful


Three Months Ended September 30, 2017March 31, 2023 Compared with Three Months Ended September 30, 2016March 31, 2022


Total U.S.revenues for International RAC revenues were $1.7 billionincreased $64 million in the thirdfirst quarter of 2017, a decrease2023 compared to 2022 due to higher volume and pricing. Excluding an unfavorable $17 million fx impact, revenues increased $81 million. The increase in Transaction Days was driven by higher volume due to increased travel demand. Total RPD increased due primarily to higher pricing across the industry resulting from growth in travel demand in most business and leisure categories.

Depreciation of $22 million, or 1%, fromrevenue earning vehicles and lease charges, net for International RAC in the thirdfirst quarter of 2016. Transaction days2023 was comparable to 2022. Average Vehicles for International RAC increased in the first quarter of 2023 due to increased travel demand. Depreciation Per Unit Per Month for International RAC decreased 4% comprisedto $115 for the first quarter of a decrease2023 compared to $129 for the first quarter of 6% in our airport business partially offset by an increase of 1% in our off airport business. Airport transactions days declined2022 due in part to our decision to reduce the fleet sizecontinued strength in residual values and execute on plans to focus on customer mix to improve the quality of our revenue. Off airport transaction days were up due to growth in our ride-hailingincreased vehicle rentals and were partially offset by fewer retail and replacement rentals during the third quarter of 2017 as well as declines due to our decision to reduce the fleet size and focus on customer mix. Although insurance replacement rentals in regions affected by the hurricanes in 2017 were up, there was an overall decrease in replacement rentals due to a large number of customer vehicle recalls in the third quarter of 2016. Total RPD increased 2% primarily due to improved rental rates in our retail and domestic tour customer segments, partially offset by the growth of ride-hailing vehicle rentals and a decline in ancillary revenues from vehicle upgrades and insurance related products. Off airport revenues comprised 28% of total revenues for the segment in the third quarter of 2017 as compared to 27% in the third quarter of 2016. We estimate that the hurricanes negatively impacted revenue by approximately $15 million due to the loss of revenue from business interruption.dispositions.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

DOE for U.S. RAC decreased $16 million, or 2%, primarily due to the following:

Vehicle related expenses increased $7 million compared to the third quarter of 2016, primarily due to:

◦Increased transportation expense of $11 million due in part to repositioning the fleet in response to the hurricanes in the third quarter of 2017.

◦Decreased damage and short term maintenance expense of $6 million driven primarily by a $11 million improvement in customer collections for damage claims resulting from process improvements, partially offset by $6 million in damage charges related to the hurricanes in the third quarter of 2017.

Personnel related expenses increased $12 million compared to the third quarter of 2016, primarily due to an increase of $13 million in field wages, overtime and outsourced labor due in part to new customer-oriented initiatives.

Transaction variable expenses decreased $7 million compared to the third quarter of 2016, primarily due to decreases in optional insurance liability expense due to fewer transaction days.

Other direct vehicle and operating expenses decreased $28 million year over year primarily due to a decrease of $29 million in restructuring charges mostly comprised of the impairment of certain assets recorded in the third quarter of 2016 and a $6 million decrease due to rent credits as a result of finalization of negotiations on a concession agreement, partially offset by a $6 million increase in commissions due to growth in our on-line travel partner and airline channels.

Depreciation rates are reviewed on a quarterly basis based on management's routine review of present and estimated future market conditions and their effect on residual values at the time of disposal. Depreciation rates being used to compute the provision for depreciation of revenue earning vehicles are adjusted on certain vehicles in our vehicle rental operations to reflect changes in the estimated residual values to be realized when revenue earning vehicles are sold. Based on the review completed during the third quarter of 2017, depreciation rate changes in our U.S. RAC operations resulted in a decrease in depreciation expense of $15 million. The third quarter of 2017 rate change reflects the stabilization of residual values and a two month increase in the assumed hold period for model year 2017 vehicles to accommodate increased volume in our off airport rentals. Based on the review completed during the third quarter of 2016, depreciation rate changes in our U.S. RAC operations resulted in an increase to depreciation expense of $39 million.

Depreciation of revenue earning vehicles and lease charges, net for U.S. RAC decreased by $7 million, or 2%, in the third quarter of 2017 compared to the third quarter of 2016. The decrease year over year is primarily the result of lower average vehicles as the Company right-sized the fleet, partially offset by higher per vehicle depreciation rates. Net depreciation per unit per month increased slightly to $306 in the third quarter of 2017 compared to $304 in the third quarter of 2016.

Income before income taxes for U.S. RAC was $131 million in the third quarter of 2017 compared to $124 million in the third quarter of 2016. The $7 million increase year over year is primarily due to the impact of decreased DOE and depreciation expense on our revenue earning vehicles as discussed above. Additionally, SG&A for the segment decreased $5 million year over year, primarily resulting from decreases in costs for labor-related matters, finance and information technology transformation program costs and other expenses. The above were partially offset by lower revenues.

Adjusted pre-tax income for U.S. RAC was $158 million in the third quarter of 2017 compared to $173 million in the third quarter of 2016. See footnote (a) in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" for a summary and description of reconciling adjustments on a consolidated basis.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

Total U.S. RAC revenues were $4.6 billion in the nine months of 2017, a decrease of $140 million, or 3%, from 2016. Transaction days decreased 3% driven by declines of 4% in our airport business and a 1% decline in our off airport businesses. Airport transaction days were down due to fewer retail customer rentals and due to our decision to reduce the fleet size and focus on customer mix. The decline in our off airport volume reflects the challenging year over year comparison in replacement rentals. Although insurance replacement rentals in regions affected by the hurricanes in 2017 were up, there was an overall decrease in replacement rentals due to a large number of customer vehicle recalls in the nine months of 2016. Additionally, there were off airport volume declines due to our decision to reduce the fleet size and focus on customer mix, partially offset by the growth in our ride-hailing vehicle rentals. Total RPD decreased 1% due to a decline in ancillary revenues and customer mix, primarily driven by a change from higher yielding corporate contracted and retail rentals to lower yielding domestic tour and ride-hailing vehicle rentals. Off airport revenues comprised 28% of total revenues for the segment in the nine months of 2017 as compared to 27% for 2016. We estimate that the hurricanes negatively impacted revenue by approximately $15 million due to the loss of revenue from business interruption.

DOE for U.S. RAC decreased $22 million, or 1%, primarily due to the following:

Vehicle related expenses increased $2 million year over year primarily due to:

Decreased damage and short term maintenance expense of $17 million resulting from a $16 million improvement in customer collections for damage claims resulting from process improvements and a $7 million decrease in the costs to prepare program vehicles for turn-back due to a reduction in the number of program vehicles returned to the manufacturer year over year. The improvements were partially offset by $6 million of damage charges related to the hurricanes in the third quarter of 2017.

Increased transportation expense of $10 million due in part to repositioning the fleet in response to the hurricanes in the third quarter of 2017.

Increased maintenance and other vehicle operating expense of $6 million primarily for the reconditioning of certain vehicles.

Personnel related expenses increased $20 million compared to the nine months of 2016, primarily due to a $24 million increase in field wages, overtime and outsourced labor due in part to new customer-oriented initiatives and a $9 million increase in benefits expense, primarily resulting from an increase in the workers compensation reserve, partially offset by a $12 million decrease in variable incentive compensation.

Transaction variable expenses decreased $23 million primarily due to decreases in optional insurance liability expense of $25 million due to favorable adjustments based on historical experience and the decrease in transaction days, partially offset by higher fuel expense of $5 million due to higher market fuel prices compared to the nine months of 2016.

Other direct vehicle and operating expenses decreased $21 million year over year primarily due to a decrease of $33 million of restructuring charges mostly comprised of an impairment of certain assets recorded in the third quarter of 2016 and a $6 million decrease due to rent credits as a result of finalization of negotiations on a concession agreement, partially offset by $7 million of increased commissions due to growth in our on-line travel partner and airline channels and an $11 million increase in other direct vehicle and operating expenses primarily due to charges associated with our Ultimate Choice program.

Depreciation rates are reviewed on a quarterly basis based on management's routine review of present and estimated future market conditions and their effect on residual values at the time of disposal. Depreciation rates being used to compute the provision for depreciation of revenue earning vehicles are adjusted on certain vehicles in our vehicle rental operations to reflect changes in the estimated residual values to be realized when revenue earning vehicles are sold. Based on the reviews completed during the nine months of 2017 and 2016, depreciation rate changes in our U.S.

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RAC operations resulted in a net increase in depreciation expense of $68 million and $88 million, respectively. The 2017 rate change reflects shortened hold periods on certain non-program vehicles as we rebalanced the fleet, our onboarding of a richer mix of premium model year 2017 vehicles, and declining residual values primarily experienced in the first half of the year.

Depreciation of revenue earning vehicles and lease charges, net for U.S. RAC increased by $180 million, or 14%, in the nine months of 2017 compared to 2016. The increase year over year is primarily the result of higher per vehicle depreciation rates due in part to declining residual values, a richer vehicle mix, the shortened hold periods on certain non-program vehicles as we rebalanced the fleet in the first half of 2017, combined with a slightly larger fleet. Net depreciation per unit per month increased to $336 in the nine months of 2017 compared to $295 in 2016.

There was a loss before income taxes for U.S. RAC of $147 million in the nine months of 2017 compared to income before income taxes of $207 million in 2016. The $354 million change year over year is due primarily to the impact of increased depreciation expense on our revenue earning vehicles and lower revenues as well as the $86 million impairment of the Dollar Thrifty tradename. Additionally, in the nine months of 2016 we had other income of $11 million primarily related to a $9 million settlement gain from an eminent domain case at one of our airport locations with no comparable income in 2017. The above were partially offset by a decrease of $24 million in interest expense, net, decreased DOE and an $17 million decrease in SG&A for the segment, primarily resulting from $19 million of decreases in restructuring related, consulting charges, incentive compensation and other expenses and an $11 million decrease in finance and information technology transformation program costs, partially offset by a $12 million increase primarily due to charges for labor-related matters recorded during the nine months of 2017.

Adjusted pre-tax income for U.S. RAC was $5 million in the nine months of 2017 compared to $312 million in the nine months of 2016. See footnote (a) in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" for a summary and description of reconciling adjustments on a consolidated basis.

International Rental Car
 Three Months Ended
September 30,		 Percent Increase/(Decrease)  Nine Months Ended
September 30,		 Percent Increase/(Decrease) 
($ in millions, except as noted)2017 2016   2017 2016  
Total revenues$728
 $683
 7 %  $1,683
 $1,656
 2 % 
Direct vehicle and operating expenses$372
 $359
 4
  $962
 $979
 (2) 
Depreciation of revenue earning vehicles and lease charges, net$126
 $116
 9
  $311
 $300
 4
 
Income (loss) before income taxes$152
 $134
 13
  $189
 $162
 17
 
Adjusted pre-tax income (loss)(a)
$147
 $142
 4
  $200
 $179
 12
 
Transaction days (in thousands)(b)
15,947
 15,133
 5
  39,366
 37,747
 4
 
Average vehicles(c)
212,600
 204,100
 4
  183,100
 176,900
 4
 
Vehicle utilization(c)
82% 81% 90
bps 79% 78% 90
bps
Total RPD (in whole dollars)(d)
$41.32
 $42.36
 (2)  $40.11
 $41.17
 (3) 
Total RPU (in whole dollars)(e)
$1,033
 $1,047
 (1)  $958
 $976
 (2) 
Net depreciation per unit per month (in whole dollars)(f)
$177
 $178
 (1)  $177
 $176
 1
 
Percentage of program vehicles at period end45% 43% 200
bps 45% 43% 200
bps
Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016

Total revenues for International RAC increased $45 million, or 7%, in the third quarter of 2017 compared to the third quarter of 2016. Excluding a $28 million impact of foreign currency exchange rates, revenues increased $17 million, or 2%, driven by a 5% increase in transaction days primarily due to volume growth in our value brands, partially offset by a 2% decrease in Total RPD.

DOE for International RAC increased $13$32 million in the thirdfirst quarter of 20172023 compared to 2022. Excluding an unfavorable $10 million fx impact, DOE increased $42 million due primarily to higher volume driven by the thirdincreased travel demand discussed above.

SG&A for International RAC decreased $5 million in the first quarter of 2016.2023 compared 2022. Excluding the $14an unfavorable $2 million fx impact, of foreign currency exchange rates, direct vehicle and operating expenses were flat as comparedSG&A was comparable to the prior year primarily due an increase of $6 million in transaction variable expenses, such as concessions, field compensation and facilities due to higher rental volume in the third quarter of 2017 versus 2016, partially offset by a $5 milliondecrease in PLPD2022.

Vehicle interest expense as a result of utilizing a third party insurance carrier in a certain country.

Depreciation of revenue earning vehicles and lease charges, net for International RAC increased $10 million, or 9%, in the third quarter of 2017 compared to the third quarter of 2016. Excluding the $5 million impact of foreign currency exchange rates, depreciation of revenue earning vehicles and lease charges, net increased $5 million or 4% primarily due to a 4% increase in average vehicles in the third quarter of 2017 compared to the third quarter of 2016, partially offset by slightly lower per vehicle depreciation rates. Net depreciation per unit per month for International RAC decreased 1% to $177 from $178 for the third quarter of 2017 versus 2016.

Income before income taxes for International RAC was $152$15 million in the thirdfirst quarter of 20172023 compared to $134 million in the third quarter of 2016. The increase year over year is2022 due primarily due to higher revenues and an increasedebt levels resulting from the incorporation of $9 million in other income primarily comprised of a $6 million pre-tax gain on the sale of our Brazil Operations, partially offset by increased DOE and increased depreciation expense on our revenue earning vehicles as discussed above. Additionally, there was an increase of $7 million in SG&A primarily due to enhanced advertising efforts and an increase of $6 million in interest expense, net primarily related toItalian fleet within the European Vehicle Notes which were issued in the third quarter of 2016.ABS financing structure.


Adjusted pre-tax income for International RAC was $147 million in the third quarter of 2017 compared to $142 million in the third quarter of 2016. See footnote (a) in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" for a summary and description of reconciling adjustments on a consolidated basis.

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

Total revenues for International RAC increased $27 million, or 2%, in the nine months of 2017 compared to 2016. Excluding a $4 million impact of foreign currency exchange rates, revenues increased $23 million or 1%, driven by a 4% increase in transaction days for the segment, due to volume growth in our value brands, partially offset by a 3% decrease in Total RPD.

DOE for International RAC decreased $17 million in the nine months of 2017 compared to 2016. Excluding the $3 million impact of foreign currency exchange rates, direct vehicle and operating expenses decreased $14 million, or 1%, versus the prior year due to a $25 milliondecrease in PLPD expense and a decrease of $8 million in vehicle damage expense, partially offset by an increase of $14 million in transaction variable expenses, such as field compensation and concessions due to higher rental volume in the nine months of 2017 versus 2016, and an increase of $5 million in restructuring related expenses. The decrease in PLPD expense primarily represents $20 million higher charges in the second quarter of 2016 resulting from adverse experience and case development and lower charges in 2017 as a result of utilizing a third party insurance carrier in a certain country, partially offset by a $5 million accrual for PLPD related to a terrorist event in the first half of 2017.

Depreciation of revenue earning vehicles and lease charges, net for International RAC increased $11 million, or 4%, in the nine months of 2017 compared to 2016. Excluding the $1 million impact of foreign currency exchange rates, depreciation of revenue earning vehicles and lease charges, net increased $12 million or 4% primarily due to a 4% increase in average vehicles in the nine months of 2017 compared to the nine months of 2016 and slightly higher per

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

vehicle depreciation rates. Net depreciation per unit per month increased1% to $177 from $176 for the nine months of 2017 compared to the nine months of 2016.

Income before income taxes for International RAC was $189 million in the nine months of 2017 compared to $162 million in 2016. The $27 million increase year over year is primarily due to an increase in revenues and decreased DOE discussed above and an increase of $9 million in other income primarily comprised of a $6 million pre-tax gain on the sale of our Brazil Operations. The above were partially offset by a $11 million increase in interest expense, net primarily related to the European Vehicle Notes which were issued in the third quarter of 2016 and an increase in depreciation expense on our revenue earning vehicles as discussed above.

Adjusted pre-tax income for International RAC was $200 million in the nine months of 2017 compared to $179 million in 2016. See footnote (a) in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" for a summary and description of reconciling adjustments on a consolidated basis.

All Other Operations
 Three Months Ended
September 30,		 Percent Increase/(Decrease) Nine Months Ended
September 30,		 Percent Increase/(Decrease)
($ in millions)2017 2016  2017 2016 
Total revenues$159
 $152
 5% $473
 $441
 7%
Direct vehicle and operating expenses$9
 $6
 50
 $28
 $17
 65
Depreciation of revenue earning vehicles and lease charges, net$119
 $117
 2
 $355
 $342
 4
Income (loss) before income taxes$17
 $12
 42
 $51
 $42
 21
Adjusted pre-tax income (loss)(a)
$20
 $19
 5
 $59
 $53
 11
Average vehicles - Donlen205,600
 173,300
 19
 206,500
 167,600
 23
Footnotes to the table above are shown in the "Footnotes to the Results of Operations and Selected Operating Data by Segment Tables" section of this MD&A.

All Other Operations has favorable results in the third quarter and nine months of 2017 as compared to the third quarter and nine months of 2016. Revenues were higher primarily due to an increase in Donlen's leasing and services volume due to new business origination and existing customer growth, and were partially offset by increases in DOE due to charges related to new leases entered into during the periods during 2017 and increases in vehicle depreciation due to the growth of leased fleet.

Footnotes to the Results of Operations and Selected Operating Data by Segment Tables


(a)Adjusted pre-tax income (loss) is calculated as income (loss) from continuing operations before income taxes plus non-cash acquisition accounting charges, debt-related charges relating to the amortization and write-off of debt financing costs and debt discounts, goodwill, intangible and tangible asset impairments and write-downs and certain one-time charges and non-operational items. Adjusted pre-tax income (loss) is important because it allows management to assess operational performance of our business, exclusive of the items mentioned above. It also allows management to assess the performance of the entire business on the same basis as the segment measure of profitability. Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally. When evaluating our operating performance, investors should not consider adjusted pre-tax income (loss) in isolation of, or as a substitute for, measures of our financial performance, such as net income (loss) from continuing operations or income (loss) from continuing operations before income taxes. The contribution of our reportable segments to adjusted pre-tax income (loss) and reconciliation to the most comparable consolidated GAAP measure are presented below:

(a)Adjusted Corporate EBITDA is calculated as net income (loss), adjusted for income taxes; non-vehicle depreciation and amortization; non-vehicle debt interest, net; vehicle debt-related charges; restructuring and restructuring related charges; unrealized (gains) losses from financial instruments; gain on sale of non-vehicle capital assets; change in fair value of Public Warrants and certain other miscellaneous items. When evaluating our operating performance, investors should not consider Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance determined in accordance with U.S. GAAP. The reconciliations to the most comparable consolidated U.S. GAAP measure are presented below:
Hertz
Three Months Ended
March 31,
(In millions)20232022
Net income (loss)$314 $376 
Adjustments:
Income tax provision (benefit)(134)130 
Non-vehicle depreciation and amortization35 33 
Non-vehicle debt interest, net51 39 
Vehicle debt-related charges(1)
10 7 
Restructuring and restructuring related charges(2)
3 6 
Unrealized (gains) losses on financial instruments(3)
108 (44)
Gain on sale of non-vehicle capital assets(4)
(162)— 
Other items(5)
12 67 
Adjusted Corporate EBITDA$237 $614 
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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Hertz
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Adjusted pre-tax income (loss):       
U.S. Rental Car$158
 $173
 $5
 $312
International Rental Car147
 142
 200
 179
All Other Operations20
 19
 59
 53
Total reportable segments325
 334
 264
 544
Corporate(1)
(136) (122) (367) (385)
Adjusted pre-tax income (loss)189
 212
 (103) 159
Adjustments:       
Acquisition accounting(2)
(15) (16) (47) (49)
Debt-related charges(3)
(12) (11) (33) (36)
Loss on extinguishment of debt(4)
—
 (20) (8) (40)
Restructuring and restructuring related charges(5)
(2) (11) (14) (41)
Sale of CAR Inc. common stock(6)
—
 —
 3
 75
Impairment charges and asset write-downs(7)
—
 (28) (116) (31)
Finance and information technology transformation costs(8)
(15) (14) (55) (40)
Other(9)
(1) (4) (20) —
Income (loss) before income taxes$144
 $108
 $(393) $(3)

Hertz Global
Three Months Ended
March 31,
(In millions)20232022
Net income (loss)$196 $426 
Adjustments:
Income tax provision (benefit)(134)130 
Non-vehicle depreciation and amortization35 33 
Non-vehicle debt interest, net51 39 
Vehicle debt-related charges(1)
10 7 
Restructuring and restructuring related charges(2)
3 6 
Unrealized (gains) losses on financial instruments(3)
108 (44)
Gain on sale of non-vehicle capital assets(4)
(162)— 
Change in fair value of Public Warrants(6)
118 (50)
Other items(5)
12 67 
Adjusted Corporate EBITDA$237 $614 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)2017 2016 2017 2016
Adjusted pre-tax income (loss):       
U.S. Rental Car$158
 $173
 $5
 $312
International Rental Car147
 142
 200
 179
All Other Operations20
 19
 59
 53
Total reportable segments325
 334
 264
 544
Corporate(1)
(137) (122) (371) (385)
Adjusted pre-tax income (loss)188
 212
 (107) 159
Adjustments:       
Acquisition accounting(2)
(15) (16) (47) (49)
Debt-related charges(3)
(12) (11) (33) (36)
Loss on extinguishment of debt(4)
—
 (20) (8) (40)
Restructuring and restructuring related charges(5)
(2) (11) (14) (41)
Sale of CAR Inc. common stock(6)
—
 —
 3
 75
Impairment charges and asset write-downs(7)
—
 (28) (116) (31)
Finance and information technology transformation costs(8)
(15) (14) (55) (40)
Other(9)
(1) (4) (20) —
Income (loss) before income taxes$143
 $108
 $(397) $(3)
(1)Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.

(2)Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.
(1)Represents general corporate expenses, non-vehicle interest expense, as well as other business activities.
(2)Represents incremental expense associated with amortization of other intangible assets and depreciation of property and equipment relating to acquisition accounting.
(3)Represents debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.
(4)In 2017, represents $6 million of early redemption premium and write-off of deferred financing costs associated with the redemption of the outstanding 4.25% Senior Notes due April 2018 and a $2 million write-off of deferred financing costs associated with the termination of commitments under the Senior RCF incurred during the second quarter. In 2016, primarily represents the second quarter write-off of $18 million in deferred financing costs as a result of paying off the Senior Term Facility and various vehicle debt

(3)Represents unrealized (gains) losses on derivative financial instruments. In 2023, also includes the realization of $88 million of previously unrealized gains resulting from the unwind of certain interest rate caps. See Note 10, "Financial Instruments," in Part I, Item 1 of this Quarterly Report.
(4)Represents gain on sale of certain non-vehicle capital assets sold in March 2023. See Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report.
(5)Represents miscellaneous items. For the three months ended March 31, 2023, primarily includes certain IT related charges. For the three months ended March 31, 2022 primarily includes bankruptcy claims, certain non-cash stock-based compensation charges, certain professional fees and charges related to the settlement of bankruptcy claims.
(6)Represents the change in fair value during the reporting period for Hertz Global's outstanding Public Warrants.

(b)Transaction Days represents the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period. 

(c)Vehicle Utilization is calculated by dividing total Transaction Days by Available Car Days. Available Car Days represents Average Rentable Vehicles multiplied by the number of days in a given period. Average Rentable Vehicles excludes vehicles for sale on our retail lots or actively in the process of being sold through other disposition channels and is determined using a simple average of such vehicles at the beginning and end of a given period.
Americas RACInternational RAC
Three Months Ended March 31,
2023202220232022
Transaction Days (in thousands)27,879 25,579 5,908 5,042 
Average Rentable Vehicles (in whole units)393,512 373,153 89,776 82,364 
Number of days in period (in whole units)90 90 90 90 
Available Car Days (in thousands)35,420 33,584 8,191 7,415 
Vehicle Utilization79 %76 %72 %68 %

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
refinancings,
(d)Total RPD is calculated as wellrevenues with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates ("Total Revenues - adjusted for foreign currency"), divided by the total number of Transaction Days. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Total RPD is shown below:
Americas RACInternational RAC
Three Months Ended March 31,
($ in millions, except as noted)2023202220232022
Revenues$1,730 $1,558 $317 $252 
Foreign currency adjustment(1)
(1)(2)(3)(15)
Total Revenues - adjusted for foreign currency$1,729 $1,556 $314 $237 
Transaction Days (in thousands)27,879 25,579 5,908 5,042 
Total RPD (in whole dollars)$62.03 $60.81 $53.18 $47.00 
(1)Based on December 31, 2022 foreign currency exchange rates for all periods presented.

(e)Total RPU Per Month is calculated as Total Revenues - adjusted for foreign currency divided by the third quarter early redemption premiumAverage Rentable Vehicles in each period and then divided by the number of $13 millionmonths in the period reported.
Americas RACInternational RAC
Three Months Ended March 31,
($ in millions, except as noted)2023202220232022
Total Revenues - adjusted for foreign currency$1,729 $1,556 $314 $237 
Average Rentable Vehicles (in whole units)393,512 373,153 89,776 82,364 
Total revenue per unit (in whole dollars)$4,395 $4,169 $3,500 $2,877 
Number of months in period (in whole units)
3 3 3 3 
Total RPU Per Month (in whole dollars)$1,465 $1,390 $1,167 $959 

(f)Depreciation Per Unit Per Month represents the amount of average depreciation expense and write-offlease charges, per vehicle per month and is calculated as depreciation of $5 millionrevenue earning vehicles and lease charges, net, with all periods adjusted to eliminate the effect of fluctuations in deferred financing costs associated withforeign currency exchange rates, divided by the redemption of allAverage Vehicles in each period, which is determined using a simple average of the 7.50% Senior Notes.number of vehicles at the beginning and end of a period, and then dividing by the number of months in the period reported. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. The calculation of Depreciation Per Unit Per Month is shown below:
(5)Represents expenses incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs, when applicable. For further information on restructuring costs, see Part I, Item 1, Note 10, "Restructuring," to the Notes to our condensed consolidated financial statements included in this Report. Also represents certain other charges such as incremental costs incurred directly supporting business transformation initiatives. Such costs include transition costs incurred in connection with business process outsourcing arrangements and incremental costs incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and extensive operational process changes. Also includes consulting costs and legal fees related to the previously disclosed accounting review and investigation.
(6)Represents the pre-tax gain on the sale of CAR Inc. common stock.
(7)In 2017, primarily represents a second quarter $86 million impairment of the Dollar Thrifty tradename and a first quarter impairment of $30 million related to an equity method investment. In 2016, primarily represents the third quarter impairment of certain tangible assets used in the U.S. RAC segment in conjunction with a restructuring program.
(8)Represents external costs associated with our finance and information technology transformation programs, both of which are multi-year initiatives that commenced in 2016 to upgrade and modernize our systems and processes.
(9)Represents miscellaneous, non-recurring and other non-cash items. In 2017, includes a $6 million gain on the sale of our Brazil Operations and a return of capital from an equity method investment resulting in a $4 million gain, offset by net expenses of $13 million associated with the impact of the hurricanes in the third quarter. Also includes second quarter charges of $5 million relating to PLPD as a result of a terrorist event. For 2016, includes a $9 million settlement gain recorded in the first quarter from an eminent domain case related to one of our airport locations.

Americas RACInternational RAC
Three Months Ended March 31,
($ in millions, except as noted)2023202220232022
Depreciation of revenue earning vehicles and lease charges, net$349 $(93)$32 $34 
Foreign currency adjustment(1)
1 — (1)(2)
Adjusted depreciation of revenue earning vehicles and lease charges$350 $(93)$31 $32 
Average Vehicles (in whole units)
412,983 397,620 91,545 83,591 
Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)$847 $(235)$344 $386 
Number of months in period (in whole units)
3 3 3 3 
Depreciation Per Unit Per Month (in whole dollars)$282 $(78)$115 $129 
(b)Transaction days represent the total number of 24-hour periods, with any partial period counted as one transaction day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period. Thus, it is possible for a vehicle to attain more than one transaction day in a 24-hour period. 

(1)Based on December 31, 2022 foreign currency exchange rates for all periods presented.
(c)Average vehicles is determined using a simple average of the number of vehicles at the beginning and end of a given period. Among other things, average vehicles is used to calculate our vehicle utilization which represents the portion of our vehicles that are being utilized to generate revenue. Vehicle utilization is calculated by dividing total transaction days by available car days. The calculation of vehicle utilization is shown in the table below.
43

 U.S. Rental Car International Rental Car
 Three Months Ended September 30,
 2017 2016 2017 2016
Transaction days (in thousands)36,879
 38,280
 15,947
 15,133
Average vehicles495,000
 505,800
 212,600
 204,100
Number of days in period92
 92
 92
 92
Available car days (in thousands)45,540
 46,534
 19,559
 18,777
Vehicle utilization81% 82% 82% 81%

 U.S. Rental Car International Rental Car
 Nine Months Ended September 30,
 2017 2016 2017 2016
Transaction days (in thousands)105,424
 108,212
 39,366
 37,747
Average vehicles489,300
 488,700
 183,100
 176,900
Number of days in period273
 274
 273
 274
Available car days (in thousands)133,579
 133,904
 49,986
 48,471
Vehicle utilization79% 81% 79% 78%


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


(d)Total RPD is a key metric that is calculated as total revenue less ancillary retail vehicle sales revenue, divided by the total number of transaction days, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. This statistic is important to our management and investors as it represents a measurement of the changes in underlying pricing in the vehicle rental business and encompasses the elements in vehicle rental pricing that management has the ability to control. The following tables reconcile our rental car segment revenues to our total rental revenue and total revenue per transaction day (based on December 31, 2016 foreign currency exchange rates) for the periods shown:
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 U.S. Rental Car International Rental Car
 Three Months Ended September 30,
($ in millions, except as noted)2017 2016 2017 2016
Revenues$1,685
 $1,707
 $728
 $683
Ancillary retail vehicle sales revenue(24) (19) —
 —
Foreign currency adjustment—
 —
 (69) (42)
Total rental revenue$1,661
 $1,688
 $659
 $641
Transaction days (in thousands)36,879
 38,280
 15,947
 15,133
Total RPD (in whole dollars)$45.04
 $44.10
 $41.32
 $42.36


 U.S. Rental Car International Rental Car
 Nine Months Ended September 30,
($ in millions, except as noted)2017 2016 2017 2016
Revenues$4,557
 $4,697
 $1,683
 $1,656
Ancillary retail vehicle sales revenue(70) (56) —
 —
Foreign currency adjustment—
 —
 (104) (102)
Total rental revenue$4,487
 $4,641
 $1,579
 $1,554
Transaction days (in thousands)105,424
 108,212
 39,366
 37,747
Total RPD (in whole dollars)$42.56
 $42.89
 $40.11
 $41.17

(e)Total RPU is a key metric that is calculated as total revenues less ancillary retail vehicle sales revenue divided by the average vehicles in each period and then divided by the number of months in the period reported, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is appropriate so as not to affect the comparability of underlying trends. This metric is important to our management as it represents a measurement of revenue productivity relative to fleet capacity. The following tables reconcile our rental car segments' total rental revenues to our total revenue per unit per month (based on December 31, 2016 foreign currency exchange rates) for the periods shown:
 U.S. Rental CarInternational Rental Car
 Three Months Ended September 30,
($ in millions, except as noted)2017 2016 2017 2016
Total rental revenue$1,661
 $1,688
 $659
 $641
Average vehicles495,000
 505,800
 212,600
 204,100
Total revenue per unit (in whole dollars)$3,356
 $3,337
 $3,100
 $3,141
Number of months in period3
 3
 3
 3
Total RPU (in whole dollars)$1,119
 $1,112
 $1,033
 $1,047


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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

 U.S. Rental CarInternational Rental Car
 Nine Months Ended September 30,
($ in millions, except as noted)2017 2016 2017 2016
Total rental revenue$4,487
 $4,641
 $1,579
 $1,554
Average vehicles489,300
 488,700
 183,100
 176,900
Total revenue per unit (in whole dollars)$9,170
 $9,497
 $8,624
 $8,785
Number of months in period9
 9
 9
 9
Total RPU (in whole dollars)$1,019
 $1,055
 $958
 $976

(f)Net depreciation per unit per month is a key metric that is calculated by dividing depreciation of revenue earning vehicles and lease charges, net by the average vehicles in each period and then dividing by the number of months in the period reported, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates. Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends. Net depreciation per unit per month represents the amount of average depreciation expense and lease charges, net per vehicle per month. The following tables reconcile our rental car segment depreciation of revenue earning vehicles and lease charges, net to our net depreciation per unit per month (based on December 31, 2016 foreign currency exchange rates) for the periods shown:
 U.S. Rental Car International Rental Car
 Three Months Ended September 30,
($ in millions, except as noted)2017 2016 2017 2016
Depreciation of revenue earning vehicles and lease charges, net$455
 $462
 $126
 $116
Foreign currency adjustment—
 —
 (13) (7)
Adjusted depreciation of revenue earning vehicles and lease charges, net$455
 $462
 $113
 $109
Average vehicles495,000
 505,800
 212,600
 204,100
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)$919
 $913
 $532
 $534
Number of months in period3 3 3 3
Net depreciation per unit per month (in whole dollars)$306
 $304
 $177
 $178

 U.S. Rental Car International Rental Car
 Nine Months Ended September 30,
($ in millions, except as noted)2017 2016 2017 2016
Depreciation of revenue earning vehicles and lease charges, net$1,478
 $1,298
 $311
 $300
Foreign currency adjustment—
 —
 (19) (20)
Adjusted depreciation of revenue earning vehicles and lease charges, net$1,478
 $1,298
 $292
 $280
Average vehicles489,300
 488,700
 183,100
 176,900
Adjusted depreciation of revenue earning vehicles and lease charges, net divided by average vehicles (in whole dollars)$3,021
 $2,656
 $1,595
 $1,583
Number of months in period9 9 9 9
Net depreciation per unit per month (in whole dollars)$336
 $295
 $177
 $176

LIQUIDITY AND CAPITAL RESOURCES


Our U.S. and international operations are funded by cash provided by operating activities and by extensive financing arrangements maintained by us in the U.S. and internationally.


Cash and Cash Equivalents

As of September 30, 2017,March 31, 2023, we had $748$728 million of cash and cash equivalents and $1.0 billion$514 million of restricted cash. Of these amounts, ascash and cash equivalents. As of September 30, 2017, $106March 31, 2023, $335 million of cash and cash equivalents and $34$75 million of restricted cash wasand cash equivalents were held by our subsidiaries outside of the U.S., Canada We do not assert permanent reinvestment with respect to our non-U.S. earnings, and Puerto Rico. Ifif not in the form of loan repayments or subject to favorable tax treaties, repatriation of some of these funds under current regulatory and tax law for use in domestic operations wouldcould expose

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

us to additional taxes. We consider cash held by our subsidiaries outside of the U.S., Canada and Puerto Rico to be permanently reinvested.taxes.


We believe that cash and cash equivalents generated by our U.S. operations and cash received on the disposal of vehicles, together with amounts available under various liquidity facilities and refinancing options available to us in the U.S. capital markets, will be sufficient to fund our operating requirementsactivities and obligations for the next twelve months.


Cash Flows - Hertz


As of September 30, 2017,March 31, 2023 and December 31, 2022, Hertz had cash and cash equivalents of $748$728 million as compared to $816and $943 million, asrespectively, and restricted cash and cash equivalents of December 31, 2016.$514 million and $475 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for the periods shown:
 Three Months Ended
March 31,
(In millions)20232022$ Change
Cash provided by (used in):
Operating activities$561 $621 $(60)
Investing activities(1,488)(1,541)53 
Financing activities740 392 348 
Effect of exchange rate changes11 (1)12 
Net change in cash and cash equivalents and restricted cash and cash equivalents$(176)$(529)$353 
 Nine Months Ended
September 30,		  
(In millions)2017 2016 $ Change
Cash provided by (used in):     
Operating activities$1,981
 $2,051
 $(70)
Investing activities(3,316) (2,139) (1,177)
Financing activities1,248
 1,034
 214
Effect of exchange rate changes19
 10
 9
Net change in cash and cash equivalents$(68) $956
 $(1,024)


During the ninethree months of 2017, there wasended March 31, 2023, cash flows from operating activities decreased $60 million period over period due primarily due to a reduction of cash inflows of $112$241 million from net income excluding non-cash items, partiallychange in working capital accounts, offset by a $42$181 million reductionchange in cash outflowsnet income, as adjusted for non-cash and non-operating items. Cash flows from working capital accounts period over period. The change from working capital accounts wasdecreased due primarily to non-vehicle payments due to timing, a $115 million increasedecrease in cash related to non-vehicle accounts payableaccrued liabilities due in part to an increaseincentive payments in payables related to our IT transformation programs2023 and an increase in payables related to certain insurance programs due to timing. The above was partially offset by a $62 million decrease in cash due in part to lower restructuring liabilities, lower PLPD liabilities due to a reduction in expenses during the 2017 periodpost-emergence bankruptcy and an increaseother related payments in receivables related to certain insurance programs due to timing of collections.2023.


Our primary investing activities relate to the acquisition and disposalsdisposal of revenue earning vehicles. CashDuring the three months ended March 31, 2023, there was a $53 million decrease in the cash used in investing activities period over period due primarily to $168 million of net proceeds received in 2023 from the sale of revenue earning vehicles was down $1.1 billion due to fewer program vehicles returned to the manufacturer year over year and wascertain non-vehicle capital assets as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report, partially offset by a $27an $104 million decrease in cash outflows for the purchase of revenue earning vehicles asvehicle expenditures, net primarily resulting from lower per unit gains recognized on vehicle dispositions and fewer vehicle acquisitions in the Company focused on managing its fleet size. Also, cash outflows for the purchase of capital assets increased $25 million due2023 period primarily to expenditures for information technology andin our Americas RAC segment.

Net financing cash inflows fromwere $740 million in the sale of property and other equipment was down $35three months ended March 31, 2023 compared to $392 million in the 2022 period. The $348 million increase in cash inflows due in part to the sale of our previous corporate headquarters buildinga $649 million reduction in the second quarter of 2016. Cash from equity method investments was $9 million from the sale of CAR Inc. common stock during the nine months of 2017 compared to $233 million received in the prior year period, offset by a $45 million cash outflow in the prior year period for the purchase of an equity method investment. Additionally, we received net proceeds of $94 million from the sale of our Brazil operations in August 2017.

During the nine months of 2017, there was a $3.0 billion increase in net borrowings, partially offset by the $2.1 billion transfer from discontinued operations in the prior year period resulting from the Spin-Off. Under the terms of the credit agreement governing the Senior Facilities, in effect as of September 30, 2017, the use of proceeds from the issuance of the Senior Second Priority Secured Notes in June 2017 were limited to refinancing existing indebtedness and funding related expenses. As such, the remaining proceeds as of September 30, 2017 of approximately $833 million were classified as restricted cash and comprised the net change in restricted cash and cash equivalents, non-vehicle during the nine months ended September 30, 2017.


dividends paid
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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

to Hertz Holdings used primarily for share repurchases, partially offset by a decrease of $317 million in net proceeds from vehicle debt resulting from less issuances in the 2023 period versus 2022.

Cash Flows - Hertz Global


As of September 30, 2017,March 31, 2023 and December 31, 2022, Hertz Global had cash and cash equivalents of $748$728 million as compared to $816and $943 million, asrespectively, and restricted cash and cash equivalents of December 31, 2016.$514 million and $475 million, respectively. The following table summarizes the net change in cash and cash equivalents and restricted cash and cash equivalents for the periods shown:
 Three Months Ended
March 31,
(In millions)20232022$ Change
Cash provided by (used in):
Operating activities$562 $621 $(59)
Investing activities(1,488)(1,541)53 
Financing activities739 392 347 
Effect of exchange rate changes11 (1)12 
Net change in cash and cash equivalents and restricted cash and cash equivalents$(176)$(529)$353 
 Nine Months Ended
September 30,		  
(In millions)2017 2016 $ Change
Cash provided by (used in):     
Operating activities$1,977
 $2,051
 $(74)
Investing activities(3,316) (2,139) (1,177)
Financing activities1,252
 1,034
 218
Effect of exchange rate changes19
 10
 9
Net change in cash and cash equivalents$(68) $956
 $(1,024)


Fluctuations in operating, investing and financing cash flows from period to period arewere due to the same factors as those disclosed for Hertz above, with the exception of any cash inflows or outflows related to the master loan agreement betweenrepurchase of our common stock and the exercise of Public Warrants as disclosed in Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz andGlobal," in Part I, Item 1 of this Quarterly Report.

Share Repurchase Programs for Common Stock

In November 2021, Hertz Global's Board of Directors approved the 2021 Share Repurchase Program that authorized the repurchase of up to $2.0 billion worth of shares of Hertz Global's outstanding common stock. During the second quarter of 2022, the 2021 Share Repurchase Program was completed. A total of 97,783,047 shares of Hertz Global and cash outflows bycommon stock were repurchased since the inception of the 2021 Share Repurchase Program for an aggregate purchase price of $2.0 billion.

In June 2022, Hertz Global's Board of Directors approved the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. During the three months ended March 31, 2023, a total of 5,735,648 shares of Hertz Global's common stock were repurchased under this program at an average share price of $17.44 for an aggregate purchase price of $100 million. As of March 31, 2023, a total of 53,038,657 shares of Hertz Global's common stock have been repurchased since the inception of the 2022 Share Repurchase Program for an aggregate purchase price of $935 million.

These amounts are included in treasury stock in the accompanying Hertz Global unaudited condensed consolidated balance sheet as of March 31, 2023 and December 31, 2022 in Part I, Item I of this Quarterly Report.

Between April 1, 2023 and April 20, 2023, a total of 2,691,587 shares of Hertz Global's common stock were repurchased at an average share price of $15.60 for an aggregate purchase price of $42 million.

Hertz Global funded the share repurchases with available cash and dividend distributions from Hertz.

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Debt Financing

Non-vehicle Debt

In the first quarter of 2023, Hertz increased the aggregate committed amount of the First Lien RCF from $1.9 billion to $2.0 billion.

Vehicle Debt

In March 2023, the following HVF III Series 2023 Fixed Rate Rental Car Asset Backed Notes were issued:
•HVF III Series 2023-1 Notes were issued in an aggregate principal amount of $500 million. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Class D Notes in an aggregate principal amount of $40 million, and accordingly, the related principal amount is eliminated in consolidation.
•HVF III Series 2023-2 Notes were issued in an aggregate principal amount of $300 million.

There is subordination within each of the preceding series based on class. Proceeds from the issuance of the HVF III Series 2023-1 Notes and HVF III Series 2023-2 Notes were used to repay amounts outstanding on the Series 2021-A Notes and for the purchase or refinancing of treasury shares. Thereelectric vehicles.

As of March 31, 2023, transactions totaling $114 million were no purchasesoutstanding under the Repurchase Facilities.

In March 2023, the New Zealand RCF was amended to extend its seasonal commitment period and provide for aggregate maximum borrowings of treasury shares by Hertz Global duringNZD$80 million with step downs in committed capacity through May 2023. Following the nine monthsexpiration of 2017. Cash used in financing activities by Hertz Global for the purchase of treasury shares was $100 million during the nine months of 2016.seasonal commitment period, aggregate maximum borrowings will revert to NZD$60 million.


Financing

Our primary liquidity needs include servicing of vehicle and non-vehicle debt, the payment of operating expenses and capital projects and purchases of revenue earning vehicles to be used in our operations. Our primary sources of funding are operating cash flows, cash received on the disposal of revenue earning vehicles, borrowings under our revolving credit facilities and access to the credit markets. Substantially all of our revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of ourthe lenders under ourthe various credit facilities, other secured financings and asset-backed securities programs. None of the value of such assets are(including the assets owned by Hertz Vehicle Financing III LLC and various international subsidiaries that facilitate our international securitizations) will be available to satisfy the claims of our general creditors.unsecured creditors unless the secured creditors are paid in full.

We are highly leveraged, and a substantial portion of our liquidity needs arise from debt service on our indebtedness and from the funding of our costs of operations, capital expenditures and acquisitions. The Company’s practice is to maintain sufficient total liquidity through cash from operations, credit facilities and other financing arrangements, to mitigate any adverse effect on its operations resulting from adverse financial market conditions.


Refer to Note 5, "Debt," in Part I, Item 1 Note 7, "Debt," to the Notes to our condensed consolidated financial statements included inof this Quarterly Report ("Note 7") for information on our outstanding debt obligations and our borrowing capacity and availability under our revolving credit facilities as of September 30, 2017.March 31, 2023. Cash paid for interest during the nine months ended September 30, 2017 was $212 million for interest on vehicle debt during the three months ended March 31, 2023 and $1642022 was $96 million and $39 million, respectively. The $57 million increase in cash paid for vehicle debt interest is due primarily to higher debt levels resulting from the issuance of the HVF III Series 2023 Notes and higher interest rates. Cash paid for interest on non-vehicle debt.debt during the three months ended March 31, 2023 and 2022 was $36 million and $17 million, respectively. The $19 million increase in cash paid for non-vehicle debt interest is due primarily to higher benchmark rates.


Details of ourOur available corporate liquidity, werewhich excludes unused commitments under our vehicle debt, was as follows:
(In millions)March 31, 2023December 31, 2022
Cash and cash equivalents$728 $943 
Availability under the First Lien RCF1,512 1,514 
Corporate liquidity$2,240 $2,457 
 September 30, 2017 December 31, 2016
Cash and cash equivalents$748
 $816
Availability under the Senior RCF644
 1,130
Corporate liquidity$1,392
 $1,946

The decline in corporate liquidity was primarily due to funding our operations and the acquisition of non-vehicle capital assets.



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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
In October 2017, Hertz repaid the $120 million outstanding under the Senior RCF. In November 2017, Hertz amended its Senior Facilities, terminated $383 million of commitments under the Senior RCF, entered into a standalone $400 million letter of credit facility and extended the maturities of several vehicle debt facilities and provided an irrevocable notice to the holders of its $450 million in aggregate principal amount of outstanding 6.75% Senior Notes due 2019 of its election to redeem in full all of the outstanding 2019 Notes and deposited funds with the trustee under the indenture governing the 2019 Notes to effect such redemption on the redemption date. These transactions are corporate liquidity neutral as of the date of their execution and the principal benefits include:

Extending our vehicle debt maturities of approximately $5.3 billion (using foreign currency exchange rates as of October 31, 2017) in aggregate principal amount of the Company's global bank-funded vehicle financing facilities through March 2020 and extending our non-vehicle debt maturity runway;

Improving the cushion under our consolidated first-lien leverage ratio by reducing outstanding first-lien debt by terminating $383 million of available commitments under the Senior RCF. After giving effect to the transactions described above, Hertz’s consolidated first-lien leverage ratio as of September 30, 2017 would have declined from 2.58x to 1.55x;

Creating immediate debt incurrence capacity of $542 million under the $2.4 billion credit facilities basket contained in our Senior Facilities as long as such debt incurred is, among other things, junior to the Company’s first-lien debt. If we elect to utilize such capacity, the proceeds from such newly incurred debt would not be required to be used to refinance debt and may be used for working capital, capital expenditures and other purposes of the Company and its subsidiaries; and

To the extent the Company elects to utilize the $400 million LetterLetters of Credit Facility for

As of March 31, 2023, there were outstanding standby letters of credit totaling $749 million comprised primarily of $245 million issued under the Term C Loan and $488 million issued under the First Lien RCF. As of March 31, 2023, no capacity remains to issue letters of credit under the Term C Loan. Such letters of credit have been issued primarily to provide credit enhancement for our asset-backed securitization facilities and to support our insurance programs, as well as to support our vehicle rental concessions and leaseholds. As of March 31, 2023, none of the issued letters of credit were drawn.

Covenants

The First Lien Credit Agreement requires us to comply with the following financial covenant: a First Lien Ratio of less than or relatingequal to liabilities or obligations incurred,3.00 to 1.00 in the ordinary course of business, the Company would further increase such debt incurrence capacity,first and the proceeds of any debt that the Company elects to incur utilizing such additional capacity would also be available for working capital, capital expenditures and other purposeslast quarters of the Companycalendar year and its subsidiaries.

Refer3.50 to Note 19, "Subsequent Events," to the Notes to our condensed consolidated financial statements included in this Report for further information on the above transactions. Amounts for principal and interest payments subsequent to the above transactions are presented1.00 in the Contractual Obligations section of this MD&A below.

Subsequent to the November 2017 transactions described above, approximately $1.8 billion of vehicle debtsecond and $23 million of non-vehicle debt will mature during the twelve months following the issuance of this Report (the "next twelve months") and the Company will need to refinance a portionthird quarters of the debt. We have reviewed the maturing debt obligations and determined that it is probable that the Company will be able, and has the intent, to repay or refinance these facilities at such times as the Company determines appropriate prior to their maturities. We believe that cash generated from operations, cash received on the disposal of vehicles, together with amounts available under various liquidity facilities and refinancing options available to us, will be adequate to permit us to meet our debt maturities over the next twelve months.

Covenants

calendar year. The indentures for the Senior Notes and Senior Second Priority Secured Notes contain covenants that, among other things, limit or restrict the ability of the Hertz credit group to incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain restricted payments (including paying dividends, redeeming stock or making other distributions to parent entities of Hertz and other persons outside of the Hertz credit group), make investments, create liens, transfer or sell assets, merge or consolidate, and enter into certain transactions with Hertz's affiliates that are not members of the Hertz credit group.

Certain of the Company's other debt instruments and credit facilities (including the Senior Facilities) contain a number of covenants that, among other things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain restricted

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

payments (including paying dividends, share repurchases or making other distributions), create liens, make investments, make acquisitions, engage in mergers, fundamentally change the nature of their business, make capital expenditures, or engage in certain transactions with certain affiliates.

The Senior RCF contains a financial maintenance covenant that is only applicable to the Senior RCF. Such covenant provides that Hertz’s consolidated first lien net leverage ratio, as definedwas effective beginning in the credit agreement governing the Senior RCF (the "Senior RCF Credit Agreement"), asthird quarter of the last day2021. As of any fiscal quarter (the "Covenant Leverage Ratio"), may not exceed the ratios indicated below:
Fiscal Quarter(s) Ending Maximum Ratio
September 30, 2017 3.25to1.00
December 31, 2017 and each March 31, June 30, September 30 and December 31 ending thereafter 3.00to1.00

At September 30, 2017, Hertz wasMarch 31, 2023, we were in compliance with the Covenant Leverage Ratio with a ratio of 2.58First Lien Ratio.

In addition to 1.00, as calculated in accordance with the Senior RCFfinancial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and when adjustedannual financial statements and compliance certificates, and covenants related to includeconduct of business, maintenance of property and insurance, compliance with environmental laws and the November 2017 transactions discussed above, would have been 1.55 to 1:00. Consolidated EBITDA, as defined ingranting of security interests for the Senior RCFbenefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement is a componentalso contains customary negative covenants, including, among other things, the incurrence of the calculationliens, indebtedness, asset dispositions and restricted payments. As of the Covenant Leverage Ratio and is a non-GAAP financial measure that is not a measure of operating results, but instead is a measure used to determine compliance with the Covenant Leverage Ratio under the Senior RCF Credit Agreement. Consolidated EBITDA is generally defined in the Senior RCF Credit Agreement as consolidated net income plus the sum of income taxes, non-vehicle interest expense, non-vehicle depreciation and amortization expense, and non-cash charges or losses, as further adjusted for certain other items permitted in calculating covenant compliance under the Senior RCF, including add-backs for non-recurring, unusual or extraordinary charges, business optimization expenses or other restructuring charges or reserves.

Based on available liquidity from our expected operating results, the Senior RCF and other financing arrangements, Hertz expects to continue to beMarch 31, 2023, we were in compliance with all covenants in the Covenant Leverage Ratio for at least the next twelve months.First Lien Credit Agreement.


Capital Expenditures


Revenue Earning Vehicles Expenditures and Disposals


The table below sets forth our revenue earning vehicles expenditures and related disposal proceeds for the periods shown:
Cash inflow (cash outflow)Revenue Earning Vehicles
(In millions)Capital
Expenditures		Disposal
Proceeds		Net Capital
Expenditures
2023
First Quarter$(2,824)$1,206 $(1,618)
2022
First Quarter$(2,985)$1,471 $(1,514)
Cash inflow (cash outflow)Revenue Earning Vehicles
(In millions)
Capital
Expenditures
 
Disposal
Proceeds
 
Net Capital
Expenditures
2017     
First Quarter$(2,862) $1,960
 $(902)
Second Quarter(3,847) 1,875
 (1,972)
Third Quarter(1,974) 1,450
 (524)
Total$(8,683) $5,285
 $(3,398)
2016     
First Quarter$(3,378) $2,755
 $(623)
Second Quarter(3,509) 2,032
 (1,477)
Third Quarter(1,823) 1,633
 (190)
Total$(8,710) $6,420
 $(2,290)


The table below sets forth expenditures for revenue earning vehicles, net of disposal proceeds:

Cash inflow (cash outflow)Three Months Ended
March 31,
($ in millions)20232022$ Change% Change
Americas RAC$(1,585)$(1,440)$(145)10 
International RAC(33)(74)41 (55)
Total$(1,618)$(1,514)$(104)7 

Revenue earning vehicle expenditures decreased approximately $161 million, or 5%, in the three months ended March 31, 2023 compared to the 2022 period, primarily in our Americas RAC segment, resulting from fewer vehicle acquisitions. Revenue earning vehicle disposal proceeds decreased $265 million for the three months ended March 31, 2023 compared to the 2022 period resulting primarily from lower per unit gains recognized on vehicle dispositions in our Americas RAC segment.
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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The table below sets forth net capital expenditures for revenue earning vehicles by segment for the periods shown:

Cash inflow (cash outflow)Nine Months Ended
September 30,		    
($ in millions)2017 2016 $ Change % Change
U.S. Rental Car$(1,748) $(899) $(849) 94 %
International Rental Car(1,294) (1,014) (280) 28
All Other Operations(356) (377) 21
 (6)
Total$(3,398) $(2,290) $(1,108) 48


Non-Vehicle Capital Asset Expenditures and Disposals
As further described in Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements," to the Notes to our condensed consolidated financial statements included in this Report, we revised our condensed consolidated statements of cash flows to decrease revenue earning vehicles expenditures and decrease proceeds from disposals of revenue earning vehicles by $53 million in the International segment and $487 million in the All Other Operations segment for the nine months ended September 30, 2016. These revisions had no impact on net capital expenditures for revenue earning vehicles for the segments.

Capital Assets, Non-Vehicle


The table below sets forth our non-vehicle capital asset expenditures non-vehicle, and related disposal proceeds from non-vehicle capital assets disposed of or to be disposed of for the periods shown:
Cash inflow (cash outflow)Non-Vehicle Capital Assets
(In millions)Capital
Expenditures		Disposal
Proceeds		Net Capital
Expenditures
2023
First Quarter$(45)$175 $130 
2022
First Quarter$(30)$1 $(29)
Cash inflow (cash outflow)Capital Assets, Non-Vehicle
(In millions)
Capital
Expenditures
 
Disposal
Proceeds
 
Net Capital
Expenditures
2017     
First Quarter$(54) $7
 $(47)
Second Quarter(49) 4
 (45)
Third Quarter(21) 7
 (14)
Total$(124) $18
 $(106)
2016     
First Quarter$(46) $19
 $(27)
Second Quarter(26) 20
 (6)
Third Quarter(27) 14
 (13)
Total$(99) $53
 $(46)


The table below sets forth non-vehicle capital asset expenditures, non-fleet, net of disposal proceeds, by segment for the periods shown:proceeds:
Cash inflow (cash outflow)Nine Months Ended
September 30,		    Cash inflow (cash outflow)Three Months Ended
March 31,		  
($ in millions)2017 2016 $ Change % Change($ in millions)20232022$ Change% Change
U.S. Rental Car$(56) $(24) $(32) 133 %
International Rental Car(15) (10) (5) 50
All Other Operations(4) (7) 3
 (43)
Americas RACAmericas RAC$146 $(28)$174 NM
International RACInternational RAC(3)(2)(1)50 
Corporate(31) (5) (26) 520
Corporate(13)1 (14)NM
Total$(106) $(46) $(60) 130
Total$130 $(29)$159 NM
NM - Not meaningful



In the three months ended March 31, 2023, proceeds for non-vehicle capital assets increased by $174 million compared to 2022, primarily in our Americas RAC segment, resulting primarily from the sale of certain non-vehicle capital assets as disclosed in Note 3, "Divestitures," in Part I, Item 1 of this Quarterly Report. In the three months ended March 31, 2023, expenditures for non-vehicle capital assets increased by $15 million compared to the 2022 period, primarily in Corporate, resulting primarily from increased IT related and electric vehicle charging infrastructure spend.
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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

CONTRACTUAL OBLIGATIONS


At September 30, 2017, after giving effect to the transactions occurring in October 2017 and November 2017, as further described in Note 19, "Subsequent Events", the nominal amountsAs of maturities of debt and related interest payable for the years ending DecemberMarch 31, are as follows:

   Payments Due by Period
(in millions)Total 2017 2018 2019 to 2020 2021 to 2022 After 2022
Vehicle:           
Debt obligation$10,962
 $244
 $1,756
 $7,197
 $1,765
 $—
Interest on debt(a)
847
 84
 321
 392
 50
 —
Non-Vehicle:           
Debt obligation5,048
 4
 23
 1,178
 2,398
 1,445
Interest on debt(a)
1,432
 79
 319
 580
 352
 102
Total$18,289
 $411
 $2,419
 $9,347
 $4,565
 $1,547

(a)Amounts represent the estimated commitment fees and interest payments based on the principal amounts, minimum non-cancelable maturity dates and applicable interest rates on the debt at September 30, 2017.
There2023, there have been no material changes outside of the ordinary course of business to our other known contractual obligations as set forth in the table included in Part II, Item 7 "Management's Discussionof our 2022 Form 10-K. Changes to our aggregate indebtedness, including related interest and Analysisterms of Financial Condition and Resultsnew issuances, are disclosed in Note 5, "Debt," in Part I, Item 1 of Operations" included in our 2016 Form 10‑K.this Quarterly Report.


OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

Indemnification Obligations


There have been no significant changes to our indemnification obligations as compared to those disclosed in Note 17,15, "Contingencies and Off-Balance Sheet Commitments" of the Notes to our consolidated financial statements includedCommitments," in our 2016 Form 10‑K under the captionPart II, Item 8 "Financial Statements and Supplementary Data."of our 2022 Form 10-K.


The CompanyWe regularly evaluatesevaluate the probability of having to incur costs associated with these indemnification obligations and will accruehave accrued for expected losses when theythat are probable and estimable.


CRITICALRECENTLY ISSUED ACCOUNTING POLICIES AND ESTIMATESPRONOUNCEMENTS


Our discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, whichThere have been preparedno significant changes due to recently issued accounting pronouncements as compared to those disclosed in accordance with accounting principles generally accepted in the United States of America. The preparation of the condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts in our condensed consolidated financial statements and accompanying notes. If different assumptions or conditions were to prevail, the results could be materially different from our reported results.

We discuss our critical accounting policies and estimatesNote 2, "Significant Accounting Policies," in Part II, Item 7. "Management's Discussion and Analysis8 of Financial Condition and Results of Operations" in our 20162022 Form 10-K. On January 1, 2017, we prospectively adopted guidance that eliminates the second step of the two-step goodwill impairment test, which requires the determination of the implied fair value of goodwill to measure an impairment. Rather, a goodwill impairment charge will be calculated as the amount by which a reporting unit's carrying amount exceeds its fair value. Under the guidance, we still have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.



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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
On January 1, 2017, we also adopted guidance that simplifies several areas of employee share-based payment accounting, including income taxes, forfeitures, minimum statutory withholding requirements, and classifications within the statement of cash flows. Most significantly, the new guidance eliminates the need to track tax “windfalls” in a separate pool within additional paid-in capital; instead, excess tax benefits and tax deficiencies will be recorded within income tax expense. For details regarding the method of adoption, refer to Part I, Item 1, Note 2 "Basis of Presentation and Recently Issued Accounting Pronouncements," to the Notes to our condensed consolidated financial statements included in this Report.

Effective January 1, 2017, the Company’s board of directors adopted the 2017 EICP which provides for PSUs where the service inception date precedes the grant date. The fair value is based on the anticipated number of shares awarded and the quoted price of the Company’s shares at each reporting date up to the grant date. Compensation charges accumulate as a liability until the grant date, at which time the liability will be reclassified to equity. Additionally, under the 2016 Omnibus Plan, we issued PSAs with graded vesting where the compensation expense is recognized ratably over the requisite service period for each separately vesting tranche of the award. For details regarding the 2017 EICP and PSAs described above, refer to Part I, Item 1, Note 9 "Stock-Based Compensation," to the Notes to our condensed consolidated financial statements included in this Report.

There have been no other material changes to our critical accounting policies and estimates as disclosed in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2016 Form 10-K.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, see Note 2, "Basis of Presentation and Recently Issued Accounting Pronouncements," to the Notes to our condensed consolidated financial statements included in this Report on Form 10-Q under the caption Item 1, "Condensed Consolidated Financial Statements (Unaudited)" ("Note 2").

As disclosed in Note 2, the Company will adopt Topic 606 on January 1, 2018. The Company believes that the most significant impact relates to its accounting for reward points earned by customers under its loyalty programs. Upon adoption of Topic 606, each transaction which generates loyalty reward points will result in the deferral of revenue equivalent to the retail value of the redemption of the loyalty reward points. The associated revenue will be recognized at the time when the customer redeems the loyalty reward points. Under the current guidance, there is no revenue deferral and the Company records an expense associated with the incremental cost of providing the future rental at the time when the loyalty reward points are earned. The Company is in the process of quantifying the impact of deferring revenue associated with reward points upon adoption of Topic 606.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


Certain statements contained or incorporated by reference in this Quarterly Report and in reports we subsequently file with the United States Securities and Exchange Commission ("SEC") on Forms 10‑K and 10‑Q and file or furnish on Form 8‑K, and in related comments by our management, include "forward-looking statements." Forward-looking statements include information concerning our liquidity and our possible or assumed future results of operations, including descriptions of our business strategies. These statements often includeare identified by words such as "believe," "expect," "project," "potential," "anticipate," "intend," "plan," "estimate," "seek," "will," "may," "would," "should," "could," "forecasts""forecasts," "guidance" or similar expressions.expressions, and include information concerning our liquidity, our results of operations, our business strategies and other information about our business. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances.appropriate. We believe these judgments are reasonable, but you should understand that these statements are not guarantees of future 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 Forms 10‑K, 10‑Q and 8‑K.negative.


Important factors that could affect our actual results and cause them to differ materially from those expressed in forward-looking statements include, among others,other things, those that may be disclosed from time to time in subsequent reports filed

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

with or furnished to the SEC, those described under "Item 1A—Risk Factors"Item 1A, "Risk Factors," included in our 20162022 Form 10-K and this Quarterly Report and the following, which were derived in part from the risks set forth in "Item 1A—Risk Factors"Item 1A, "Risk Factors," of our 20162022 Form 10-K:10-K and this Quarterly Report:


any claims, investigations or proceedings arising•our ability to purchase adequate supplies of competitively priced vehicles at a reasonable cost in order to efficiently service rental demand, including as a result of disruptions in the restatement in 2015 of our previously issued financial results;global supply chain;
•our ability to remediate the material weaknesses in our internal controls over financial reporting;attract and retain effective frontline employees, senior management and other key employees;
•levels of travel demand, particularly with respect to airline passenger trafficbusiness and leisure travel in the United StatesU.S. and in global markets;
the effect of our separation of our vehicle and equipment rental businesses, any failure by Herc Holdings Inc. to comply with the agreements entered into in connection with the separation and our ability to obtain the expected benefits of the separation;
•significant changes in the competitive environment including as a result of industry consolidation, and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives;pricing;
increased vehicle costs due to declines in the value of our non-program vehicles;
•occurrences that disrupt rental activity during our peak periods;periods particularly in critical geographies;
our ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles we purchase;
•our ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in our rental operations accordingly;
•our ability to maintain sufficient liquidity and the availabilityimplement our business strategy or strategic transactions, including our ability to us of additional or continued sources of financing forimplement plans to support a large-scale electric vehicle fleet, execute our revenue earning vehiclesrideshare strategy and to refinance our existing indebtedness;play a central role in the modern mobility ecosystem;
•our ability to adequately respond to changes in technology impacting the mobility industry;
•the mix of vehicles in our fleet, including but not limited to program and non-program vehicles, which can lead to increased exposure to residual risk upon disposition;
•increases in vehicle holding periods, which may result in additional maintenance costs and lower customer demands;satisfaction;
•financial instability of the manufacturers of our vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs;
•increases in the level of recall activity by the manufacturers of our vehicles, which may increase our costs and can disrupt our rental activity;
•our access to third-party distribution channels and related prices, commission structures and transaction volumes;volumes associated with those channels;
an increase in our vehicle costs or disruption to our rental activity, particularly during our peak periods, due to safety recalls by the manufacturers of our vehicles;
a major disruption in our communication or centralized information networks;
financial instability of the manufacturers of our vehicles;
any impact on us from the actions of our franchisees, dealers and independent contractors;
•our ability to sustain operations during adverse economic cyclesoffer an excellent customer experience, retain and unfavorable external events (including war, terrorist acts, natural disastersincrease customer loyalty and epidemic disease);
shortages of fuel and increases or volatility in fuel costs;
our ability to successfully integrate acquisitions and complete dispositions;
our ability to maintain favorable brand recognition;
costs and risks associated with litigation and investigations;
risks related to our indebtedness, including our substantial amount of debt, our ability to incur substantially more debt, the fact that substantially all of our consolidated assets secure certain of our outstanding indebtedness and increases in interest rates or in our borrowing margins;
our ability to meet the financial and other covenants contained in our Senior Facilities, our outstanding unsecured Senior Notes, our outstanding Senior Second Priority Secured Notes and certain asset-backed and asset-based arrangements;

increase market share;
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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
changes in accounting principles, or their application or interpretation, and
•our ability to make accurate estimatesmaintain our network of leases and vehicle rental concessions at airports and other key locations in the assumptions underlyingU.S. and internationally;
•our ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy;
•our ability to effectively manage our union relations and labor agreement negotiations;
•our ability, and that of our key third-party partners, to prevent the estimates, which could have an effect on operating results;misuse or theft of information we possess, including as a result of cyber security breaches and other security threats, as well as to comply with privacy regulations across the globe;
•a major disruption in our communication or centralized information networks or a failure to maintain, upgrade and consolidate our information technology systems;
•risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruptionanti-corruption or antibriberyanti-bribery laws and our ability to repatriate cash from non-U.S. affiliates without adverse tax consequences;
•risks relating to tax laws, including those that affect our ability to prevent the misuseoffset future tax on fleet dispositions, as well as any adverse determinations or theft of information we possess, including as a result of cyber security breaches;rulings by tax authorities;
•our ability to successfully implementutilize our financenet operating loss carryforwards;
•our exposure to uninsured liabilities relating to personal injury, death and information technology transformation programs;property damage, or otherwise;
•changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, where such actions mayincluding those related to accounting principles, that affect our operations, the cost thereofour costs or applicable tax rates;
changes to our senior management team and •the dependencerecoverability of our goodwill and indefinite-lived intangible assets when performing impairment analysis;
•costs and risks associated with potential litigation and investigations, compliance with and changes in laws and regulations and potential exposures under environmental laws and regulations;
•our ability to comply with ESG regulations, meet increasing ESG expectations of stakeholders, and otherwise achieve ESG goals;
•the availability of additional or continued sources of financing at acceptable rates for our revenue earning vehicles and to refinance our existing indebtedness;
•volatility in our stock price and certain provisions of our charter documents which could negatively affect the market price of our common stock;
•our ability to effectively maintain effective internal controls over financial reporting; and
•our ability to implement an effective business operations on our senior management team;
continuity plan to protect the effect of tangible and intangible asset impairment charges;
our exposure to uninsured claimsbusiness in excess of historical levels;
fluctuations in interest rates and commodity prices;
our exposure to fluctuations in foreign currency exchange rates; and
other risks and uncertainties described from time to time in periodic and current reports that we file with the SEC.exigent circumstances.
You should not place undue reliance on forward-looking statements. All forward-looking statements attributable 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,of this Quarterly Report and, except as required by law, we undertake 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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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Hertz Global and HertzWe are exposed to a variety of market risks, including the effects of changes in interest rates (including credit spreads), foreign currency exchange rates and fluctuations in fuel prices. Hertz Global and HertzWe manage theirour exposure to these market risks through theirour regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Derivative financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. In addition, derivative financial instruments are entered into with a diversified group of major financial institutions in order to manage Hertz Global and Hertz'sour exposure to counterparty nonperformance on such instruments.


Hertz Global

In the second quarter of 2017, Hertz Global identified a new 5 percent shareholder of its common stock that resulted in a change in control as that term is defined in Section 382 of the Internal Revenue Code. Due to the net unrealized built-in gains from its like-kind exchange programs, Hertz Global does not anticipate that this will have an impact on its taxes or that it will lose any of its net operating losses. Other than as described above, thereThere have been no material changes to the information reported under Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk," included in Hertz Global's 2016of our 2022 Form 10‑K.10-K.


Hertz

There is no material change in the information reported under Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," included in Hertz's 2016 Form 10‑K.


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ITEM 4.   CONTROLS AND PROCEDURES (CONTINUED)


ITEM 4.     CONTROLS AND PROCEDURES


HERTZ GLOBAL


Evaluation of Disclosure Controls and Procedures


Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q.Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2017, due to the identification of material weaknesses in our internal control over financial reporting, as further described in Part II, Item 9A, “Controls and Procedures” included in our 2016 Form 10-K (“Item 9A”),March 31, 2023, our disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, with the participation of its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.effective.


Changes in Internal Control over Financial Reporting

As a part of our financial systems modernization initiative, in July 2017 we implemented a new chart of accounts in North America and in September 2017 we implemented a new claims management system for North America damage collections monitoring.


During the three months ended September 30, 2017,March 31, 2023, as part of our initiative to migrate technology to the cloud, we completed deployment of certain modules in our new cloud enterprise resource planning (“ERP”) system to support certain aspects of financial reporting, budgeting and forecasting, procure to pay processes and human resources management. As a result of the ERP system implementation, in the three months ended March 31, 2023, certain internal controls over financial reporting have taken,been automated, modified or implemented to address the changes in the control environment and continue to take,processes associated with the actions described below to remediateERP system.

There were no other changes in our existing material weaknesses, which haveinternal control over financial reporting that occurred during the three months ended March 31, 2023 that materially affected, or are reasonably likely to materially affect, the Company'sour internal control over financial reporting.

Control Activities

Accounting Estimates

To address the material weakness associated with controls over accounting estimates related to allowances for uncollectible amounts receivable for renter obligations for damaged vehicles, during the three months ended September 30, 2017, management completed the design and implementation of controls to remediate the non-fleet procurement and risk assessment material weakness related to fleet key reports and spreadsheets used in the determination of the allowance for uncollectible amounts receivable for renter obligations for damaged vehicles.

Risk Assessment

To address the material weakness of risk assessment, during the three months ended September 2017, management completed the design of several internal controls over financial reporting to appropriately address the risk at the two entities which were contributory factors to this material weakness.

Information Technology Systems

To address the material weakness associated with controls over IT, management performed the following during the three months ended September 30, 2017: (1) continued to enhance and implement controls to monitor developers' access to production, (2) performed additional training to owners of IT user and administrator access review, (3) updated existing technology tools to assist in the identification of conflicts in the general ledger and (4) designed and implemented controls to monitor segregation of duties in the general ledger.


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ITEM 4.   CONTROLS AND PROCEDURES (CONTINUED)


System-Generated Reports and Spreadsheets Related to Revenue Earning Vehicles Estimates

To address the material weakness associated with completeness and accuracy of system-generated reports and spreadsheets used in the accounting for estimates related to revenue earning vehicles, during the three months ended September 30, 2017, management completed the design and implementation of controls to validate the completeness and accuracy of the data used in these estimates.

To remediate our existing material weaknesses, we require additional time to complete the implementation of our remediation plans and demonstrate the effectiveness of our remediation efforts. The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

As we continue to evaluate and work to improve our internal controls over financial reporting, our senior management may determine to take additional measures to address control deficiencies or determine to modify the remediation efforts described in this section. Until the remediation efforts discussed in this section, including any additional remediation efforts that our senior management identifies as necessary, are completed, the material weaknesses described in Item 9A will continue to exist.


HERTZ


Evaluation of Disclosure Controls and Procedures


Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q.Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2017, due to the identification of material weaknesses in our internal control over financial reporting, as further described in Part II, Item 9A, “Controls and Procedures” included in our 2016 Form 10-K (“Item 9A”),March 31, 2023, our disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, with the participation of its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.effective.


Changes in Internal Control over Financial Reporting


As a part of our financial systems modernization initiative, in July 2017 we implemented a new chart of accounts in North America and in September 2017 we implemented a new claims management system for North America damage collections monitoring.

During the three months ended September 30, 2017,March 31, 2023, as part of our initiative to migrate technology to the cloud, we have taken,completed deployment of certain modules in our new ERP system to support certain aspects of financial reporting, budgeting and continueforecasting, procure to take,pay processes and human resources management.As a result of the actions described below to remediate our existing material weaknesses, which have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Control Activities

Accounting Estimates

To address the material weakness associated with controls over accounting estimates related to allowances for uncollectible amounts receivable for renter obligations for damaged vehicles, duringERP system implementation, in the three months ended September 30, 2017, management completedMarch 31, 2023, certain internal controls over financial reporting have been automated, modified or implemented to address the design and implementation of controls to remediate the non-fleet procurement and risk assessment material weakness related to fleet key reports and spreadsheets usedchanges in the determination ofcontrol environment and processes associated with the allowance for uncollectible amounts receivable for renter obligations for damaged vehicles.ERP system.



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ITEM 4.   CONTROLS AND PROCEDURES (CONTINUED)


Risk Assessment

To address the material weakness of risk assessment,There were no other changes in our internal control over financial reporting that occurred during the three months ended September 2017, management completed the design of severalMarch 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting to appropriately address the risk at the two entities which were contributory factors to this material weakness.reporting.

Information Technology Systems

To address the material weakness associated with controls over IT, management performed the following during the three months ended September 30, 2017: (1) continued to enhance and implement controls to monitor developers' access to production, (2) performed additional training to owners of IT user and administrator access review, (3) updated existing technology tools to assist in the identification of conflicts in the general ledger and (4) designed and implemented controls to monitor segregation of duties in the general ledger.

System-Generated Reports and Spreadsheets Related to Revenue Earning Vehicles Estimates

To address the material weakness associated with completeness and accuracy of system-generated reports and spreadsheets used in the accounting for estimates related to revenue earning vehicles, during the three months ended September 30, 2017, management completed the design and implementation of controls to validate the completeness and accuracy of the data used in these estimates.

To remediate our existing material weaknesses, we require additional time to complete the implementation of our remediation plans and demonstrate the effectiveness of our remediation efforts. The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

As we continue to evaluate and work to improve our internal controls over financial reporting, our senior management may determine to take additional measures to address control deficiencies or determine to modify the remediation efforts described in this section. Until the remediation efforts discussed in this section, including any additional remediation efforts that our senior management identifies as necessary, are completed, the material weaknesses described in Item 9A will continue to exist.



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PART II—II. OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS

For a description of certain pending legal proceedings see Part I, Item 1, Note 14,12, "Contingencies and Off-Balance Sheet Commitments," to the Notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.

ITEM 1A.    RISK FACTORS
There are no material amendments or additions to the information reported under
Part I, Item 1A “Risk Factors” contained inof our 20162022 Form 10-K.10-K for the year ended December 31, 2022 includes certain risk factors that could materially affect our business, financial condition or future results. There have been no material changes to those risk factors.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
The following table provides a breakdown of our equity security repurchases during the first quarter of 2023.
(a)
Total number of shares purchased		(b)
Average price paid per share		(c)
Total number of shares purchased as part of the publicly announced plan or program		(d)
Maximum number (or approximate dollar value) of shares that may yet be purchased under the publicly announced plan or program
(In thousands)
Common Stock
January 1 – January 31, 20231,259,972$16.64 1,259,972 $1,144,408 
February 1 – February 28, 20231,668,208$18.88 1,668,208 $1,112,915 
March 1 – March 31, 20232,807,468$16.94 2,807,468 $1,065,353 
Total5,735,648$17.44 5,735,648 $1,065,353 

In November 2021, Hertz Global's Board of Directors approved the 2021 Share Repurchase Program that authorized the repurchase of up to $2.0 billion worth of shares of Hertz Global's outstanding common stock. During the second quarter of 2022, the 2021 Share Repurchase Program was completed. A total of 97,783,047 shares of Hertz Global common stock were repurchased since the inception of the 2021 Share Repurchase Program for an aggregate purchase price of $2.0 billion.

In June 2022, Hertz Global's Board of Directors approved the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $2.0 billion worth of shares of Hertz Global's outstanding common stock. During the three months ended March 31, 2023, a total of 5,735,648 shares of Hertz Global's common stock were repurchased under this program at an average share price of $17.44 for an aggregate purchase price of $100 million. As of March 31, 2023, a total of 53,038,657 shares of Hertz Global's common stock have been repurchased since the inception of the 2022 Share Repurchase Program for an aggregate purchase price of $935 million.

Repurchases under the 2022 Share Repurchase Program may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, in private transactions or otherwise. The authorization does not have a stated expiration date. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, share price, market conditions and other factors. The repurchase program does not obligate Hertz Global to acquire any particular amount of common stock and may be discontinued at any time. There can be no assurance as to the timing or number of any share repurchases.

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THE HERTZ CORPORATION AND SUBSIDIARIES

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.   MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.    OTHER INFORMATION

None.

ITEM 6.   EXHIBITS
(a)Exhibits:

(a)Exhibits:
The attached list of exhibits in the "Exhibit Index" immediately followingpreceding the signature page to this Quarterly Report is filed as part of this Form 10-QQuarterly Report and is incorporated herein by reference in response to this item.

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THE HERTZ CORPORATION AND SUBSIDIARIES

EXHIBIT INDEX
Exhibit
Number		Description
10.1Hertz Holdings
Hertz
10.2Hertz Holdings
Hertz
31.1Hertz Holdings
31.2Hertz Holdings
31.3Hertz
31.4Hertz
32.1Hertz Holdings
32.2Hertz Holdings
32.3Hertz
32.4Hertz
101.INSHertz Holdings
Hertz		InIine XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHHertz Holdings
Hertz		Inline XBRL Taxonomy Extension Schema Document*
101.CALHertz Holdings
Hertz		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEFHertz Holdings
Hertz		Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LABHertz Holdings
Hertz		Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PREHertz Holdings
Hertz		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104Hertz Holdings
Hertz		Cover Page Interactive Data File (Embedded within the Inline XBRL document)
______________________________________________________________________________
* Filed herewith
** Furnished herewith
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THE HERTZ CORPORATION AND SUBSIDIARIES
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on itstheir behalf by the undersigned thereunto duly authorized.
Date:November 9, 2017April 27, 2023
HERTZ GLOBAL HOLDINGS, INC.

THE HERTZ CORPORATION

(Registrants)
By:/s/ THOMAS C. KENNEDYALEXANDRA BROOKS
Thomas C. KennedyAlexandra Brooks
Senior Executive Vice President and Interim Chief Financial Officer (Principal Financial Officer and Authorized Signatory)

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THE HERTZ CORPORATION AND SUBSIDIARIES


EXHIBIT INDEX
Exhibit
Number		Description
4.11.3
Hertz Holdings
Hertz
Fourth Amended and Restated Series 2013-A Supplement, dated as of November 2, 2017, among Hertz Vehicle Financing II LP, as Issuer, The Hertz Corporation, as Group I Administrator, Deutsche Bank AG, New York Branch, as Administrative Agent, certain Committed Note Purchasers, certain Conduit Investors, certain Funding Agents, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities Intermediary, to the Amended and Restated Group I Supplement, dated as of October 31, 2014, between Hertz Vehicle Financing II LP, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities Intermediary, to the Base Indenture, dated as of October 31, 2014, between Hertz Vehicle Financing II LP, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee.*
4.11.5
Hertz Holdings
Hertz
Third Amended and Restated Series 2013-B Supplement, dated as of November 2, 2017, among Hertz Vehicle Financing II LP, as Issuer, The Hertz Corporation, as Group II Administrator, Deutsche Bank AG, New York Branch, as Administrative Agent, certain Committed Note Purchasers, certain Conduit Investors, certain Funding Agents, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities Intermediary, to the Amended and Restated Group II Supplement, dated as of June 17, 2015, between Hertz Vehicle Financing II LP, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee and Securities Intermediary, as amended by Amendment No. 1 thereto, dated as of December 3, 2015, to the Amended and Restated Base Indenture, dated as of October 31, 2014, between Hertz Vehicle Financing II LP, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee.*
10.1.2
Hertz Holdings
Hertz
Amended and Restated Guarantee and Collateral Agreement, dated as of November 2, 2017, made by Rental Car Intermediate Holdings, LLC, The Hertz Corporation and certain of its subsidiaries from time to time party thereto, in favor of Barclays Bank PLC, as collateral agent and administrative agent.*
10.1.5
Hertz Holdings
Hertz
Third Amendment, dated as of November 2, 2017, to the Credit Agreement, dated as of June 30, 2016, among The Hertz Corporation, the subsidiary borrowers from time to time party thereto, the several banks and other financial institutions from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of Hertz Global Holdings, Inc. (File No. 001-37665), as filed on November 2, 2017).
10.1.6
Hertz Holdings
Hertz
Letter of Credit Agreement, dated as of November 2, 2017, among The Hertz Corporation, the several banks and other financial institutions from time to time party thereto and Barclays Bank PLC, as administrative agent and collateral agent.*
31.1Hertz Holdings
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*
31.2Hertz Holdings
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*
31.3Hertz
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*
31.4Hertz
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*
32.1Hertz Holdings
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.*
32.2Hertz Holdings
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.*
32.3Hertz
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.*
32.4Hertz
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.*
101.INS
Hertz Holdings
Hertz
XBRL Instance Document*
101.SCH
Hertz Holdings
Hertz
XBRL Taxonomy Extension Schema Document*
101.CAL
Hertz Holdings
Hertz
XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
Hertz Holdings
Hertz
XBRL Taxonomy Extension Definition Linkbase Document*

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THE HERTZ CORPORATION AND SUBSIDIARIES


Exhibit
Number		Description
101.LAB
Hertz Holdings
Hertz
XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
Hertz Holdings
Hertz
XBRL Taxonomy Extension Presentation Linkbase Document*


*Furnished herewith

Note: Certain instruments with respect to various additional obligations, which could be considered as long-term debt, have not been filed as exhibits to this Report because the total amount of securities authorized under any such instrument does not exceed 10% of our total assets on a consolidated basis. We agree to furnish to the SEC upon request a copy of any such instrument defining the rights of the holders of such long-term debt.

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