HERTZ GLOBAL HOLDINGS, INC - Annual Report: 2019 (Form 10-K)

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(i)	"2019 Annual Report" or "Combined Form 10-K" means this Annual Report on Form 10-K for the year ended December 31, 2019, which combines the annual reports for Hertz Global Holdings, Inc. and The Hertz Corporation into a single filing;

(ii)	"All Other Operations" means the reportable segment comprised primarily of the Company's Donlen business and the Company's other business activities which comprise less than 1% of revenues and expenses of the segment;

(iii)	"Alternative Letter of Credit Facility" means the standalone $250 million letter of credit facility that the Company entered into in 2019 as further described in Note 5, "Debt," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2019 Annual Report;

(iv)	"the Code" means the Internal Revenue Code of 1986, as amended;

(v)	"the Company", "we", "our" and "us" mean Hertz Global and Hertz interchangeably;

(vi)	"company-operated" or "company-owned" rental locations are those through which we, or an agent of ours, rent vehicles that we own or lease;

(vii)	"concessions" mean licensing or permitting agreements or arrangements granting us the right to conduct our vehicle rental business at airports;

(viii)	"Corporate" means corporate operations, which include general corporate assets and expenses and certain interest expense (including net interest on non-vehicle debt);

(ix)	"Dollar Thrifty" means Dollar Thrifty Automotive Group, Inc., a consolidated subsidiary of the Company;

(x)	"Donlen" means Donlen Corporation, a consolidated subsidiary of the Company. Donlen conducts our vehicle leasing and fleet management services;

(xi)	"Hertz Gold Plus Rewards" means our customer loyalty program and our global expedited rental program;

(xii)	"Hertz" means The Hertz Corporation, its consolidated subsidiaries and variable interest entities, our primary operating company and a direct wholly-owned subsidiary of Rental Car Intermediate Holdings, LLC, which is wholly-owned by Hertz Holdings;

(xiii)	"Hertz Global" means Hertz Global Holdings, Inc., our top-level holding company, its consolidated subsidiaries and variable interest entities, including The Hertz Corporation;

(xiv)	"Hertz Ultimate Choice" is an offering at select airport locations in the U.S. that allows customers to choose their vehicle from a range of makes, models and colors available within the zone indicated on their reservation;

(xv)	"Hertz Holdings" refers to Hertz Global Holdings, Inc. excluding its subsidiaries;

(xvi)	"International RAC" means the international rental car reportable segment;

(xvii)	"Letter of Credit Facility" means the standalone $400 million letter of credit facility that the Company entered into in 2017 as further described in Note 5, "Debt," to the Notes to our consolidated financial statements

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(xviii)	“non-program vehicles” means vehicles not purchased under repurchase or guaranteed depreciation programs for which we are exposed to residual risk;

(xix)	"Old Hertz Holdings" for periods on or prior to June 30, 2016, and "Herc Holdings" for periods after June 30, 2016, refer to the former Hertz Global Holdings, Inc.;

(xx)	"program vehicles" means vehicles purchased under repurchase or guaranteed depreciation programs with vehicle manufacturers;

(xxi)	"replacement renters" means renters who need vehicles while their vehicle is being repaired or is temporarily unavailable for other reasons;

(xxii)	"Rights Offering" means the Company's rights offering providing for the issuance of new shares of Hertz Global common stock that closed in July 2019 as further described in Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data" included in this 2019 Annual Report;

(xxiii)	"SEC" means the United States Securities and Exchange Commission;

(xxiv)	"Senior Facilities" means the Company's senior secured term facility and senior secured revolving credit facility ("Senior RCF") as further described in Note 5, "Debt," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2019 Annual Report;

(xxv)

"Spin-Off" means the spin-off by Old Hertz Holdings 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 shares of common stock of Hertz Rental Car Holding Company, Inc., which was re-named Hertz Global Holdings, Inc. in connection with the Spin-Off, on a one-to-five basis.

(xxvi)	"Tax Reform" means legislation signed into law on December 22, 2017 which amends the U.S. Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses, commonly known as the "Tax Cuts and Jobs Act" ("TCJA");

(xxvii)	"TNC" means transportation network companies that provide ride-hailing services that pair passengers with drivers via websites and mobile applications;

(xxviii)	"TNC Partners" means certain transportation network companies where we provide rental vehicles to their drivers under agreements that specify the relevant terms;

(xxix)	"U.S." means the United States of America;

(xxx)	"U.S. RAC" means the U.S. rental car reportable segment;

(xxxi)	"Vehicle Utilization" means the portion of our vehicles that are being utilized to generate revenue; and

(xxxii)	"vehicles” means cars, vans, crossovers and light trucks.

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•	enhancing investors' understanding of Hertz Global and Hertz by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•	eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosures apply to both Hertz Global and Hertz; and

•	creating time and cost efficiencies through the preparation of one combined annual report instead of two separate annual reports.

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•	levels of travel demand, particularly with respect to business and leisure travel in the United States and in global markets;

•	significant changes in the competitive environment and the effect of competition in our markets on rental volume and pricing, including on our pricing policies or use of incentives;

•	occurrences that disrupt rental activity during our peak periods;

•	our ability to accurately estimate future levels of rental activity and adjust the number and mix of vehicles used in our rental operations accordingly;

•	increased vehicle costs due to declining value of our non-program vehicles;

•	our ability to maintain sufficient liquidity and the availability to us of additional or continued sources of financing for our revenue earning vehicles and to refinance our existing indebtedness;

•	our ability to adequately respond to changes in technology, customer demands and market competition;

•	our ability to purchase adequate supplies of competitively priced vehicles and risks relating to increases in the cost of the vehicles we purchase;

•	our recognition of previously deferred tax gains on the disposition of revenue earning vehicles;

•	financial instability of the manufacturers of our vehicles, which could impact their ability to fulfill obligations under repurchase or guaranteed depreciation programs;

•	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;

•	our ability to execute a business continuity plan;

•	our access to third-party distribution channels and related prices, commission structures and transaction volumes;

•	our ability to retain customer loyalty and market share;

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risks associated with operating in many different countries, including the risk of a violation or alleged violation of applicable anticorruption or antibribery laws, our ability to repatriate cash from non-U.S. affiliates without adverse tax consequences, our exposure to fluctuations in foreign currency exchange rates and our ability to effectively manage our international operations after the United Kingdom's withdrawal from the European Union;

•	a major disruption in our communication or centralized information networks;

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•	a failure to maintain, upgrade and consolidate our information technology systems;

•	our ability to prevent the misuse or theft of information we possess, including as a result of cyber security breaches and other security threats;

•	costs and risks associated with litigation and investigations or any failure or inability to comply with laws and regulations or any changes in the legal and regulatory environment, including laws and regulations relating to environmental matters and consumer privacy and data security;

•	our ability to maintain our network of leases and vehicle rental concessions at airports in the U.S. and internationally;

•	our ability to maintain favorable brand recognition and a coordinated branding and portfolio strategy;

•	our ability to maintain an effective employee retention and talent management strategy and resulting changes in personnel and employee relations;

•	changes in the existing, or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations, where such actions may affect our operations, the cost thereof or applicable tax rates;

•	risks relating to our deferred tax assets, including the risk of an "ownership change" under the Code;

•	our exposure to uninsured claims in excess of historical levels;

•	risks relating to our participation in multiemployer pension plans;

•	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 credit facilities and letter of credit facility, our outstanding unsecured senior notes, our outstanding senior second priority secured notes and certain asset-backed and asset-based arrangements;

•	our ability to access financial markets, including the financing of our vehicle fleet through the issuance of asset-backed securities;

•	fluctuations in interest rates and commodity prices;

•	our ability to sustain operations during adverse economic cycles and unfavorable external events (including war, terrorist acts, natural disasters and epidemic disease);

•	shortages of fuel and increases or volatility in fuel costs;

•	changes in accounting principles, or their application or interpretation, and our ability to make accurate estimates and the assumptions underlying the estimates, which could have an effect on operating results; and

•	other risks and uncertainties described from time to time in periodic and current reports that we file with the SEC.

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•	U.S. RAC - Rental of vehicles, as well as sales of value-added services, in the U.S. We maintain a substantial network of company-operated rental locations in the U.S., enabling us to provide consistent quality and service. We also have franchisees and partners that operate rental locations under our brands throughout the U.S;

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International RAC - Rental and leasing of vehicles, as well as sales of value-added services, internationally. We maintain a substantial network of company-operated rental locations internationally, a majority of which are in Europe. Our franchisees and partners also operate rental locations in approximately 160 countries and jurisdictions, including many of the countries in which we also have company-operated rental locations; and

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All Other Operations - Primarily comprised of our Donlen business, which provides integrated vehicle leasing and fleet management solutions in the U.S. and Canada. Donlen is a provider of these services for commercial fleets and Donlen's fleet management programs provide solutions to reduce fleet operating costs and improve driver productivity and safety. These programs include administration of preventive vehicle maintenance, advisory services and fuel and accident management along with other complementary services. Additionally, Donlen provides specialized consulting and technology expertise that allows us and our customers to model, measure and manage fleet performance more effectively and efficiently. Also included are our other business activities which comprise less than 1% of revenues and expenses of the segment.

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•	Provide customers a more convenient and geographically extensive network of rental locations, thereby creating revenue opportunities from replacement renters, non-airline travel renters and airline travelers with local rental needs;

•	Provide a more balanced revenue mix by reducing our reliance on air travel and therefore reducing our exposure to external events that may disrupt airline travel trends;

•	Contribute to higher Vehicle Utilization as a result of the longer average rental periods associated with off airport business, compared to those of airport rentals;

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•	Insurance replacement rental volume is less seasonal than that of other business and leisure rentals, which permits efficiencies in both vehicle and labor planning; and

•	Cross-selling opportunities exist for us to promote off airport rentals among frequent airport Hertz Gold Plus Rewards program renters and, conversely, to promote airport rentals to off airport renters.

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•	Vehicle financing, acquisition and remarketing;

•	License, title and registration;

•	Vehicle maintenance consultation;

•	Fuel management;

•	Accident management;

•	Toll management;

•	Telematics-based location, driver performance and scorecard reporting; and

•	Lease financing.

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•	legal liability arising from the operation of our vehicles (i.e., vehicle liability);

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•	legal liability to members of the public and employees from other causes (i.e., general liability/workers' compensation); and

•	risk of property damage and/or business interruption and/or increased cost of operating as a consequence of property damage.

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(a)	Includes U.S. Rental Car and International Rental Car segments.

(b)	Income tax (provision) benefit for 2018 and 2017 includes the effects of the TCJA, which contained wide-ranging changes to the U.S. tax structure.

(c)

Basic weighted-average shares outstanding and weighted-average shares used to calculate diluted earnings (loss) per share have been adjusted retrospectively to give effect to the Rights Offering for the years ended December 31, 2018, 2017, 2016 and 2015. See Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global," to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data" for additional information.

(d)

The balance of total assets as of December 31, 2019 includes the impact upon adoption of guidance impacting leases, as further disclosed in Note 2, "Significant Accounting Policies" to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data". The balance of total assets as of December 31, 2015 includes the assets of certain entities that were spun-off on June 30, 2016.

(e)	Total equity as of December 31, 2018 includes the net adjustment recorded to accumulated deficit of $178 million upon adoption of guidance impacting revenue recognition and reporting comprehensive income.

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(a)	Includes U.S. Rental Car and International Rental Car segments.

(b)	Income tax (provision) benefit for 2018 and 2017 includes the effects of the TCJA, which contained wide-ranging changes to the U.S. tax structure.

(c)

The balance of total assets as of December 31, 2019 includes the impact upon adoption of guidance impacting leases, as further disclosed in Note 2, "Significant Accounting Policies" to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data". The balance of total assets as of December 31, 2015 includes the assets of certain entities that were spun-off on June 30, 2016.

(d)	Total equity as of December 31, 2018 includes the net adjustment recorded to accumulated deficit of $178 million upon adoption of guidance impacting revenue recognition and reporting comprehensive income.

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ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Adjusted 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 them 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.

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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. Depreciation Per Unit Per Month is reflective of how we are managing the costs of our vehicles and facilitates a comparison with other participants in the vehicle rental industry.

•	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 total number of vehicles in our fleet whether owned or leased ("Average Vehicles" or "fleet capacity").

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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.

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•	Vehicle Utilization - important key metric to management and investors because it is the measurement of the proportion of our vehicles that are being used to generate revenues relative to fleet capacity. Higher Vehicle Utilization means more vehicles are being utilized to generate revenues.

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

•	All other operations revenues - revenues from vehicle leasing and fleet management services by our Donlen business and other business activities.

•	Direct vehicle and operating expense ("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;

•	Depreciation expense and lease charges relating to revenue earning vehicles, including costs associated with the disposal of vehicles;

•	Selling, general and administrative expense ("SG&A"), which includes costs for advertising and personnel, along with information technology and finance transformation programs; and

•	Interest expense, net.

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•	U.S. RAC - Rental of vehicles, as well as sales of value-added services, in the U.S.;

•	International RAC - Rental and leasing of vehicles, as well as sales of value-added services, internationally; and

•	All Other Operations - Comprised primarily of our Donlen business, which provides vehicle leasing and fleet management services, and other business activities.

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◦	Total RPD increased 2%, and Total RPU increased 1%

◦	Transaction Days increased 4%

◦	Depreciation of revenue earning vehicles and lease charges decreased 1% to $1.7 billion

◦	Depreciation Per Unit Per Month decreased 7% to $258

◦	Vehicle Utilization decreased to 80% from 81%

◦	DOE as a percentage of total revenues decreased to 60% from 62%

◦	SG&A as a percentage of total revenues remained flat at 7%

◦	Total revenues decreased $107 million, or 5%, and were flat, excluding the impact of foreign currency exchange at average rates ("fx")

◦	Total RPD increased 1%, and Total RPU was flat

◦	Transaction Days decreased 1%

◦	Depreciation of revenue earning vehicles and lease charges decreased 2% to $440 million, and increased $14 million, or 3%, excluding fx

◦	Depreciation Per Unit Per Month increased 3% to $205

◦	Vehicle Utilization decreased to 76% from 77%

◦	DOE as a percentage of total revenues increased to 61% from 57%

◦	SG&A as a percentage of total revenues decreased to 10% from 11%

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•	Increased transportation expense of $31 million driven by higher rates from third-party transportation providers, increased usage and additional trucking for fleet optimization.

•	Increased facility expenses of $20 million primarily driven by increased rent and facility services.

•	Increased other vehicle expense of $16 million primarily driven by increased licensing fees in certain states.

•	Increased fuel expense of $16 million due to higher market fuel prices compared to 2017.

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(a)

Adjusted Corporate EBITDA is calculated as net income (loss) attributable to Hertz or Hertz Global, adjusted for income taxes, non-vehicle depreciation and amortization, non-vehicle debt interest, net, vehicle debt-related charges, loss on extinguishment of vehicle debt, restructuring and restructuring related charges, goodwill, intangible and tangible asset impairments and write-downs, information technology and finance transformation costs 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:

(1)	Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums.

(2)	In 2018, primarily represents $20 million of early redemption premium and write-off of deferred financing costs associated with the full redemption of the 4.375% European Vehicle Senior Notes due January 2019.

(3)

Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. In 2018 and 2017, also includes consulting costs, legal fees and other expenses related to the previously disclosed accounting review and investigation.

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(4)	In 2017, primarily represents an $86 million impairment of the Dollar Thrifty tradename and an impairment of $30 million related to an equity method investment.

(5)	Represents costs associated with our information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize our systems and processes.

(6)

Represents miscellaneous items, including non-cash stock-based compensation charges. In 2019, includes a $30 million gain on marketable securities and a $39 million gain on the sale of non-vehicle capital assets. In 2018, includes a $20 million gain on marketable securities and a $6 million legal settlement received related to an oil spill in the Gulf of Mexico in 2010. In 2017, includes net expenses of $16 million resulting from hurricanes, charges of $8 million associated with strategic financings and charges of $5 million relating to PLPD as a result of a terrorist event, partially offset by a $6 million gain on the sale of our Brazil Operations and a $4 million return of capital from an equity method investment.

(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.

(c)

Average Vehicles are 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:

(d)

Total RPD is calculated as total revenues less ancillary retail vehicle sales revenues, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates ("Total Rental Revenues"), 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:

(1)	Based on December 31, 2018 foreign currency exchange rates for all periods presented.

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(e)	Total RPU Per Month is calculated as Total Rental Revenues divided by the Average Vehicles in each period and then divided by the number of months in the period reported. The calculation of Total RPU Per Month is shown below:

(f)

Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges, per vehicle per month and is calculated as depreciation of revenue earning vehicles and lease charges, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates, divided by the Average Vehicles in each 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:

(1)	Based on December 31, 2018 foreign currency exchange rates for all periods presented.

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•	The aggregate principal amount of medium term notes outstanding increased from $5.3 billion to $6.6 billion; and

•	The remaining capacity under various U.S. RAC revolving vehicle debt financing facilities increased from $725 million to $1.5 billion.

•	The aggregate principal amount of HFLF medium term notes outstanding increased from $1.2 billion to $1.4 billion; and

•	Remaining capacity under revolving vehicle debt facilities associated with the Donlen business increased from $180 million to $228 million.

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(a)	Amounts represent the estimated commitment fees and interest payments based on the principal amounts, minimum non-cancelable maturity dates and interest rates on the debt as of December 31, 2019.

(b)	Reflects the impact upon adoption of the lease standard as further disclosed in Note 2, "Significant Accounting Policies" to the Notes to our consolidated financial statements in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data".

(c)	Represents fleet purchases where contracts have been signed or are pending with committed orders under the terms of such arrangements.

(d)

Represents agreements to purchase goods or services that are legally binding on us and that specify all significant terms, including fixed or minimum quantities; fixed, minimum or variable price provisions; and the approximate timing of the transaction, as well as liabilities for uncertain tax positions and other liabilities, and excludes any obligations to employees. Only the minimum non-cancelable portion of purchase agreements and related cancellation penalties are included as obligations. In the case of contracts that state minimum quantities of goods or services, amounts reflect only the stipulated minimums; all other contracts reflect estimated amounts. Purchase obligations include $20 million representing our tax liability for uncertain tax positions and related net accrued interest and penalties.

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(1)	Changes in the International Rental Car segment and All Other Operations segment primarily consists of foreign currency exchange rate adjustments.

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(1)	Technology-related intangibles include software not yet placed into service.

(2)	Other amortizable intangible assets primarily include the Donlen tradename and reacquired franchise rights.

(3)	Other indefinite-lived intangible assets primarily consist of reacquired franchise rights.

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(1)	References to the "Senior Notes" include the series of Hertz's unsecured senior notes set forth in the table below. Outstanding principal amounts for each such series of the Senior Notes is also specified below:

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(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 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.

(3)

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 January 2020. The second maturity date referenced for each series of HFLF Medium Term Notes represents the date by which 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.

(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 1.12 to 1 and 1.14 to 1 as of December 31, 2019 and 2018, respectively) set forth in the table below. Outstanding principal amounts for each such series of the European Vehicle Notes is also specified below:

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(1)	Includes certain investments where the fair value measurement utilizes the net asset value (NAV) and as such, are not classified in the fair value levels above.

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(1)	Includes certain investments where the fair value measurement utilizes the net asset value (NAV) and as such, are not classified in the fair value levels above.

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a)	Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b)	If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c)

If the Company ceases to have an obligation to contribute to the multiemployer plan in which the Company had been a contributing employer, the Company may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of its participation in the plan prior to the cessation of its obligation to contribute. The amount that an employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is referred to as a withdrawal liability.

N/A	Not applicable

(1)	Indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the plan year that ended in 2019.

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(2)	Included in the Other Plans are contributions to the Local 1034 Pension Fund. The amount contributed by Hertz to the Local 1034 Pension Fund was reported as being more than 5% of total contributions to the plan, on the fund's Form 5500 for the year ended December 31, 2018.

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(1)	Options granted in 2019 are solely related to the incremental grants awarded as part of the Rights Offering, as disclosed in Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global."

(1)	All options granted are in connection with the Rights Offering, as disclosed in Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global."

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(1)	Includes 166,248 awards granted in connection with the Rights Offering, as disclosed in Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global."

(1)	Includes 85,453 awards granted in connection with the Rights Offering, as disclosed in Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global."

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•	The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;

•	The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise;

•	The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;

•	The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; or

•	The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.

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•	Concession agreements which grant the Company the right to conduct its vehicle rental operations at airports, hotels and train stations and to use building space such as terminal counters and parking garages;

•	Real estate leases for its off airport vehicle rental locations and other premises;

•	Revenue earning vehicle leases; and

•	Other equipment leases.

•	Operating expenses, such as common area charges, real estate taxes and insurance;

•	A percentage of revenues or sales arising at the relevant premises; and/or

•	Periodic inflation adjustments.

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(1)	Topic 842, which was adopted on January 1, 2019, requires the Company to disclose the short-term portion of minimum fixed lease costs. For the years ended December 31, 2018 and 2017, under the then existing guidance in Topic 840, the Company was only required to disclose minimum fixed costs in total.

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(1)	All asset derivatives are recorded in prepaid expenses and other assets and all liability derivatives are recorded in accrued liabilities in the accompanying consolidated balance sheets.

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(1)	Reflects the impact of the Rights Offering subscription period.

(2)	Reflects the weighted-average impact of the issuance of 57,915,055 shares from the Rights Offering on July 18, 2019.

•	U.S. Rental Car ("U.S. RAC") - rental of vehicles (cars, crossovers and light trucks), as well as sales of value-added services, in the U.S. and consists of the Company's U.S. operating segment;

•

International Rental Car ("International RAC") - rental and leasing of vehicles (cars, vans, crossovers and light trucks), as well as sales of value-added services, internationally and consists of the Company's Europe and Other International operating segments, which are aggregated into a reportable segment based primarily upon similar economic characteristics, products and services, customers, delivery methods and general regulatory environments;

•	All Other Operations - 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 1% of revenues and expenses of the segment.

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(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 debt discounts and premiums.

(3)	In 2018, primarily represents $20 million of early redemption premium and write-off of deferred financing costs associated with the full redemption of the 4.375% European Vehicle Senior Notes due January 2019.

(4)

Represents charges incurred under restructuring actions as defined in U.S. GAAP, excluding impairments and asset write-downs. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. In 2018 and 2017, also includes consulting costs, legal fees and other expenses related to the previously disclosed accounting review and investigation.

(5)	In 2017, primarily represents an $86 million impairment of the Dollar Thrifty tradename and an impairment of $30 million related to an equity method investment.

(6)	Represents costs associated with the Company's information technology and finance transformation programs, both of which are multi-year initiatives to upgrade and modernize the Company's systems and processes.

(7)

Represents miscellaneous items, including non-cash stock-based compensation charges, and amounts attributable to noncontrolling interests. In 2019, includes a $30 million gain on marketable securities and a $39 million gain on the sale of non-vehicle capital assets. In 2018, includes a $20 million gain on marketable securities, and a $6 million legal settlement received related to an oil spill in the Gulf of Mexico in 2010. In 2017, includes net expenses of $16 million resulting from hurricanes, charges of $8 million associated with strategic financings and charges of $5 million relating to PLPD as a result of a terrorist event, partially offset by a $6 million gain on the sale of the Company's Brazil Operations and a $4 million return of capital from an equity method investment.

(1)	Basic and Diluted earnings (loss) per share for the first quarter of 2019 and for all quarters in 2018 have been adjusted retrospectively to give effect to the Rights Offering, as further disclosed in Note 16, "Equity and Earnings (Loss) Per Share - Hertz Global."

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•	In re Hertz Global Holdings, Inc. Securities Litigation

•	Litigation Against Former Executives

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(1)	Amounts written off, net of recoveries.

(2)	The release of the valuation allowance during 2018 was due to the sales or anticipated sales of properties which would generate capital gain.

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(1)

Audit fees were for services rendered in connection with (i) the audit of the financial statements included in the Hertz Global and Hertz Annual Reports, (ii) reviews of the financial statements included in the Hertz Global and Hertz Quarterly Reports on Form 10-Q, (iii) attestation of the effectiveness of internal controls over financial reporting for Hertz Global and Hertz, (iv) statutory audits and (v) providing comfort letters in connection with our financing transactions.

(2)	Audit-related fees were for services rendered in connection with due diligence and assurance services and employee benefit plan audits. For 2019, there was an immaterial amount of audit-related fees for services performed by Ernst & Young LLP.

(3)	Tax fees related to our LKE program and tax audit assistance.

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