ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Index
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Page
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Hertz Global Holdings, Inc. and Subsidiaries
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The Hertz Corporation and Subsidiaries
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Notes to the Condensed Consolidated Financial Statements
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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
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June 30, 2021
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December 31, 2020
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ASSETS
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Cash and cash equivalents
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$
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1,820
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$
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1,096
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Restricted cash and cash equivalents:
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Vehicle
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247
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50
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Non-vehicle
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628
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361
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Total restricted cash and cash equivalents
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875
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411
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Total cash, cash equivalents, restricted cash and restricted cash equivalents
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2,695
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1,507
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Receivables:
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Vehicle
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87
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164
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Non-vehicle, net of allowance of $58 and $46, respectively
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937
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613
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Total receivables, net
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1,024
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777
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Prepaid expenses and other assets
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1,184
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373
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Revenue earning vehicles:
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Vehicles
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9,563
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7,540
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Less: accumulated depreciation
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(1,573)
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(1,478)
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Total revenue earning vehicles, net
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7,990
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6,062
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Property and equipment, net
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618
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666
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Operating lease right-of-use assets
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1,504
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1,675
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Intangible assets, net
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2,947
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2,992
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Goodwill
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1,045
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1,045
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Assets held for sale
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—
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1,811
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Total assets(a)
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$
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19,007
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$
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16,908
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LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
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Accounts payable:
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Vehicle
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$
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93
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$
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29
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Non-vehicle
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687
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389
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Total accounts payable
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780
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418
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Accrued liabilities
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945
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759
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Accrued taxes, net
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232
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121
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Debt:
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Vehicle
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7,035
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6,024
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Non-vehicle
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1,514
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243
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Total debt
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8,549
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6,267
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Public Warrants
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800
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—
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Operating lease liabilities
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1,459
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1,636
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Self-insured liabilities
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459
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488
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Deferred income taxes, net
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711
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730
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Total liabilities not subject to compromise
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13,935
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10,419
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Liabilities subject to compromise
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—
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4,965
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Liabilities held for sale
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—
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1,431
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Total liabilities(a)
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13,935
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16,815
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Commitments and contingencies
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Mezzanine Equity:
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Preferred stock, $0.01 par value, 1,500,000 shares issued and outstanding at June 30, 2021
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1,433
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—
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Total mezzanine equity
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1,433
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—
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Stockholders' equity:
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Preferred stock, $0.01 par value, no shares issued and outstanding at June 30, 2021 and December 31, 2020
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—
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—
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Common stock, $0.01 par value, 471,102,462 shares issued and outstanding at June 30, 2021, and 158,235,410 and 156,206,478 shares issued and outstanding at December 31, 2020
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5
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2
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Treasury stock, at cost, 2,028,932 shares at December 31, 2020
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—
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(100)
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Additional paid-in capital
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6,476
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3,047
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Retained earnings (Accumulated deficit)
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(2,659)
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(2,681)
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Accumulated other comprehensive income (loss)
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(202)
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(212)
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Stockholders' equity attributable to Hertz Global
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3,620
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56
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Noncontrolling interests
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19
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37
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Total stockholders' equity
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3,639
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93
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Total liabilities, mezzanine equity and stockholders' equity
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$
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19,007
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$
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16,908
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(a)Hertz Global Holdings, Inc.'s consolidated total assets as of June 30, 2021 and December 31, 2020 include total assets of variable interest entities (“VIEs”) of $808 million and $511 million, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of June 30, 2021 and December 31, 2020 include total liabilities of VIEs of $694 million and $475 million, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Pledges Related to Vehicle Financing" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note 15, "Related Party Transactions," for further information.
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share data)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2021
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2020
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2021
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2020
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Revenues
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$
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1,873
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$
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832
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$
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3,161
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$
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2,755
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Expenses:
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Direct vehicle and operating
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946
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652
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1,724
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1,845
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Depreciation of revenue earning vehicles and lease charges
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116
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609
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359
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1,285
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Non-vehicle depreciation and amortization
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50
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57
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104
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110
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Selling, general and administrative
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172
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164
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321
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368
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Interest expense, net:
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Vehicle
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98
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132
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202
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250
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Non-vehicle (excludes contractual interest of $22 million for the three and six months ended June 30, 2020)
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91
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44
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135
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101
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Total interest expense, net
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189
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176
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337
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351
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Technology-related intangible and other asset impairments
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—
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193
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—
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193
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Other (income) expense, net
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(10)
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2
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(13)
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(15)
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Reorganization items, net
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633
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23
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677
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23
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(Gain) from the sale of a business
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(8)
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—
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(400)
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—
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Total expenses
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2,088
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1,876
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3,109
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4,160
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Income (loss) before income taxes
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(215)
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(1,044)
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52
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(1,405)
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Income tax (provision) benefit
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46
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192
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(33)
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196
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Net income (loss)
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(169)
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(852)
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19
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(1,209)
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Net (income) loss attributable to noncontrolling interests
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1
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5
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2
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6
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Net income (loss) attributable to Hertz Global
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$
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(168)
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$
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(847)
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$
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21
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$
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(1,203)
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Weighted-average shares outstanding:
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Basic
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160
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144
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158
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143
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Diluted
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160
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144
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158
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143
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Earnings (loss) per share:
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Basic earnings (loss) per share
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$
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(1.05)
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$
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(5.86)
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$
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0.13
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$
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(8.39)
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Diluted earnings (loss) per share
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$
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(1.05)
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$
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(5.86)
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$
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0.13
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$
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(8.39)
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The accompanying notes are an integral part of these financial statements.
3
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2021
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2020
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2021
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2020
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Net income (loss)
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$
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(169)
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$
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(852)
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$
|
19
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$
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(1,209)
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Other comprehensive income (loss):
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Foreign currency translation adjustments
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(7)
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15
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10
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(26)
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Net gain (loss) on pension and postretirement benefit plans
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—
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(15)
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—
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(14)
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Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses
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—
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4
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—
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5
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Total other comprehensive income (loss) before income taxes
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(7)
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4
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10
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(35)
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Income tax (provision) benefit related to pension and postretirement benefit plans
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—
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4
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—
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4
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Income tax (provision) benefit related to reclassified amounts of net periodic costs on pension and postretirement benefit plans
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—
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(1)
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—
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(1)
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Total other comprehensive income (loss)
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(7)
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|
7
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|
10
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(32)
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Total comprehensive income (loss)
|
(176)
|
|
|
(845)
|
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|
29
|
|
|
(1,241)
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Comprehensive (income) loss attributable to noncontrolling interests
|
1
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|
5
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|
2
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|
6
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Comprehensive income (loss) attributable to Hertz Global
|
$
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(175)
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|
$
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(840)
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|
$
|
31
|
|
|
$
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(1,235)
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The accompanying notes are an integral part of these financial statements.
4
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
Unaudited
(In millions)
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Preferred Stock
Shares
|
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Preferred Stock
Amount
|
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Common Stock Shares
|
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Common Stock Amount
|
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Additional
Paid-In Capital
|
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Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock Shares
|
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Treasury Stock Amount
|
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Stockholders'
Equity
Attributable to
Hertz Global
|
|
Non-
controlling Interests
|
|
Total Stockholders' Equity
|
|
Balance as of:
|
|
|
December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
142
|
|
|
$
|
1
|
|
|
$
|
3,024
|
|
|
$
|
(967)
|
|
|
$
|
(189)
|
|
|
2
|
|
|
$
|
(100)
|
|
|
$
|
1,769
|
|
|
$
|
119
|
|
|
$
|
1,888
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(356)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(356)
|
|
|
(1)
|
|
|
(357)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39)
|
|
|
—
|
|
|
—
|
|
|
(39)
|
|
|
—
|
|
|
(39)
|
|
|
Net settlement on vesting of restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
March 31, 2020
|
—
|
|
|
—
|
|
|
142
|
|
|
1
|
|
|
3,022
|
|
|
(1,323)
|
|
|
(228)
|
|
|
2
|
|
|
(100)
|
|
|
1,372
|
|
|
119
|
|
|
1,491
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(847)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(847)
|
|
|
(5)
|
|
|
(852)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
Stock-based compensation charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
Stock issuance, net
|
—
|
|
|
—
|
|
|
14
|
|
|
1
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
June 30, 2020
|
—
|
|
|
$
|
—
|
|
|
156
|
|
|
$
|
2
|
|
|
$
|
3,048
|
|
|
$
|
(2,170)
|
|
|
$
|
(221)
|
|
|
2
|
|
|
$
|
(100)
|
|
|
$
|
559
|
|
|
$
|
114
|
|
|
$
|
673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
Shares
|
|
Preferred Stock
Amount
|
|
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
|
|
Additional
Paid-In Capital
|
|
Retained Earnings (Accumulated
Deficit)(1)
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock Shares
|
|
Treasury Stock Amount
|
|
Stockholders'
Equity
Attributable to
Hertz Global
|
|
Non-
controlling Interests
|
|
Total Stockholders' Equity
|
|
Balance as of:
|
|
|
December 31, 2020
|
—
|
|
|
$
|
—
|
|
|
|
|
156
|
|
|
$
|
2
|
|
|
|
|
$
|
3,047
|
|
|
$
|
(2,681)
|
|
|
$
|
(212)
|
|
|
2
|
|
|
$
|
(100)
|
|
|
$
|
56
|
|
|
$
|
37
|
|
|
$
|
93
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
(1)
|
|
|
189
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation charges
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
(11)
|
|
|
March 31, 2021
|
—
|
|
|
—
|
|
|
|
|
156
|
|
|
2
|
|
|
|
|
3,049
|
|
|
(2,491)
|
|
|
(195)
|
|
|
2
|
|
|
(100)
|
|
|
265
|
|
|
25
|
|
|
290
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
|
|
—
|
|
—
|
|
|
|
|
—
|
|
|
(168)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(168)
|
|
|
(1)
|
|
|
(169)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
—
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of common and treasury shares in exchange for new common shares
|
—
|
|
|
—
|
|
|
|
|
(142)
|
|
|
(2)
|
|
|
|
|
(98)
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Cancellation of stock-based awards
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(10)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
(10)
|
|
|
Distributions to common stockholders
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(239)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(239)
|
|
|
—
|
|
|
(239)
|
|
|
Contribution from Plan Sponsors
|
—
|
|
|
—
|
|
|
|
|
277
|
|
|
3
|
|
|
|
|
2,778
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,781
|
|
|
—
|
|
|
2,781
|
|
|
Rights Offering, net
|
—
|
|
|
—
|
|
|
|
|
180
|
|
|
2
|
|
|
|
|
1,796
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,798
|
|
|
—
|
|
|
1,798
|
|
|
Public Warrants issuance
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(800)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(800)
|
|
|
—
|
|
|
(800)
|
|
|
Preferred stock issuance, net
|
2
|
|
|
1,433
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Distributions to non-controlling interests, net
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
2
|
|
|
$
|
1,433
|
|
|
|
|
471
|
|
|
$
|
5
|
|
|
|
|
$
|
6,476
|
|
|
$
|
(2,659)
|
|
|
$
|
(202)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
3,620
|
|
|
$
|
19
|
|
|
$
|
3,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) Net income (loss) is computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet.
The accompanying notes are an integral part of these financial statements.
5
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income (loss)
|
$
|
19
|
|
|
$
|
(1,209)
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
Depreciation and reserves for revenue earning vehicles
|
420
|
|
|
1,393
|
|
|
Depreciation and amortization, non-vehicle
|
104
|
|
|
110
|
|
|
Amortization of deferred financing costs and debt discount (premium)
|
98
|
|
|
26
|
|
|
Loss on extinguishment of debt
|
8
|
|
|
3
|
|
|
|
|
|
|
|
Provision for receivables allowance
|
64
|
|
|
32
|
|
|
Deferred income taxes, net
|
(16)
|
|
|
(205)
|
|
|
Technology-related intangible and other asset impairments
|
—
|
|
|
193
|
|
|
|
|
|
|
|
Reorganization items, net
|
314
|
|
|
(1)
|
|
|
(Gain) loss from the sale of a business
|
(400)
|
|
|
—
|
|
|
(Gain) loss on sale of non-vehicle capital assets
|
(6)
|
|
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
—
|
|
|
(1)
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
Non-vehicle receivables
|
(214)
|
|
|
287
|
|
|
Prepaid expenses and other assets
|
(67)
|
|
|
(4)
|
|
|
Operating lease right-of-use assets
|
154
|
|
|
189
|
|
|
Non-vehicle accounts payable
|
94
|
|
|
168
|
|
|
Accrued liabilities
|
(11)
|
|
|
(61)
|
|
|
Accrued taxes, net
|
91
|
|
|
(20)
|
|
|
Operating lease liabilities
|
(160)
|
|
|
(195)
|
|
|
Self-insured liabilities
|
(27)
|
|
|
(55)
|
|
|
Net cash provided by (used in) operating activities
|
465
|
|
|
626
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Revenue earning vehicles expenditures
|
(4,136)
|
|
|
(4,956)
|
|
|
Proceeds from disposal of revenue earning vehicles
|
1,199
|
|
|
5,005
|
|
|
Non-vehicle capital asset expenditures
|
(17)
|
|
|
(72)
|
|
|
Proceeds from non-vehicle capital assets disposed of or to be disposed of
|
10
|
|
|
50
|
|
|
Sales of marketable securities
|
—
|
|
|
74
|
|
|
Collateral payments
|
(303)
|
|
|
—
|
|
|
Collateral returned in exchange for letters of credit
|
114
|
|
|
—
|
|
|
Proceeds from the sale of a business, net of cash sold
|
818
|
|
|
—
|
|
|
Other
|
(1)
|
|
|
(1)
|
|
|
Net cash provided by (used in) investing activities
|
(2,316)
|
|
|
100
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance of vehicle debt
|
8,939
|
|
|
4,174
|
|
|
Repayments of vehicle debt
|
(8,120)
|
|
|
(4,613)
|
|
The accompanying notes are an integral part of these financial statements.
6
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
Proceeds from issuance of non-vehicle debt
|
3,139
|
|
|
1,498
|
|
|
Repayments of non-vehicle debt
|
(6,341)
|
|
|
(853)
|
|
|
Payment of financing costs
|
(151)
|
|
|
(11)
|
|
|
Proceeds from Plan Sponsors
|
2,781
|
|
|
—
|
|
|
Proceeds from Rights Offering, net
|
1,635
|
|
|
—
|
|
|
Proceeds from the issuance of preferred stock, net
|
1,433
|
|
|
—
|
|
|
Distributions to common stockholders
|
(239)
|
|
|
—
|
|
|
Proceeds from the issuance of stock, net
|
—
|
|
|
29
|
|
|
Early redemption payments
|
(85)
|
|
|
—
|
|
|
Contributions from (distributions to) noncontrolling interests
|
(15)
|
|
|
—
|
|
|
Other
|
—
|
|
|
(2)
|
|
|
Net cash provided by (used in) financing activities
|
2,976
|
|
|
222
|
|
|
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(8)
|
|
|
3
|
|
|
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
|
1,117
|
|
|
951
|
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period(1)
|
1,578
|
|
|
1,360
|
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
2,695
|
|
|
$
|
2,311
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
Interest, net of amounts capitalized:
|
|
|
|
|
Vehicle
|
$
|
203
|
|
|
$
|
193
|
|
|
Non-vehicle
|
158
|
|
|
67
|
|
|
Income taxes, net of refunds
|
2
|
|
|
3
|
|
|
|
|
|
|
|
Supplemental disclosures of non-cash information:
|
|
|
|
|
Purchases of revenue earning vehicles included in accounts payable, net of incentives
|
$
|
39
|
|
|
$
|
43
|
|
|
Sales of revenue earning vehicles included in vehicle receivables
|
33
|
|
|
759
|
|
|
|
|
|
|
|
Purchases of non-vehicle capital assets included in accounts payable
|
24
|
|
|
4
|
|
|
Purchases of non-vehicle capital assets included in liabilities subject to compromise
|
—
|
|
|
31
|
|
|
Revenue earning vehicles and non-vehicle capital assets acquired through capital lease
|
56
|
|
|
10
|
|
|
Public Warrants issuance
|
800
|
|
|
—
|
|
|
Backstop equity issuance
|
164
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale at December 31, 2020, as disclosed in Note 3, "Divestitures."
The accompanying notes are an integral part of these financial statements.
7
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,820
|
|
|
|
$
|
1,096
|
|
|
Restricted cash and cash equivalents:
|
|
|
|
|
|
|
Vehicle
|
|
247
|
|
|
|
50
|
|
|
Non-vehicle
|
|
628
|
|
|
|
333
|
|
|
Total restricted cash and cash equivalents
|
|
875
|
|
|
|
383
|
|
|
Total cash, cash equivalents, restricted cash and restricted cash equivalents
|
|
2,695
|
|
|
|
1,479
|
|
|
Receivables:
|
|
|
|
|
|
|
Vehicle
|
|
87
|
|
|
|
164
|
|
|
Non-vehicle, net of allowance of $58 and $46, respectively
|
|
937
|
|
|
|
613
|
|
|
Total receivables, net
|
|
1,024
|
|
|
|
777
|
|
|
Due from Hertz Holdings
|
|
—
|
|
|
|
1
|
|
|
Prepaid expenses and other assets
|
|
1,184
|
|
|
|
372
|
|
|
Revenue earning vehicles:
|
|
|
|
|
|
|
Vehicles
|
|
9,563
|
|
|
|
7,540
|
|
|
Less: accumulated depreciation
|
|
(1,573)
|
|
|
|
(1,478)
|
|
|
Total revenue earning vehicles, net
|
|
7,990
|
|
|
|
6,062
|
|
|
Property and equipment, net
|
|
618
|
|
|
|
666
|
|
|
Operating lease right-of-use assets
|
|
1,504
|
|
|
|
1,675
|
|
|
Intangible assets, net
|
|
2,947
|
|
|
|
2,992
|
|
|
Goodwill
|
|
1,045
|
|
|
|
1,045
|
|
|
Assets held for sale
|
|
—
|
|
|
|
1,811
|
|
|
Total assets(a)
|
|
$
|
19,007
|
|
|
|
$
|
16,880
|
|
|
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
|
|
|
|
|
|
|
Accounts payable:
|
|
|
|
|
|
|
Vehicle
|
|
$
|
93
|
|
|
|
$
|
29
|
|
|
Non-vehicle
|
|
687
|
|
|
|
389
|
|
|
Total accounts payable
|
|
780
|
|
|
|
418
|
|
|
Accrued liabilities
|
|
945
|
|
|
|
759
|
|
|
Accrued taxes, net
|
|
232
|
|
|
|
121
|
|
|
Debt:
|
|
|
|
|
|
|
Vehicle
|
|
7,035
|
|
|
|
6,024
|
|
|
Non-vehicle
|
|
1,514
|
|
|
|
243
|
|
|
Total debt
|
|
8,549
|
|
|
|
6,267
|
|
|
Operating lease liabilities
|
|
1,459
|
|
|
|
1,636
|
|
|
Self-insured liabilities
|
|
459
|
|
|
|
488
|
|
|
Deferred income taxes, net
|
|
715
|
|
|
|
735
|
|
|
Total liabilities not subject to compromise
|
|
13,139
|
|
|
|
10,424
|
|
|
Liabilities subject to compromise
|
|
—
|
|
|
|
5,030
|
|
|
Liabilities held for sale
|
|
—
|
|
|
|
1,431
|
|
|
Total liabilities(a)
|
|
13,139
|
|
|
|
16,885
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Stockholder's equity (deficit):
|
|
|
|
|
|
|
Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively
|
|
—
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
9,583
|
|
|
|
3,953
|
|
|
Due to Hertz Holdings
|
|
65
|
|
|
|
—
|
|
|
Retained earnings (Accumulated deficit)
|
|
(3,597)
|
|
|
|
(3,783)
|
|
|
Accumulated other comprehensive income (loss)
|
|
(202)
|
|
|
|
(212)
|
|
|
Stockholder's equity (deficit) attributable to Hertz
|
|
5,849
|
|
|
|
(42)
|
|
|
Noncontrolling interests
|
|
19
|
|
|
|
37
|
|
|
Total stockholder's equity (deficit)
|
|
5,868
|
|
|
|
(5)
|
|
|
Total liabilities and stockholder's equity (deficit)
|
|
$
|
19,007
|
|
|
|
$
|
16,880
|
|
(a)The Hertz Corporation's consolidated total assets as of June 30, 2021 and December 31, 2020 include total assets of VIEs of $808 million and $511 million, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of June 30, 2021 and December 31, 2020 include total liabilities of VIEs of $694 million and $475 million, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Pledges Related to Vehicle Financing" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note 15, "Related Party Transactions," for further information.
The accompanying notes are an integral part of these financial statements.
8
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
1,873
|
|
|
$
|
832
|
|
|
$
|
3,161
|
|
|
$
|
2,755
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Direct vehicle and operating
|
946
|
|
|
652
|
|
|
1,724
|
|
|
1,845
|
|
|
Depreciation of revenue earning vehicles and lease charges
|
116
|
|
|
609
|
|
|
359
|
|
|
1,285
|
|
|
Non-vehicle depreciation and amortization
|
50
|
|
|
57
|
|
|
104
|
|
|
110
|
|
|
Selling, general and administrative
|
172
|
|
|
164
|
|
|
321
|
|
|
368
|
|
|
Interest expense, net:
|
|
|
|
|
|
|
|
|
Vehicle
|
98
|
|
|
132
|
|
|
202
|
|
|
250
|
|
|
Non-vehicle (excludes contractual interest of $22 million for the three and six months ended June 30, 2020)
|
91
|
|
|
43
|
|
|
135
|
|
|
99
|
|
|
Total interest expense, net
|
189
|
|
|
175
|
|
|
337
|
|
|
349
|
|
|
Technology-related intangible and other asset impairments
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
|
Write-off of intercompany loan
|
—
|
|
|
133
|
|
|
—
|
|
|
133
|
|
|
Other (income) expense, net
|
(10)
|
|
|
2
|
|
|
(13)
|
|
|
(15)
|
|
|
Reorganization items, net
|
469
|
|
|
23
|
|
|
513
|
|
|
23
|
|
|
(Gain) from the sale of a business
|
(8)
|
|
|
—
|
|
|
(400)
|
|
|
—
|
|
|
Total expenses
|
1,924
|
|
|
2,008
|
|
|
2,945
|
|
|
4,291
|
|
|
Income (loss) before income taxes
|
(51)
|
|
|
(1,176)
|
|
|
216
|
|
|
(1,536)
|
|
|
Income tax (provision) benefit
|
46
|
|
|
219
|
|
|
(33)
|
|
|
224
|
|
|
Net income (loss)
|
(5)
|
|
|
(957)
|
|
|
183
|
|
|
(1,312)
|
|
|
Net (income) loss attributable to noncontrolling interests
|
1
|
|
|
5
|
|
|
2
|
|
|
6
|
|
|
Net income (loss) attributable to Hertz
|
$
|
(4)
|
|
|
$
|
(952)
|
|
|
$
|
185
|
|
|
$
|
(1,306)
|
|
The accompanying notes are an integral part of these financial statements.
9
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Net income (loss)
|
$
|
(5)
|
|
|
$
|
(957)
|
|
|
$
|
183
|
|
|
$
|
(1,312)
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(7)
|
|
|
15
|
|
|
10
|
|
|
(26)
|
|
|
Net gain (loss) on pension and postretirement benefit plans
|
—
|
|
|
(15)
|
|
|
—
|
|
|
(14)
|
|
|
Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses
|
—
|
|
|
4
|
|
|
—
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) before income taxes
|
(7)
|
|
|
4
|
|
|
10
|
|
|
(35)
|
|
|
Income tax (provision) benefit related to pension and postretirement benefit plans
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
Income tax (provision) benefit related to reclassified amounts of net periodic costs on pension and postretirement benefit plans
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
Total other comprehensive income (loss)
|
(7)
|
|
|
7
|
|
|
10
|
|
|
(32)
|
|
|
Total comprehensive income (loss)
|
(12)
|
|
|
(950)
|
|
|
193
|
|
|
(1,344)
|
|
|
Comprehensive (income) loss attributable to noncontrolling interests
|
1
|
|
|
5
|
|
|
2
|
|
|
6
|
|
|
Comprehensive income (loss) attributable to Hertz
|
$
|
(11)
|
|
|
$
|
(945)
|
|
|
$
|
195
|
|
|
$
|
(1,338)
|
|
The accompanying notes are an integral part of these financial statements.
10
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
Unaudited
(In millions, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital
|
|
Due From Affiliate
|
|
Accumulated
Deficit(1)
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Stockholder's Equity Attributable to Hertz
|
|
Noncontrolling Interests
|
|
Total Stockholder's Equity
|
|
Balance as of:
|
|
|
|
|
|
|
|
|
December 31, 2019
|
100
|
|
|
$
|
—
|
|
|
$
|
3,955
|
|
|
$
|
(64)
|
|
|
$
|
(1,937)
|
|
|
$
|
(189)
|
|
|
$
|
1,765
|
|
|
$
|
119
|
|
|
$
|
1,884
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(355)
|
|
|
—
|
|
|
(355)
|
|
|
(1)
|
|
|
(356)
|
|
|
Due from Hertz Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(3)
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39)
|
|
|
(39)
|
|
|
—
|
|
|
(39)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
March 31, 2020
|
100
|
|
|
—
|
|
|
3,955
|
|
|
(67)
|
|
|
(2,292)
|
|
|
(228)
|
|
|
1,368
|
|
|
119
|
|
|
1,487
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(951)
|
|
|
—
|
|
|
(951)
|
|
|
(5)
|
|
|
(956)
|
|
|
Due from Hertz Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
Liabilities subject to compromise(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(65)
|
|
|
—
|
|
|
—
|
|
|
(65)
|
|
|
—
|
|
|
(65)
|
|
|
Write-off of intercompany loan(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
133
|
|
|
—
|
|
|
133
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
Stock-based compensation charges
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
100
|
|
|
$
|
—
|
|
|
$
|
3,953
|
|
|
$
|
—
|
|
|
$
|
(3,243)
|
|
|
$
|
(221)
|
|
|
$
|
489
|
|
|
$
|
114
|
|
|
$
|
603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Shares
|
|
Common Stock Amount
|
|
Additional
Paid-In Capital
|
|
Due To Affiliate
|
|
Accumulated
Deficit(1)
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Stockholder's Equity Attributable to Hertz
|
|
Noncontrolling Interests
|
|
Total Stockholder's Equity (Deficit)
|
|
Balance as of:
|
|
|
|
|
|
|
|
|
December 31, 2020
|
100
|
|
|
$
|
—
|
|
|
$
|
3,953
|
|
|
$
|
—
|
|
|
$
|
(3,783)
|
|
|
$
|
(212)
|
|
|
$
|
(42)
|
|
|
$
|
37
|
|
|
$
|
(5)
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190
|
|
|
—
|
|
|
190
|
|
|
(1)
|
|
|
189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|
Stock-based compensation charges
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)
|
|
|
(11)
|
|
|
March 31, 2021
|
100
|
|
|
—
|
|
|
3,955
|
|
|
—
|
|
|
(3,593)
|
|
|
(195)
|
|
|
167
|
|
|
25
|
|
|
192
|
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
|
(4)
|
|
|
(1)
|
|
|
(5)
|
|
|
Due to Hertz Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
(7)
|
|
|
—
|
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of stock-based awards
|
—
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
|
(10)
|
|
|
Contributions from Hertz Holdings
|
—
|
|
|
—
|
|
|
5,638
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,638
|
|
|
—
|
|
|
5,638
|
|
|
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
100
|
|
|
$
|
—
|
|
|
$
|
9,583
|
|
|
$
|
65
|
|
|
$
|
(3,597)
|
|
|
$
|
(202)
|
|
|
$
|
5,849
|
|
|
$
|
19
|
|
|
$
|
5,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) Net income (loss) is computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet.
2) As a result of filing the Chapter 11 Cases, a pre-petition loan due to an affiliate was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020. See Note 17, "Liabilities Subject to Compromise ."
3) As a result of filing the Chapter 11 Cases, the full amount outstanding under a loan due from affiliate was deemed uncollectible and written off. See Note 15, "Related Party Transactions."
The accompanying notes are an integral part of these financial statements.
11
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income (loss)
|
$
|
183
|
|
|
$
|
(1,312)
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
Depreciation and reserves for revenue earning vehicles
|
420
|
|
|
1,393
|
|
|
Depreciation and amortization, non-vehicle
|
104
|
|
|
110
|
|
|
Amortization of deferred financing costs and debt discount (premium)
|
98
|
|
|
26
|
|
|
Loss on extinguishment of debt
|
8
|
|
|
3
|
|
|
|
|
|
|
|
Provision for receivables allowance
|
64
|
|
|
32
|
|
|
Deferred income taxes, net
|
(16)
|
|
|
(232)
|
|
|
Technology-related intangible and other asset impairments
|
—
|
|
|
193
|
|
|
Write-off of intercompany loan
|
—
|
|
|
133
|
|
|
Reorganization items, net
|
150
|
|
|
(1)
|
|
|
(Gain) loss from the sale of a business
|
(400)
|
|
|
—
|
|
|
(Gain) loss on sale of non-vehicle capital assets
|
(6)
|
|
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
—
|
|
|
(1)
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
Non-vehicle receivables
|
(214)
|
|
|
287
|
|
|
Prepaid expenses and other assets
|
(67)
|
|
|
(4)
|
|
|
Operating lease right-of-use assets
|
154
|
|
|
189
|
|
|
Non-vehicle accounts payable
|
94
|
|
|
168
|
|
|
Accrued liabilities
|
(11)
|
|
|
(61)
|
|
|
Accrued taxes, net
|
91
|
|
|
(20)
|
|
|
Operating lease liabilities
|
(160)
|
|
|
(195)
|
|
|
Self-insured liabilities
|
(27)
|
|
|
(55)
|
|
|
Net cash provided by (used in) operating activities
|
465
|
|
|
629
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Revenue earning vehicles expenditures
|
(4,136)
|
|
|
(4,956)
|
|
|
Proceeds from disposal of revenue earning vehicles
|
1,199
|
|
|
5,005
|
|
|
Non-vehicle capital asset expenditures
|
(17)
|
|
|
(72)
|
|
|
Proceeds from non-vehicle capital assets disposed of or to be disposed of
|
10
|
|
|
50
|
|
|
Sales of marketable securities
|
—
|
|
|
74
|
|
|
Collateral payments
|
(303)
|
|
|
—
|
|
|
Collateral returned in exchange for letters of credit
|
114
|
|
|
—
|
|
|
Proceeds from the sale of a business, net of cash sold
|
818
|
|
|
—
|
|
|
Other
|
(1)
|
|
|
(1)
|
|
|
Net cash provided by (used in) investing activities
|
(2,316)
|
|
|
100
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from issuance of vehicle debt
|
8,939
|
|
|
4,174
|
|
The accompanying notes are an integral part of these financial statements.
12
THE HERTZ CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
2021
|
|
2020
|
|
Repayments of vehicle debt
|
(8,120)
|
|
|
(4,613)
|
|
|
Proceeds from issuance of non-vehicle debt
|
3,139
|
|
|
1,498
|
|
|
Repayments of non-vehicle debt
|
(6,341)
|
|
|
(853)
|
|
|
Payment of financing costs
|
(151)
|
|
|
(11)
|
|
|
Contributions from Hertz Holdings
|
5,638
|
|
|
—
|
|
|
Advances to Hertz Holdings
|
—
|
|
|
(4)
|
|
|
Early redemption payments
|
(85)
|
|
|
—
|
|
|
Contributions from (distributions to) noncontrolling interests
|
(15)
|
|
|
—
|
|
|
Other
|
—
|
|
|
(1)
|
|
|
Net cash provided by (used in) financing activities
|
3,004
|
|
|
190
|
|
|
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
|
(8)
|
|
|
3
|
|
|
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
|
1,145
|
|
|
922
|
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period(1)
|
1,550
|
|
|
1,360
|
|
|
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
2,695
|
|
|
$
|
2,282
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
Interest, net of amounts capitalized:
|
|
|
|
|
Vehicle
|
$
|
203
|
|
|
$
|
193
|
|
|
Non-vehicle
|
158
|
|
|
67
|
|
|
Income taxes, net of refunds
|
2
|
|
|
3
|
|
|
|
|
|
|
|
Supplemental disclosures of non-cash information:
|
|
|
|
|
Purchases of revenue earning vehicles included in accounts payable, net of incentives
|
$
|
39
|
|
|
$
|
43
|
|
|
Sales of revenue earning vehicles included in vehicle receivables
|
33
|
|
|
759
|
|
|
|
|
|
|
|
Purchases of non-vehicle capital assets included in accounts payable
|
24
|
|
|
4
|
|
|
Purchases of non-vehicle capital assets included in liabilities subject to compromise
|
—
|
|
|
31
|
|
|
Revenue earning vehicles and non-vehicle capital assets acquired through capital lease
|
56
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale at December 31, 2020, as disclosed in Note 3, "Divestitures."
The accompanying notes are an integral part of these financial statements.
13
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 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, licensee and franchisee locations in the United States ("U.S."), Africa, Asia, Australia, Canada, the Caribbean, Europe, Latin America, the Middle East and New Zealand. The Company also sells vehicles through Hertz Car Sales and operates the Firefly vehicle rental brand and Hertz 24/7 car sharing business in international markets. As disclosed in Note 3, "Divestitures," on March 30, 2021 the Company completed the previously announced sale of substantially all of the assets and certain liabilities of its Donlen subsidiary (the "Donlen Sale"), a business which provided vehicle leasing and fleet management services.
Chapter 11 and Emergence
In March 2020, the World Health Organization declared COVID-19 a global pandemic. In response to COVID-19, local and national governments around the world instituted shelter-in-place and similar orders and travel restrictions, and airline and other travel decreased suddenly and dramatically. As a result of the impact of COVID-19 and the associated government responses on travel demand, late in the first quarter of 2020, the Company experienced a high level of rental cancellations and a significant decline in forward bookings. In response, the Company began aggressive actions to eliminate costs. However, it faced significant ongoing expenses, including a large lease payment with respect to its vehicle fleet that increased as a result of COVID-19's impact on the car market.
On May 22, 2020 (the "Petition Date"), Hertz Global, Hertz and certain of their direct and indirect subsidiaries in the U.S. and Canada (collectively the "Debtors") filed voluntary petitions for relief (collectively, the "Petitions") under chapter 11 of title 11 ("Chapter 11") of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Chapter 11 cases (the "Chapter 11 Cases") were jointly administered for procedural purposes only under the caption In re The Hertz Corporation, et al., Case No. 20-11218 (MFW). On May 14, 2021, the Debtors filed the solicitation version of the First Modified Third Amended Joint Chapter 11 Plan of Reorganization of the Debtors (as amended, supplemented or otherwise modified in accordance with its terms, the "Plan of Reorganization"), and the solicitation version of the Supplement to the Disclosure Statement which was approved by the Bankruptcy Court on May 14, 2021 (as supplemented, the "Disclosure Statement").
On June 10, 2021, the Plan of Reorganization was confirmed by the Bankruptcy Court. On June 30, 2021 (the “Effective Date”), the Plan of Reorganization became effective in accordance with its terms and the Debtors emerged from Chapter 11 (the "Chapter 11 Emergence").
On the Effective Date, as a result of the Plan of Reorganization, the reorganized Company received cash proceeds of $7.5 billion comprised of:
•$2.8 billion from the purchase of common stock in reorganized Hertz Global by one or more funds associated with Knighthead Capital Management, LLC and its affiliates ("Knighthead"), one or more funds associated with Certares Opportunities LLC and its affiliates ("Certares"), investment funds, separate accounts and other entities owned (in whole or in part), controlled or managed by Apollo Capital Management L.P. and its affiliates (collectively "Apollo" and with Knighthead and Certares (the "Plan Sponsors"), and certain other investment funds and entities;
•$1.6 billion from the purchase of common stock in reorganized Hertz Global pursuant to the rights offering (the "Rights Offering") by Hertz Global's former equity holders, holders of the Company's Senior Notes and lenders under the Alternative Letter of Credit Facility and certain equity commitment parties pursuant to their obligations under the Equity Purchase and Commitment Agreement (the "EPCA");
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
•$1.5 billion (less a 2% upfront discount and stock issuance fees) from the purchase of preferred stock of reorganized Hertz Global by Apollo; and
•$1.5 billion in proceeds from the Company's secured exit term loan facilities.
Such cash proceeds were used, in part, to provide payments to the Company's stakeholders pursuant to the terms of the Plan of Reorganization as follows:
•the holders of administrative, priority and secured claims received payment in cash in full;
•the holders of the approximately $1.0 billion of obligations owed with respect to the Company's debtor-in-possession financing (the "DIP Credit Agreement") received payment in cash in full;
•the holders of the Company's Senior Term Loan, Senior RCF and Letter of Credit Facility received payment in cash in full with respect to all non-contingent liquidated claims;
•the holders of claims with respect to the Senior Second Priority Secured Notes received payment in cash in full;
•the holders of the Company's €725 million European Vehicle Notes received payment in cash in full;
•the holders of the €257 million term loan facility incurred by Hertz International Ltd. received payment in cash in full;
•the holders of claims with respect to the unsecured Senior Notes and the holders of claims with respect to the Alternative Letter of Credit Facility received payment in cash with respect to (i) all remaining principal, (ii) accrued and unpaid interest as of the Petition Date at the contract rate, and (iii) accrued and unpaid interest from the Petition Date to the Effective Date at the federal judgment rate (at such rate in effect as of the Petition Date), subject to the rights of creditors (if any) to bring a claim for the payment of additional interest and/or premiums; and
•the holders of general unsecured claims will receive payment in cash in full plus interest at the federal judgment rate from the Petition Date to the date of payment (at such rate in effect as of the Petition Date), subject to the rights of creditors to bring a claim for payment of additional interest.
All of the Hertz Global equity interests existing as of the Effective Date were cancelled on such date in accordance with the Plan of Reorganization with existing equity holders receiving (i) cash in the amount of $1.53 per share of existing interests, (ii) their pro rata share of three percent of the common shares of reorganized Hertz Global, subject to dilution, and (iii) either new 30-year public warrants (the " Public Warrants"), for in the aggregate of up to 18% of reorganized Hertz Global common stock issued and outstanding on the Effective Date, subject to dilution and certain conditions, or subscription rights to participate in the Rights Offering as disclosed below.
In accordance with the Plan of Reorganization, Hertz Global commenced a Rights Offering, under which eligible holders of Hertz Global's common stock and certain eligible holders of the Company's Senior Notes and lenders under the Alternative Letter of Credit Facility could purchase up to $1.6 billion of shares of reorganized Hertz Global common stock at a purchase price of $10.00 per share. Pursuant to the EPCA, certain parties agreed to purchase all unsubscribed shares in the Rights Offering (the "Backstop Parties"). The final expiration date for the Rights Offering occurred on June 15, 2021, with eligible holders subscribing to purchase 127,362,114 shares (approximately $1.3 billion), with the Backstop Parties to purchase the remaining 36,137,887 shares (approximately $361 million). Hertz Global closed the Rights Offering upon emergence from the Chapter 11 Cases on June 30, 2021. Pursuant to the terms of the EPCA, the Backstop Parties received a backstop fee equal in the amount of $164 million (payable in shares of reorganized Hertz Global common stock valued at $10.00 per share).
On the Effective Date, in accordance with the Plan of Reorganization, reorganized Hertz Global issued 1,500,000 shares of preferred stock to Apollo and received gross proceeds of $1.5 billion, less a 2% upfront discount and stock issuance fees.
On the Effective Date, in accordance with the Plan of Reorganization, reorganized Hertz Global entered into a public warrant agreement (the "Public Warrant Agreement") and issued 89,049,029 Public Warrants, subject to certain conditions. The Public Warrants are exercisable from the date of issuance until June 30, 2051 at which time
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
all unexercised Public Warrants will expire and the rights of the holders of such expired Public Warrants will terminate. The Public Warrants have an initial exercise price of $13.80 and are subject to adjustment from time to time upon the occurrence of any payments of cash dividends and certain dilutive events.
See Note 10, "Equity, Mezzanine Equity and Earnings (Loss) Per Share – Hertz Global," and Note 11, "Public Warrants – Hertz Global," for additional information on the new equity and Public Warrants issued upon the Company's Chapter 11 emergence.
The filing of the Chapter 11 Cases constituted defaults, termination events and/or amortization events with respect to certain of the Company's existing debt obligations. As a result of the filing of the Chapter 11 Cases, the remaining capacity under almost all of the Company's revolving asset-backed vehicle finance facilities was terminated, as disclosed in Note 6, "Debt." Consequently, the proceeds of sales of vehicles which served as collateral for such vehicle finance facilities were to be applied to the payment of the related indebtedness of the Non-Debtor Financing Subsidiaries (as defined in Note 6, "Debt") and were not otherwise available to fund the Company’s operations. Additionally, the Company was precluded from accessing any of its subordinated investment in the vehicle collateral until the related defaults were waived or the third-party funding under those facilities were retired, either through the monetization of the underlying collateral or the refinancing of the related indebtedness.
On the Effective Date, the reorganized Company entered into exit credit facilities in an aggregate amount of $2.8 billion comprised of senior secured term loan facilities in an aggregate principal amount of $1.5 billion plus a senior secured revolving credit facility (the "First Lien RCF") in an aggregate committed amount of $1.3 billion. Additionally, the reorganized Company entered into a new ABS facility program ("HVF III") of a principal amount of $6.8 billion comprised of variable funding notes with a principal amount up to $2.8 billion and medium term notes in an aggregate principal amount of $4.0 billion. On the Effective Date, substantially all non-vehicle debt and all existing ABS facilities under the HVF II U.S. ABS Program were repaid in full and terminated in accordance with the Plan of Reorganization. See Note 6, "Debt," for additional information.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. During the Chapter 11 Cases, the Company’s ability to continue as a going concern was contingent upon the Company’s ability to successfully implement the Company’s Plan of Reorganization, among other factors. As a result of the implementation of the Plan of Reorganization, management believes there is no longer substantial doubt about the Company's ability to continue as a going concern.
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 June 30, 2021 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 accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.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
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
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.
Effective on the Petition Date, the Company applied Accounting Standards Codification (“ASC”) 852, Reorganizations (“Topic 852”) which requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, pre-petition obligations of the Debtors that could be impacted by the Chapter 11 Cases have been classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020. These liabilities were reported at the amounts the Company anticipated would be allowed by the Bankruptcy Court, even if they could be settled for lesser amounts. See Note 17, "Liabilities Subject to Compromise," for additional information. In addition, certain charges related to the Chapter 11 Cases are recorded as reorganization items, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021 and 2020, respectively. See Note 18, "Reorganization Items, Net," for additional information.
Under Topic 852, companies must apply “fresh-start” accounting rules upon emergence from Chapter 11 reorganization if certain conditions are met. The Company did not qualify for "fresh-start" accounting under Topic 852 upon emergence from Chapter 11.
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, 2020 unaudited condensed consolidated balance sheet data is 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-K for the year ended December 31, 2020 (the "2020 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC") on February 26, 2021.
In connection with the Chapter 11 Emergence and how the Company's chief operating decision maker ("CODM") regularly reviews operating results and allocates resources, the Company modified its reportable segments, as disclosed in Note 16, "Segment Information."
Principles of Consolidation
The unaudited condensed consolidated financial statements of Hertz Global include the accounts of Hertz Global, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The unaudited condensed consolidated financial statements of Hertz include the accounts of Hertz, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The Company consolidates a VIE when it is deemed the primary beneficiary of the 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 of the joint venture. All significant intercompany transactions have been eliminated in consolidation.
Recently Issued Accounting Pronouncements
Not Yet Adopted
Scope of Reference Rate Reform
In January 2021, the Financial Accounting Standards Board ("FASB") issued guidance that clarifies that entities with derivative instruments affected by changes to the interest rates used for discounting, margining or contract price alignment due to reference rate reform may elect to apply certain optional expedients and exceptions, including contract modification relief, provided in Topic 848. Entities may elect to apply the guidance on contract modifications either (1) retrospectively as of any date from the beginning of any interim period that includes March 12, 2020 or (2)
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
prospectively to new modifications from any date in an interim period that includes or is after January 7, 2021, up to the date that financial statements are available to be issued. The Company is in the process of assessing the available expedients and exceptions and, if applicable, the method and timing of adoption.
Note 3—Divestitures
Donlen Sale
On March 30, 2021, the Company completed the previously announced Donlen Sale. The proceeds from the sale were subject to certain post-closing adjustments in the second quarter of 2021 based on the level of assumed indebtedness, working capital and fleet equity. In the three and six months ended June 30, 2021, the Company recognized a pre-tax gain in its corporate operations of $8 million and $400 million, net of the impact of foreign currency adjustments, respectively, based on the difference in cash proceeds received of $891 million less $543 million net book value of assets sold plus a $53 million receivable in connection with the sale recorded in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2021. On March 30, 2021, the Company and the buyer entered into a transition services agreement which provides for certain transitional services in connection with the Donlen Sale.
Sale of Non-vehicle Capital Assets
During the first quarter of 2020, the Company received additional cash from the sale of certain non-vehicle capital assets in its Americas Rental Car segment, which was completed in the fourth quarter of 2019, and recognized an additional $20 million pre-tax gain on the sale, which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statement of operations for the six months ended June 30, 2020.
Sale of Marketable Securities
During the first quarter of 2020, the Company sold marketable securities for $74 million and recognized an immaterial gain on the sale in its corporate operations, which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statement of operations for the six months ended June 30, 2020.
Note 4—Revenue Earning Vehicles
The components of revenue earning vehicles, net are as follows:
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(In millions)
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June 30,
2021
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December 31,
2020
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Revenue earning vehicles
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$
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9,413
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$
|
7,492
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Less accumulated depreciation
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(1,525)
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(1,467)
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|
|
|
7,888
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|
|
|
6,025
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|
|
Revenue earning vehicles held for sale, net(1)
|
102
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|
|
|
37
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|
|
Revenue earning vehicles, net
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$
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