HERTZ GLOBAL HOLDINGS, INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index Page Hertz Global Holdings, Inc. and Subsidiaries Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 74 Consolidated Balance Sheets as of December 31, 202 3 and December 31, 202 2 82 Consolidated Statements of Operations for Years Ended December 31, 202 3 , 202 2 and 202 1 83 Consolidated Statements of Comprehensive Income (Loss) for Years Ended December 31, 202 3 , 202 2 and 202 1 84 Consolidated Statements of Changes in Mezzanine Equity and Stockholders' Equity for Years Ended December 31, 202 3 , 202 2 and 202 1 85 Consolidated Statements of Cash Flows for Years Ended December 31, 202 3 , 202 2 and 202 1 86 The Hertz Corporation and Subsidiaries Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 78 Consolidated Balance Sheets as of December 31, 202 3 and December 31, 202 2 88 Consolidated Statements of Operations for Years Ended December 31, 202 3 , 202 2 and 202 1 89 Consolidated Statements of Comprehensive Income (Loss) for Years Ended December 31, 202 3 , 202 2 and 202 1 90 Consolidated Statements of Changes in Stockholder's Equity (Deficit) for Years Ended December 31, 202 3 , 202 2 and 202 1 91 Consolidated Statements of Cash Flows for Years Ended December 31, 202 3 , 202 2 and 202 1 92 Notes to the Consolidated Financial Statements Note 1 Background 94 Note 2 Significant Accounting Policies 94 Note 3 Divestitures 101 Note 4 Revenue Earning Vehicles 102 Note 5 Goodwill and Intangible Assets, Net 102 Note 6 Debt 105 Note 7 Employee Retirement Benefits 114 Note 8 Stock-Based Compensation 120 Note 9 Leases 123 Note 1 0 Income Tax (Provision) Benefit 125 Note 1 1 Financial Instruments 129 Note 1 2 Fair Value Measurements 131 Note 1 3 Accumulated Other Comprehensive Income (Loss) 132 Note 1 4 Contingencies and Off-Balance Sheet Commitments 133 Note 1 5 Related Party Transactions 135 Note 1 6 Equity and Earnings (Loss) Per Common Share – Hertz Global 135 Note 17 Public Warrants - Hertz Global 137 Note 18 Segment Information 138 Note 19 Reorganization Items, Net 143 Schedule I Condensed Financial Information of Registrant Hertz Global Holdings, Inc. 144 Schedule II Valuation and Qualifying Accounts 148 73 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Hertz Global Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Hertz Global Holdings, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations , comprehensive income (loss), changes in mezzanine equity and stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 12, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 74 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES Calculation of Non-Program Depreciation on Revenue Earning Vehicles in the Americas Rental Car (“RAC”) Segment Description of the Matter For the year ended December 31, 2023, total depreciation of revenue earning vehicles and lease charges, net in the Americas RAC segment was $1,775 million. As discussed in Note 2 to the consolidated financial statements, depreciation rates are reviewed on a quarterly basis based on management’s ongoing assessment of present and estimated future market conditions, the effect of these conditions on residual values at the expected time of disposal and the estimated holding period for revenue earning vehicles. The Company’s revenue earning vehicles are comprised of vehicles that are subject to and are not subject to vehicle repurchase programs (“program vehicles” and “non-program vehicles,” respectively). For program vehicles, the manufacturers guarantee the depreciation rate during established repurchase or auction periods, versus non-program vehicles where the Company estimates the period that the Company will hold the asset and the residual value of the vehicle at the expected time of disposal. Auditing the Company’s calculation of depreciation for non-program vehicles related to the Americas RAC segment was complex due to the significant estimation uncertainty and management judgment to determine the estimated residual values at the expected time of disposal. The significant estimation uncertainty was primarily due to management’s assumptions related to market conditions and their effect on estimated residual values. Additionally, auditing the calculation of depreciation was challenging due to the volume of data inputs utilized in management’s calculation and their assessment of significant assumptions, including historical sales data and estimated residual values from multiple sources, including third-party sources, at varying levels of disaggregation along with additional data specific to the Company’s current revenue earning vehicles. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s measurement of depreciation expense for non-program vehicles related to the Americas RAC segment. For example, we tested controls over management’s quarterly review of the depreciation rates, which included their procedures to validate the completeness and accuracy of the data used in the calculation and their assessment of significant assumptions, specifically the estimated residual values of non-program vehicles related to the Americas RAC segment. To test the depreciation calculation for non-program vehicles, our audit procedures included, among others, testing the completeness and accuracy of the underlying data by comparing historical sales data and vehicle information used in the calculation or in the assessment of significant assumptions (e.g., make, model, trim) to external sources and the Company’s records. We evaluated the reasonableness of other significant assumptions, such as resale market conditions, to assess the reasonableness of the residual value estimates made by management. We searched for contrary evidence associated with the significant assumptions and judgments made by management. Valuation of Self-insured Liabilities – Public Liability, Property Damage, and Liability Insurance Supplement related to the Americas Rental Car (“RAC”) operations Description of the Matter As disclosed in Notes 2 and 14 to the consolidated financial statements, the Company’s self-insured liabilities primarily include public liability, property damage, and liability insurance supplement. The Company records liabilities for these matters based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses and administrative costs. The liabilities include estimates for both reported accident claims not yet paid and claims incurred but not yet reported and are recorded on an undiscounted basis. The estimated self-insured liabilities as of December 31, 2023 were $336 million related to the Americas RAC operations. The adequacy of the liabilities is monitored quarterly based on evolving accident claim history and insurance related state legislation changes. If the Company’s estimates change or if actual results differ from these assumptions, the amount of the recorded liabilities are adjusted to reflect these results. 75 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES Auditing the public liability, property damage, and liability insurance supplement components of the self-insured liabilities reserves related to the Americas RAC operations is complex and required the involvement of our actuarial specialists due to the significant valuation uncertainty associated with the use of actuarial methods. In addition, the public liability, property damage, and liability insurance supplement self-insured liabilities reserve estimates are sensitive to management’s assumptions related to actuarial evaluations of historical claim experience and trends and future projections of ultimate losses used in the computation of these self-insured liabilities. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s public liability, property damage, and liability insurance supplement self-insured liabilities estimation process related to the Americas RAC operations. For example, we tested controls over management’s review of the methods, models, and the assumptions outlined above that are used in these self-insured liabilities calculations and the completeness and accuracy of the data underlying these self-insured liabilities. To test the valuation of the public liability, property damage, and liability insurance supplement self-insured liabilities reserves related to the Americas RAC operations, we performed audit procedures that included, among others, involving our internal actuarial specialists to assist us in developing an independent range and evaluating the methods used by management and the reasonableness of assumptions used in their models (e.g., actuarial evaluations of historical claim experience and future projections of ultimate losses). We compared the Company's reserve to estimates of the liability developed by our actuarial specialists based on the underlying claims data and independently selected assumptions. /s/ Ernst & Young LLP We have served as the Company's auditor since 2019. Tampa, Florida February 12, 2024 76 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Hertz Global Holdings, Inc. Opinion on Internal Control Over Financial Reporting We have audited Hertz Global Holdings, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hertz Global Holdings, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in mezzanine equity and stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules listed in the Index at Item 15(a) and our report dated February 12, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tampa, Florida February 12, 2024 77 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of The Hertz Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Hertz Corporation and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations , comprehensive income (loss), changes in stockholder’s equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 12, 2024 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 78 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES Calculation of Non-Program Depreciation on Revenue Earning Vehicles in the Americas Rental Car (“RAC”) Segment Description of the Matter For the year ended December 31, 2023, total depreciation of revenue earning vehicles and lease charges, net in the Americas RAC segment was $1,775 million. As discussed in Note 2 to the consolidated financial statements, depreciation rates are reviewed on a quarterly basis based on management’s ongoing assessment of present and estimated future market conditions, the effect of these conditions on residual values at the expected time of disposal and the estimated holding period for revenue earning vehicles. The Company’s revenue earning vehicles are comprised of vehicles that are subject to and are not subject to vehicle repurchase programs (“program vehicles” and “non-program vehicles,” respectively). For program vehicles, the manufacturers guarantee the depreciation rate during established repurchase or auction periods, versus non-program vehicles where the Company estimates the period that the Company will hold the asset and the residual value of the vehicle at the expected time of disposal. Auditing the Company’s calculation of depreciation for non-program vehicles related to the Americas RAC segment was complex due to the significant estimation uncertainty and management judgment to determine the estimated residual values at the expected time of disposal. The significant estimation uncertainty was primarily due to management’s assumptions related to market conditions and their effect on estimated residual values. Additionally, auditing the calculation of depreciation was challenging due to the volume of data inputs utilized in management’s calculation and their assessment of significant assumptions, including historical sales data and estimated residual values from multiple sources, including third-party sources, at varying levels of disaggregation along with additional data specific to the Company’s current revenue earning vehicles. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s measurement of depreciation expense for non-program vehicles related to the Americas RAC segment. For example, we tested controls over management’s quarterly review of the depreciation rates, which included their procedures to validate the completeness and accuracy of the data used in the calculation and their assessment of significant assumptions, specifically the estimated residual values of non-program vehicles related to the Americas RAC segment. To test the depreciation calculation for non-program vehicles, our audit procedures included, among others, testing the completeness and accuracy of the underlying data by comparing historical sales data and vehicle information used in the calculation or in the assessment of significant assumptions (e.g., make, model, trim) to external sources and the Company’s records. We evaluated the reasonableness of other significant assumptions, such as resale market conditions, to assess the reasonableness of the residual value estimates made by management. We searched for contrary evidence associated with the significant assumptions and judgments made by management. Valuation of Self-insured Liabilities – Public Liability, Property Damage, and Liability Insurance Supplement related to the Americas Rental Car (“RAC”) operations Description of the Matter As disclosed in Notes 2 and 14 to the consolidated financial statements, the Company’s self-insured liabilities primarily include public liability, property damage, and liability insurance supplement. The Company records liabilities for these matters based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses and administrative costs. The liabilities include estimates for both reported accident claims not yet paid and claims incurred but not yet reported and are recorded on an undiscounted basis. The estimated self-insured liabilities as of December 31, 2023 were $336 million related to the Americas RAC operations. The adequacy of the liabilities is monitored quarterly based on evolving accident claim history and insurance related state legislation changes. If the Company’s estimates change or if actual results differ from these assumptions, the amount of the recorded liabilities are adjusted to reflect these results. 79 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES Auditing the public liability, property damage, and liability insurance supplement components of the self-insured liabilities reserves related to the Americas RAC operations is complex and required the involvement of our actuarial specialists due to the significant valuation uncertainty associated with the use of actuarial methods. In addition, the public liability, property damage, and liability insurance supplement self-insured liabilities reserve estimates are sensitive to management’s assumptions related to actuarial evaluations of historical claim experience and trends and future projections of ultimate losses used in the computation of these self-insured liabilities. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s public liability, property damage, and liability insurance supplement self-insured liabilities estimation process related to the Americas RAC operations. For example, we tested controls over management’s review of the methods, models, and the assumptions outlined above that are used in these self-insured liabilities calculations and the completeness and accuracy of the data underlying these self-insured liabilities. To test the valuation of the public liability, property damage, and liability insurance supplement self-insured liabilities reserves related to the Americas RAC operations, we performed audit procedures that included, among others, involving our internal actuarial specialists to assist us in developing an independent range and evaluating the methods used by management and the reasonableness of assumptions used in their models (e.g., actuarial evaluations of historical claim experience and future projections of ultimate losses). We compared the Company's reserve to estimates of the liability developed by our actuarial specialists based on the underlying claims data and independently selected assumptions. /s/ Ernst & Young LLP We have served as the Company's auditor since 2019. Tampa, Florida February 12, 2024 80 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholder and the Board of Directors of The Hertz Corporation Opinion on Internal Control Over Financial Reporting We have audited The Hertz Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, The Hertz Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in stockholder’s equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 12, 2024 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tampa, Florida February 12, 2024 81 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except par value and share data) December 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 764 $ 943 Restricted cash and cash equivalents: Vehicle 152 180 Non-vehicle 290 295 Total restricted cash and cash equivalents 442 475 Total cash and cash equivalents and restricted cash and cash equivalents 1,206 1,418 Receivables: Vehicle 211 111 Non-vehicle, net of allowance of $ 47 and $ 45 , respectively 980 863 Total receivables, net 1,191 974 Prepaid expenses and other assets 726 1,155 Revenue earning vehicles: Vehicles 16,806 14,281 Less: accumulated depreciation ( 2,155 ) ( 1,786 ) Total revenue earning vehicles, net 14,651 12,495 Property and equipment, net 671 637 Operating lease right-of-use assets 2,253 1,887 Intangible assets, net 2,863 2,887 Goodwill 1,044 1,044 Total assets (1) $ 24,605 $ 22,497 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable: Vehicle $ 191 $ 79 Non-vehicle 510 578 Total accounts payable 701 657 Accrued liabilities 860 911 Accrued taxes, net 157 170 Debt: Vehicle 12,242 10,886 Non-vehicle 3,449 2,977 Total debt 15,691 13,863 Public Warrants 453 617 Operating lease liabilities 2,142 1,802 Self-insured liabilities 471 472 Deferred income taxes, net 1,038 1,360 Total liabilities (1) 21,513 19,852 Commitments and contingencies Stockholders' equity: Preferred stock, $ 0.01 par value, no shares issued and outstanding — — Common stock, $ 0.01 par value, 479,990,286 and 478,914,062 shares issued, respectively, and 305,178,242 and 323,483,178 shares outstanding, respectively 5 5 Treasury stock, at cost, 174,812,044 and 155,430,884 common shares, respectively ( 3,430 ) ( 3,136 ) Additional paid-in capital 6,405 6,326 Retained earnings (Accumulated deficit) 360 ( 256 ) Accumulated other comprehensive income (loss) ( 248 ) ( 294 ) Total stockholders' equity 3,092 2,645 Total liabilities and stockholders' equity $ 24,605 $ 22,497 (1) Hertz Global Holdings, Inc.'s consolidated total assets as of December 31, 2023 and December 31, 2022 include total assets of variable interest entities ("VIEs") of $ 1.7 billion and $ 1.3 billion, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of December 31, 2023 and December 31, 2022 include total liabilities of VIEs of $ 1.7 billion and $ 1.3 billion, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Pledges Related to Vehicle Financing" in Note 6, "Debt," for further information. The accompanying notes are an integral part of these financial statements. 82 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) Years Ended December 31, 2023 2022 2021 Revenues $ 9,371 $ 8,685 $ 7,336 Expenses: Direct vehicle and operating 5,455 4,808 3,920 Depreciation of revenue earning vehicles and lease charges, net 2,039 701 497 Non-vehicle depreciation and amortization 149 142 196 Selling, general and administrative 962 959 688 Interest expense, net: Vehicle 555 159 284 Non-vehicle 238 169 185 Interest expense, net 793 328 469 Other (income) expense, net 12 2 ( 21 ) Reorganization items, net — — 677 (Gain) from the sale of a business — — ( 400 ) (Gain) on sale of non-vehicle capital assets ( 162 ) — — Change in fair value of Public Warrants ( 163 ) ( 704 ) 627 Total expenses 9,085 6,236 6,653 Income (loss) before income taxes 286 2,449 683 Income tax (provision) benefit 330 ( 390 ) ( 318 ) Net income (loss) 616 2,059 365 Net (income) loss attributable to noncontrolling interests — — 1 Net income (loss) attributable to Hertz Global 616 2,059 366 Series A Preferred Stock deemed dividends — — ( 450 ) Net income (loss) available to Hertz Global common stockholders $ 616 $ 2,059 $ ( 84 ) Weighted-average common shares outstanding: Basic 313 379 315 Diluted 326 403 315 Earnings (loss) per common share: Basic $ 1.97 $ 5.43 $ ( 0.27 ) Diluted $ 1.39 $ 3.36 $ ( 0.27 ) The accompanying notes are an integral part of these financial statements. 83 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) Years Ended December 31, 2023 2022 2021 Net income (loss) $ 616 $ 2,059 $ 365 Other comprehensive income (loss): Foreign currency translation adjustments 49 ( 76 ) ( 36 ) Net gain (loss) on pension and postretirement benefit plans ( 5 ) ( 17 ) 25 Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses 4 7 15 Total other comprehensive income (loss) before income taxes 48 ( 86 ) 4 Income tax (provision) benefit related to pension and postretirement benefit plans ( 1 ) 7 ( 3 ) Income tax (provision) benefit related to reclassified amounts of net periodic costs on pension and postretirement benefit plans ( 1 ) ( 1 ) ( 3 ) Total other comprehensive income (loss) 46 ( 80 ) ( 2 ) Total comprehensive income (loss) 662 1,979 363 Comprehensive (income) loss attributable to noncontrolling interests — — 1 Comprehensive income (loss) attributable to Hertz Global $ 662 $ 1,979 $ 364 The accompanying notes are an integral part of these financial statements. 84 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (In millions) Mezzanine Equity Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Stockholders' Equity Attributable to Hertz Global Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional Paid-In Capital Treasury Stock Shares Treasury Stock Amount 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) — — — — — 366 — — — 366 ( 1 ) 365 Other comprehensive income (loss) — — — — — — ( 2 ) — — ( 2 ) — ( 2 ) Stock-based compensation charges — — — — 10 — — — — 10 — 10 Cancellation of stock-based awards — — — — ( 10 ) — — — — ( 10 ) — ( 10 ) Cancellation of common and treasury shares in exchange for new common shares — — ( 142 ) ( 2 ) ( 98 ) — — ( 2 ) 100 — — — Distributions to common stockholders — — — — ( 239 ) — — — — ( 239 ) — ( 239 ) Contributions from Plan Sponsors — — 277 3 2,778 — — — — 2,781 — 2,781 2021 Rights Offering, net — — 181 2 1,800 — — — — 1,802 — 1,802 Public Warrant issuance — — — — ( 800 ) — — — — ( 800 ) — ( 800 ) Preferred stock issuance, net 2 1,433 — — — — — — — 1,433 — 1,433 Repurchase of preferred stock, net ( 2 ) ( 1,433 ) — — ( 450 ) — — — — ( 1,883 ) — ( 1,883 ) Public Warrant exercises — — 5 — 180 — — — — 180 — 180 Nasdaq listing and share repurchases (1) — — ( 27 ) — ( 9 ) — — 27 ( 708 ) ( 717 ) — ( 717 ) Distributions to noncontrolling interests (2) — — — — — — — — — — ( 36 ) ( 36 ) December 31, 2021 — — 450 5 6,209 ( 2,315 ) ( 214 ) 27 ( 708 ) 2,977 — 2,977 Net income (loss) — — — — — 2,059 — — — 2,059 — 2,059 Other comprehensive income (loss) — — — — — — ( 80 ) — — ( 80 ) — ( 80 ) Stock-based compensation charges — — — — 131 — — — — 131 — 131 Net settlement on vesting of restricted stock — — — — ( 20 ) — — — — ( 20 ) — ( 20 ) Public Warrant exercises — — — — 6 — — — — 6 — 6 Shares repurchases (3) — — ( 127 ) — — — — 128 ( 2,428 ) ( 2,428 ) — ( 2,428 ) December 31, 2022 — — 323 5 6,326 ( 256 ) ( 294 ) 155 ( 3,136 ) 2,645 — 2,645 Net income (loss) — — — — — 616 — — — 616 — 616 Other comprehensive income (loss) — — — — — — 46 — — 46 — 46 Stock-based compensation charges — — — — 87 — — — — 87 — 87 Net settlement on vesting of restricted stock — — 1 — ( 9 ) — — — — ( 9 ) — ( 9 ) Public Warrant exercises — — — — 1 — — — — 1 — 1 Shares repurchases (3) — — ( 19 ) — — — — 20 ( 294 ) ( 294 ) — ( 294 ) December 31, 2023 — $ — 305 $ 5 $ 6,405 $ 360 $ ( 248 ) 175 $ ( 3,430 ) $ 3,092 — $ 3,092 (1) See also "Share Repurchase Programs for Common Stock" in Note 16, "Equity and Earnings (Loss) Per Common Share – Hertz Global." (2) Effective October 31, 2021, the 767 lease agreement was terminated. See Note 3, "Divestitures." (3) The amounts presented herein may be rounded to agree to amounts in the consolidated balance sheet. Also see "Share Repurchase Programs for Common Stock" in Note 16, "Equity and Earnings (Loss) Per Common Share – Hertz Global. " The accompanying notes are an integral part of these financial statements. 85 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income (loss) $ 616 $ 2,059 $ 365 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and reserves for revenue earning vehicles, net 2,422 809 600 Depreciation and amortization, non-vehicle 149 142 196 Amortization of deferred financing costs and debt discount (premium) 61 53 122 Loss on extinguishment of debt — — 8 Stock-based compensation charges 87 130 10 Provision for receivables allowance 93 57 125 Deferred income taxes, net ( 380 ) 301 270 Reorganization items, net — — 314 (Gain) loss from the sale of a business — — ( 400 ) (Gain) loss on sale of non-vehicle capital assets ( 162 ) ( 5 ) ( 8 ) Change in fair value of Public Warrants ( 163 ) ( 704 ) 627 Changes in financial instruments 117 ( 111 ) ( 4 ) Other 5 11 ( 1 ) Changes in assets and liabilities: Non-vehicle receivables ( 216 ) ( 264 ) ( 210 ) Prepaid expenses and other assets ( 39 ) ( 126 ) ( 20 ) Operating lease right-of-use assets 365 280 274 Non-vehicle accounts payable ( 48 ) 43 ( 70 ) Accrued liabilities ( 39 ) 80 ( 108 ) Accrued taxes, net 3 73 24 Operating lease liabilities ( 391 ) ( 309 ) ( 291 ) Self-insured liabilities ( 6 ) 19 ( 17 ) Net cash provided by (used in) operating activities 2,474 2,538 1,806 Cash flows from investing activities: Revenue earning vehicles expenditures ( 9,514 ) ( 10,596 ) ( 7,154 ) Proceeds from disposal of revenue earning vehicles 5,498 6,498 2,818 Non-vehicle capital asset expenditures ( 188 ) ( 150 ) ( 71 ) Proceeds from disposal of non-vehicle capital assets 181 12 16 Collateral payments — — ( 303 ) Collateral returned in exchange for letters of credit — 19 280 Return of (investment in) equity investments ( 1 ) ( 16 ) — Proceeds from the sale of a business, net of cash sold — — 871 Other — — ( 1 ) Net cash provided by (used in) investing activities ( 4,024 ) ( 4,233 ) ( 3,544 ) Cash flows from financing activities: Proceeds from issuance of vehicle debt 6,043 9,672 14,323 Repayments of vehicle debt ( 4,837 ) ( 6,639 ) ( 12,607 ) Proceeds from issuance of non-vehicle debt 2,490 — 4,644 Repayments of non-vehicle debt ( 2,018 ) ( 20 ) ( 6,352 ) Payment of financing costs ( 41 ) ( 48 ) ( 185 ) 86 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In millions) Years Ended December 31, 2023 2022 2021 Proceeds from Plan Sponsors — — 2,781 Early redemption premium payment — — ( 85 ) Proceeds from exercises of Public Warrants — 3 77 Proceeds from the issuance of preferred stock, net — — 1,433 Distributions to common stockholders — — ( 239 ) Contributions from (distributions to) noncontrolling interests — — ( 38 ) Proceeds from 2021 Rights Offering, net — — 1,639 Share repurchases ( 315 ) ( 2,461 ) ( 654 ) Repurchase of preferred stock — — ( 1,883 ) Other ( 9 ) ( 20 ) ( 9 ) Net cash provided by (used in) financing activities 1,313 487 2,845 Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents 25 ( 25 ) ( 34 ) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period ( 212 ) ( 1,233 ) 1,073 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period (1) 1,418 2,651 1,578 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 1,206 $ 1,418 $ 2,651 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest, net of amounts capitalized: Vehicle $ 469 $ 204 $ 257 Non-vehicle 252 168 198 Income taxes, net of refunds 33 78 40 Operating lease liabilities 547 454 472 Supplemental disclosures of non-cash information: Purchases of revenue earning vehicles included in accounts payable, net of incentives $ 171 $ 53 $ 27 Sales of revenue earning vehicles included in vehicle receivables 191 85 33 Purchases of non-vehicle capital assets included in accounts payable 16 23 24 Revenue earning vehicles and non-vehicle capital assets acquired through finance leases 69 15 79 Operating lease right-of-use assets obtained in exchange for lease liabilities 721 614 177 Public Warrants issuance — — 800 Public Warrant exercises — 3 103 Backstop equity issuance — — 164 Accrual for purchases of treasury shares — 21 54 (1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale as of December 31, 2020, prior to the completion of the Donlen Sale in the first quarter of 2021, as disclosed in Note 3, "Divestitures." The accompanying notes are an integral part of these financial statements. 87 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except par value and share data) December 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 764 $ 943 Restricted cash and cash equivalents: Vehicle 152 180 Non-vehicle 290 295 Total restricted cash and cash equivalents 442 475 Total cash and cash equivalents and restricted cash and cash equivalents 1,206 1,418 Receivables: Vehicle 211 111 Non-vehicle, net of allowance of $ 47 and $ 45 , respectively 980 863 Total receivables, net 1,191 974 Prepaid expenses and other assets 725 1,154 Revenue earning vehicles: Vehicles 16,806 14,281 Less: accumulated depreciation ( 2,155 ) ( 1,786 ) Total revenue earning vehicles, net 14,651 12,495 Property and equipment, net 671 637 Operating lease right-of-use assets 2,253 1,887 Intangible assets, net 2,863 2,887 Goodwill 1,044 1,044 Total assets (1) $ 24,604 $ 22,496 LIABILITIES AND STOCKHOLDER'S EQUITY Accounts payable: Vehicle $ 191 $ 79 Non-vehicle 510 578 Total accounts payable 701 657 Accrued liabilities 860 890 Accrued taxes, net 155 170 Debt: Vehicle 12,242 10,886 Non-vehicle 3,449 2,977 Total debt 15,691 13,863 Operating lease liabilities 2,142 1,802 Self-insured liabilities 471 472 Deferred income taxes, net 1,041 1,363 Total liabilities (1) 21,061 19,217 Commitments and contingencies Stockholder's equity: Common stock, $ 0.01 par value, 3,000 shares authorized and 100 shares issued and outstanding — — Additional paid-in capital 4,610 4,844 Retained earnings (Accumulated deficit) ( 819 ) ( 1,271 ) Accumulated other comprehensive income (loss) ( 248 ) ( 294 ) Total stockholder's equity 3,543 3,279 Total liabilities and stockholder's equity $ 24,604 $ 22,496 (1) The Hertz Corporation's consolidated total assets as of December 31, 2023 and December 31, 2022 include total assets of VIEs of $ 1.7 billion and $ 1.3 billion, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of December 31, 2023 and December 31, 2022 include total liabilities of VIEs of $ 1.7 billion and $ 1.3 billion, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Pledges Related to Vehicle Financing" in Note 6, "Debt," for further information. The accompanying notes are an integral part of these financial statements. 88 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions) Years Ended December 31, 2023 2022 2021 Revenues $ 9,371 $ 8,685 $ 7,336 Expenses: Direct vehicle and operating 5,455 4,808 3,920 Depreciation of revenue earning vehicles and lease charges, net 2,039 701 497 Non-vehicle depreciation and amortization 149 142 196 Selling, general and administrative 962 959 688 Interest expense, net: Vehicle 555 159 284 Non-vehicle 238 169 185 Interest expense, net 793 328 469 Other (income) expense, net 12 2 ( 21 ) Reorganization items, net — — 513 (Gain) from the sale of a business — — ( 400 ) (Gain) on sale of non-vehicle capital assets ( 162 ) — — Total expenses 9,248 6,940 5,862 Income (loss) before income taxes 123 1,745 1,474 Income tax (provision) benefit 329 ( 390 ) ( 318 ) Net income (loss) 452 1,355 1,156 Net (income) loss attributable to noncontrolling interests — — 1 Net income (loss) attributable to Hertz $ 452 $ 1,355 $ 1,157 The accompanying notes are an integral part of these financial statements. 89 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) Years Ended December 31, 2023 2022 2021 Net income (loss) $ 452 $ 1,355 $ 1,156 Other comprehensive income (loss): Foreign currency translation adjustments 49 ( 76 ) ( 36 ) Net gain (loss) on pension and postretirement benefit plans ( 5 ) ( 17 ) 25 Reclassification from other comprehensive income (loss) to other (income) expense for amortization of actuarial net losses 4 7 15 Total other comprehensive income (loss) before income taxes 48 ( 86 ) 4 Income tax (provision) benefit related to pension and postretirement benefit plans ( 1 ) 7 ( 3 ) Income tax (provision) benefit related to reclassified amounts of net periodic costs on pension and postretirement benefit plans ( 1 ) ( 1 ) ( 3 ) Total other comprehensive income (loss) 46 ( 80 ) ( 2 ) Total comprehensive income (loss) 498 1,275 1,154 Comprehensive (income) loss attributable to noncontrolling interests — — 1 Comprehensive income (loss) attributable to Hertz $ 498 $ 1,275 $ 1,155 The accompanying notes are an integral part of these financial statements. 90 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT) (In millions, except for share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Stockholder's Equity (Deficit) 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) — — — 1,157 — 1,157 ( 1 ) 1,156 Other comprehensive income (loss) — — — — ( 2 ) ( 2 ) — ( 2 ) Non-cash distribution — — 65 — — 65 — 65 Stock-based compensation charges — — 10 — — 10 — 10 Cancellation of stock-based awards — — ( 10 ) — — ( 10 ) — ( 10 ) Contributions from Hertz Holdings — — 5,642 — — 5,642 — 5,642 Dividends to Hertz Holdings — — ( 2,470 ) — — ( 2,470 ) — ( 2,470 ) Distributions to noncontrolling interests (1) — — — — — — ( 36 ) ( 36 ) December 31, 2021 100 — 7,190 ( 2,626 ) ( 214 ) 4,350 — 4,350 Net income (loss) — — — 1,355 — 1,355 — 1,355 Other comprehensive income (loss) — — — — ( 80 ) ( 80 ) — ( 80 ) Stock-based compensation charges — — 131 — — 131 — 131 Dividends paid to Hertz Holdings (2) — — ( 2,477 ) — — ( 2,477 ) — ( 2,477 ) December 31, 2022 100 — 4,844 ( 1,271 ) ( 294 ) 3,279 — 3,279 Net income (loss) — — — 452 — 452 — 452 Other comprehensive income (loss) — — — — 46 46 — 46 Stock-based compensation charges — — 87 — — 87 — 87 Dividends paid to Hertz Holdings (2) — — ( 321 ) — — ( 321 ) — ( 321 ) December 31, 2023 100 $ — $ 4,610 $ ( 819 ) $ ( 248 ) $ 3,543 $ — $ 3,543 (1) Effective October 31, 2021, the 767 lease agreement was terminated. See Note 3, "Divestitures." (2) See "Share Repurchase Programs for Common Stock" in Note 16, "Equity and Earnings (Loss) Per Common Share – Hertz Global," for additional information. The accompanying notes are an integral part of these financial statements. 91 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income (loss) $ 452 $ 1,355 $ 1,156 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and reserves for revenue earning vehicles, net 2,422 809 600 Depreciation and amortization, non-vehicle 149 142 196 Amortization of deferred financing costs and debt discount (premium) 61 53 122 Loss on extinguishment of debt — — 8 Stock-based compensation charges 87 130 10 Provision for receivables allowance 93 57 125 Deferred income taxes, net ( 380 ) 301 270 Reorganization items, net — — 150 (Gain) loss from the sale of a business — — ( 400 ) (Gain) loss on sale of non-vehicle capital assets ( 162 ) ( 5 ) ( 8 ) Changes in financial instruments 117 ( 111 ) ( 4 ) Other 5 11 ( 1 ) Changes in assets and liabilities: Non-vehicle receivables ( 216 ) ( 264 ) ( 210 ) Prepaid expenses and other assets ( 39 ) ( 126 ) ( 20 ) Operating lease right-of-use assets 365 280 274 Non-vehicle accounts payable ( 48 ) 43 ( 70 ) Accrued liabilities ( 39 ) 80 ( 108 ) Accrued taxes, net 1 73 24 Operating lease liabilities ( 391 ) ( 309 ) ( 291 ) Self-insured liabilities ( 6 ) 19 ( 17 ) Net cash provided by (used in) operating activities 2,471 2,538 1,806 Cash flows from investing activities: Revenue earning vehicles expenditures ( 9,514 ) ( 10,596 ) ( 7,154 ) Proceeds from disposal of revenue earning vehicles 5,498 6,498 2,818 Non-vehicle capital asset expenditures ( 188 ) ( 150 ) ( 71 ) Proceeds from disposal of non-vehicle capital assets 181 12 16 Collateral payments — — ( 303 ) Collateral returned in exchange for letters of credit — 19 280 Proceeds from the sale of a business, net of cash sold — — 871 Return of (investment in) equity investments ( 1 ) ( 16 ) — Other — — ( 1 ) Net cash provided by (used in) investing activities ( 4,024 ) ( 4,233 ) ( 3,544 ) Cash flows from financing activities: Proceeds from issuance of vehicle debt 6,043 9,672 14,323 Repayments of vehicle debt ( 4,837 ) ( 6,639 ) ( 12,607 ) Proceeds from issuance of non-vehicle debt 2,490 — 4,644 Repayments of non-vehicle debt ( 2,018 ) ( 20 ) ( 6,352 ) Payment of financing costs ( 41 ) ( 48 ) ( 185 ) Early redemption premium payment — — ( 85 ) 92 Table of Contents THE HERTZ CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In millions) Years Ended December 31, 2023 2022 2021 Contributions from (distributions to) noncontrolling interests — — ( 38 ) Dividends paid to Hertz Holdings ( 321 ) ( 2,477 ) ( 2,470 ) Contributions from Hertz Holdings — — 5,642 Net cash provided by (used in) financing activities 1,316 488 2,872 Effect of foreign currency exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents 25 ( 25 ) ( 34 ) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period ( 212 ) ( 1,232 ) 1,100 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period (1) 1,418 2,650 1,550 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ 1,206 $ 1,418 $ 2,650 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest, net of amounts capitalized: Vehicle $ 469 $ 204 $ 257 Non-vehicle 252 168 198 Income taxes, net of refunds 33 78 40 Operating lease liabilities 547 454 472 Supplemental disclosures of non-cash information: Purchases of revenue earning vehicles included in accounts payable, net of incentives $ 171 $ 53 $ 27 Sales of revenue earning vehicles included in vehicle receivables 191 85 33 Purchases of non-vehicle capital assets included in accounts payable 16 23 24 Revenue earning vehicles and non-vehicle capital assets acquired through finance leases 69 15 79 Operating lease right-of-use assets obtained in exchange for lease liabilities 721 614 177 Non-cash capital contribution from Hertz Holdings — — 65 (1) Amounts include cash and cash equivalents and restricted cash and cash equivalents which were held for sale as of December 31, 2020, prior to the completion of the Donlen Sale in the first quarter of 2021, as disclosed in Note 3, "Divestitures." The accompanying notes are an integral part of these financial statements. 93 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1— Background Hertz Global Holdings, Inc. was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns The Hertz Corporation , 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-operated and franchisee locations in the U.S., Europe, Africa, Asia, Australia, Canada, the Caribbean, Latin America, the Middle East and New Zealand. The Company also sells vehicles through Hertz Car Sales. Going Concern The accompanying 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. Note 2— Significant Accounting Policies Accounting Principles The Company’s consolidated financial statements have been prepared in accordance with U.S. GAAP. Principles of Consolidation The 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 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. All significant intercompany transactions have been eliminated in consolidation. Use of Estimates and Assumptions The use of estimates and assumptions as determined by management is required in the preparation of the consolidated financial statements in conformity with U.S. GAAP. These estimates are based on management’s evaluation of historical trends and other information available when the consolidated financial statements are prepared and may affect the amounts reported and related footnote disclosures. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the consolidated financial statements include depreciation of revenue earning vehicles, accounting for income taxes and related uncertain tax positions, self-insured liabilities and useful lives and impairment of long-lived tangible and indefinite-lived intangible assets including goodwill. Other estimates inherent in the preparation of the consolidated financial statements include reserves for litigation and other contingencies, pension costs and the valuation of stock-based compensation, among others. Revenue Earning Vehicles Revenue earning vehicles are stated at cost, net of related discounts and incentives from manufacturers. Holding periods typically range from six to sixty-six months . Generally, when revenue earning vehicles are acquired outside of a vehicle repurchase program (non-program), the Company estimates the period that the Company will hold the asset, primarily based on historical measures of the amount of rental activity (e.g., automobile mileage). The Company also estimates the residual value of the applicable revenue earning vehicles at the expected time of disposal, taking into consideration factors such as make, model and options, age, physical condition, mileage, sale location, time of the year and market conditions. Depreciation is recorded over the estimated holding period. Depreciation rates are reviewed on a quarterly basis based on management's ongoing assessment of present and 94 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) estimated future market conditions, their effect on residual values at the expected time of disposal and the estimated holding periods. Gains and losses on the sale of vehicles, including the costs associated with disposals, are included in depreciation of revenue earning vehicles and lease charges in the accompanying consolidated statements of operations. For program vehicles, the manufacturers agree to repurchase the vehicles at a specified price or guarantee the depreciation rate on the vehicles during established repurchase or auction periods, subject to, among other things, certain vehicle condition, mileage and holding period requirements. Vehicle repurchase programs guarantee on an aggregate basis the residual value of the program vehicle upon sale according to certain parameters which include the holding period, mileage and condition of the vehicles. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included in the related tax liability line in the accompany consolidated balance sheets. The Company has elected to record tax on global intangible low-tax income (“GILTI”) on a current basis. GILTI is a U.S. tax on certain earnings of foreign subsidiaries that are subject to foreign tax below a certain threshold. Self-insured Liabilities Self-insured liabilities in the accompanying consolidated balance sheets primarily include public liability, property damage and liability insurance supplement. These represent an estimate for both reported accident claims not yet paid, and claims incurred but not yet reported and are recorded on an undiscounted basis. Reserve requirements are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses and administrative costs. The adequacy of the liability is monitored quarterly based on evolving accident claim history and insurance related state legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results. Recoverability of Goodwill and Indefinite-lived Intangible Assets The Company tests the recoverability of its goodwill and indefinite-lived intangible assets by performing an impairment analysis on an annual basis, as of October 1, and at interim periods when circumstances require as a result of a triggering event. 95 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A goodwill impairment charge is calculated as the amount by which a reporting unit's carrying amount exceeds its fair value. For goodwill, fair value is determined using an income approach based on the discounted cash flows of each reporting unit. A reporting unit is an operating segment or a business one level below that operating segment (the component level) if discrete financial information is prepared and regularly reviewed by segment management. Components are aggregated into a single reporting unit when they have similar economic characteristics. The Company has identified two reporting units (operating segments): Americas RAC and International RAC. The fair values of the reporting units are estimated using the net present value of discounted cash flows generated by each reporting unit and incorporate various assumptions related to discount rates, growth rates, cash flow projections, tax rates and terminal value rates specific to the reporting unit to which they are applied. Discount rates are determined based on the reporting unit's WACC. The Company’s discounted cash flow projections are based upon reasonable and appropriate assumptions about the underlying business activities of the Company’s reporting units. In the impairment analysis for an indefinite-lived intangible asset, the Company compares the carrying value of the asset to its estimated fair value and recognizes an impairment charge whenever the carrying amount of the asset exceeds its estimated fair value. The estimated fair value for a tradename utilizes a relief-from-royalty income approach, which includes the Company’s revenue projections for each asset, along with assumptions for royalty rates, tax rates and WACC. Revenue Recognition The Company recognizes two types of revenue: (i) lease revenue; and (ii) revenue from contracts with customers. The Company reports revenues for taxes or non-concession fees collected from customers on behalf of governmental authorities on a net basis. Vehicle Rental and Rental Related Revenues The Company recognizes revenue from its vehicle rental operations when persuasive evidence of a contract exists, the performance obligations have been satisfied, the transaction price is fixed or determinable and collection is reasonably assured. Performance obligations associated with vehicle rental transactions are satisfied over the rental period, except for the portion associated with loyalty points, as further described below. Rental periods are short term in nature. Performance obligations associated with rental related activities, such as charges to the customer for the fueling and electric charging of vehicles and value-added services such as loss damage waivers, insurance products, navigation units, supplemental equipment and other consumables, are also satisfied over the rental period. Revenue from charges that are charged to the customer, such as gasoline, vehicle licensing and airport concession fees, is recorded on a gross basis with a corresponding charge to direct vehicle and operating expense. The Company recognizes revenue related to collections from customers for vehicle damages. Sales commissions paid to third parties are generally expensed when incurred due to the short-term nature of the related transaction on which the commission was earned and are recorded within DOE. Payments are due from customers at the completion of the rental, except for customers with negotiated payment terms, generally net 30 days or less, which are invoiced and remain as accounts receivable until collected. Loyalty Programs - The Company offers loyalty programs, primarily Hertz Gold Plus Rewards, wherein customers are eligible to earn loyalty points that are redeemable for free rental days or can be converted to loyalty points for redemption of products and services under loyalty programs of other companies. Each transaction that generates loyalty points results in the deferral of revenue equivalent to the retail value at the date the points are earned. The associated revenue is recognized when the customer redeems the loyalty points at some point in the future. The retail value of loyalty points is estimated based on the current retail value measured as of the date the loyalty points are earned, less an estimated amount representing loyalty points that are not expected to be redeemed (“breakage”). Breakage is reviewed on a quarterly basis and includes significant assumptions such as historical breakage trends and internal Company forecasts. 96 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Customer Rebates - The Company has business customers that rent vehicles based on terms that have been negotiated through contracts with their employers, or other entities with which they are associated (“commercial contracts”), which can differ substantially from the terms on which the Company rents vehicles to the general public. Some of the commercial contracts contain provisions which allow for rebates to the entity based on achieving a specific rental volume threshold. Rebates are treated as lease incentives and are recognized as a reduction of revenue at the time of the rental based on the rebate expected to be earned by the entity. Licensee Revenue The Company has franchise agreements which allow an independent entity to rent their vehicles under the Company’s brands, primarily Hertz, Dollar or Thrifty, for a franchise fee. Franchise fees are earned over time for the duration of the franchise agreement and are typically based on the larger of a minimum payment or an amount representing a percentage of net sales of the franchised business. Franchise fees that relate to a future contract term, such as initial fees or renewal fees, are deferred and recognized over the term of the franchise agreement. Ancillary Retail Vehicle Sales Revenue Ancillary retail vehicle sales represent revenues generated from the sale of warranty contracts, financing and title fees, and other ancillary services associated with vehicles disposed of at the Company’s retail outlets. These revenues are recorded at the point in time when the Company sells the product or provides the service to the customer. These revenues exclude the sale price of the vehicle, which is a component of the gain or loss on the disposition and is included in depreciation of revenue earning vehicles and lease charges, net in the accompanying consolidated statements of operations. Contract Balances The Company recognizes receivables and liabilities resulting from its contracts with customers. Contract receivables primarily consist of receivables from customers for vehicle rentals. Contract liabilities primarily consist of obligations to customers for prepaid vehicle rentals and related to the Company’s points-based loyalty programs. Cash and Cash Equivalents and Restricted Cash and Cash Equivalents Cash and cash equivalents include cash on hand and highly liquid investments with an original maturity of three months or less. The Company's cash and cash equivalents are invested in various investment grade institutional money market funds, and bank money market and interest-bearing accounts. Restricted cash and cash equivalents include cash and cash equivalents that are not readily available for use in the Company's operating activities. Restricted cash and cash equivalents are primarily comprised of proceeds from the disposition of vehicles pledged under the terms of vehicle debt financing arrangements and are restricted for the purchase of revenue earning vehicles and other specified uses under the vehicle debt facilities, cash utilized as credit enhancement under those arrangements, proceeds from the Term Loan C which are utilized to collateralize letters of credit, and certain cash accounts supporting regulatory reserve requirements related to the Company's self-insurance. These funds are primarily held in demand deposit and money market accounts or in highly rated money market funds with investments primarily in government and corporate obligations. Deposits held at financial institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk. The Company limits exposure relating to financial instruments by diversifying the financial instruments among various counterparties, which consist of major financial institutions. Receivables, Net of Allowance Receivables are stated net of allowances and primarily represent credit extended to vehicle manufacturers, customers that satisfy defined credit criteria, and amounts due from customers resulting from damage to rental 97 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) vehicles. The estimate of the allowance for doubtful accounts is based on the Company's future expected losses and its judgement as to the likelihood of ultimate payment. Actual receivables are written-off against the allowance for doubtful accounts when the Company determines the balance will not be collected. Estimates for future credit memos are based on historical experience and are reflected as reductions to revenue in the accompanying consolidated statements of operations. Property and Equipment, Net The Company's property and equipment, net consisted of the following: (In millions) December 31, 2023 December 31, 2022 Land, buildings and leasehold improvements $ 1,014 $ 990 Service vehicles, equipment and furniture and fixtures 430 392 Less: accumulated depreciation ( 773 ) ( 745 ) Total property and equipment, net $ 671 $ 637 Land is stated at cost and reviewed for impairment as further disclosed below in "Long-lived Assets, Including Finite-lived Intangible Assets." Property and equipment are stated at cost and are depreciated utilizing the straight-line method over the estimated useful lives of the related assets. Estimated useful lives are as follows: Buildings 1 to 50 years Furniture and fixtures 1 to 5 years Service vehicles and equipment 1 to 25 years Leasehold improvements The lesser of the economic life or the lease term Depreciation expense for property and equipment, net for the years ended December 31, 2023, 2022 and 2021 was $ 101 million, $ 97 million and $ 108 million, respectively. The Company follows the practice of expensing maintenance and repair costs for service vehicles, furniture and fixtures, and equipment, including the cost of minor replacements. Long-lived Assets, Including Finite-lived Intangible Assets Finite-lived intangible assets include concession agreements, technology, customer relationships and other intangibles. Long-lived assets and intangible assets with finite lives, including technology-related intangibles, are amortized using the straight-line method over the estimated economic lives of the assets, which range from one to forty years and two to fifteen years , respectively. Long-lived assets and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the estimated fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying value or estimated fair value less costs to sell. Stock-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award. Forfeitures are accounted for when they occur. The Company has estimated the fair value of options issued at the date of grant using a Black-Scholes option- 98 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) pricing model, which includes assumptions related to volatility, expected term, dividend yield and risk-free interest rate. The Company accounts for restricted stock unit ("RSU") and performance stock unit ("PSU") awards when granted as equity classified awards. For RSUs the expense is based on the grant-date fair value of the stock and the number of shares that vest, recognized over the service period. For any PSUs and performance share awards ("PSAs") granted, the expense is based on the grant-date fair value of the stock, recognized over a service period depending upon the applicable performance condition. For any PSUs and PSAs, the Company re-assesses the probability of achieving the applicable performance condition quarterly and adjusts the recognition of expense accordingly. The Company includes the excess tax benefit within income tax expense in the accompanying consolidated statements of operations when realized. Fair Value Measurements U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market or, if none exists, the most advantageous market, for the specific asset or liability at the measurement date (referred to as the "exit price"). Fair value is a market-based measurement that is determined based upon assumptions that market participants would use in pricing an asset or liability, including consideration of nonperformance risk. The Company assesses the inputs used to measure fair value using the three-tier hierarchy promulgated under U.S. GAAP. This hierarchy indicates the extent to which inputs used in measuring fair value are observable in the market. Level 1: Inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable. Level 2: Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3: Inputs that are unobservable to the extent that observable inputs are not available for the asset or liability at the measurement date and include management's judgment about assumptions market participants would use in pricing the asset or liability. Financial Instruments The Company is exposed to a variety of market risks, including the effects of changes in interest rates, gasoline and diesel fuel prices and foreign currency exchange rates. The Company manages exposure to these market risks through regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Financial instruments are viewed as risk management tools and have not been used for speculative or trading purposes. In addition, financial instruments are entered into with a diversified group of major financial institutions in order to manage the Company's exposure to counterparty nonperformance on such instruments. The Company measures all financial instruments at their fair value and does not offset the derivative assets and liabilities in its accompanying consolidated balance sheets. As the Company does not have financial instruments that are designated and qualify as hedging instruments, the changes in their fair value are recognized currently in the Company's operating results. Foreign Currency Translation and Transactions Assets and liabilities of international subsidiaries whose functional currency is the local currency are translated at the rate of exchange in effect on the balance sheet date; income and expenses are translated at the average exchange rates throughout the year. The related translation adjustments are reflected in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets. Foreign currency exchange rate 99 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) gains and losses resulting from transactions are included in selling, general and administrative expense in the accompanying consolidated statements of operations. Advertising Advertising production costs are deferred and expensed when the advertising first takes place. Advertising communication costs are expensed as incurred. Advertising costs are reflected as a component of selling, general and administrative expenses in the accompanying consolidated statements of operations and for the years ended December 31, 2023, 2022 and 2021 were $ 285 million, $ 262 million and $ 195 million, respectively. Divestitures The Company classifies long-lived assets and liabilities to be disposed of as held for sale in the period in which they are available for immediate sale in their present condition and the sale is probable and expected to be completed within one year. The Company initially measures assets and liabilities held for sale at the lower of their carrying value or fair value less costs to sell and assesses their fair value quarterly until disposed. When the divestiture represents a strategic shift that has (or will have) a major effect on the Company's operations and financial results, the disposal is presented as a discontinued operation. Recently Issued Accounting Pronouncements Not Yet Adopted as of December 31, 2023 Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative In October 2023, the FASB issued guidance that amends certain disclosure and presentation requirements related to the statement of cash flows, accounting changes and error corrections, earnings per share, interim reporting, commitments, debt, equity, derivatives, transfers and services and various industry specific guidance. For entities subject to the SEC’s existing disclosure requirements, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the existing disclosure requirements, the amendments will not become effective. Early adoption is not permitted. The Company is in the process of assessing the overall impact of adopting this guidance on its disclosures. Improvements to Reportable Segment Disclosures In November 2023, the FASB issued guidance that modifies segment reporting disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024 using a retrospective transition method. Early adoption is permitted. The Company is in the process of determining the timing of the adoption and assessing the overall impact of adopting this guidance on its disclosures. Improvements to Income Tax Disclosures In December 2023, the FASB issued guidance to enhance income tax disclosures related to, among other items, rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is in the process of determining the timing of the adoption and assessing the overall impact of adopting this guidance on its disclosures. 100 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 3— Divestitures Sales of Non-vehicle Capital Assets In 2019, the Company substantially completed the sale of certain non-vehicle capital assets constituting real property, in an eminent domain proceeding, in its Americas RAC segment. In 2023, the Company received additional cash from the sale upon final resolution of the eminent domain proceeding and recognized an additional $ 29 million pre-tax gain on the sale, which is included in (gain) on sale of non-vehicle capital assets in the accompanying consolidated statement of operations for the year ended December 31, 2023. In 2023, the Company sold and leased back its Los Angeles, California airport location in its Americas RAC segment. The transaction qualified for sale-leaseback accounting. The Company recognized a pre-tax gain of $ 133 million based on the difference in the sale amount of $ 143 million less $ 9 million net book value of assets sold and $ 1 million in selling costs, which is included in (gain) on sale of non-vehicle capital assets in the accompanying consolidated statement of operations for the year ended December 31, 2023. The leaseback is classified as an operating lease with a term of 36 months. Donlen Sale On March 30, 2021, the Company completed the sale of substantially all of the assets and certain liabilities of its Donlen subsidiary. For the year ended December 31, 2021, the Company recognized a pre-tax gain in its corporate operations of $ 400 million, net of the impact of foreign currency adjustments, 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 where cash proceeds were received in September 2021. Termination of 767 Auto Leasing Agreement In January 2018, Hertz entered into a Master Motor Vehicle Lease and Management Agreement (the “767 Lease Agreement”) pursuant to which Hertz granted 767 Auto Leasing LLC (“767”) the option to acquire certain vehicles from Hertz at rates aligned with the rates at which Hertz sold vehicles to third parties where 767’s payment obligations were guaranteed by American Entertainment Properties Corp. ("AEPC"). The 767 Lease Agreement was terminated effective October 31, 2021. Prior to the termination of the 767 Lease Agreement, the Company determined that it was the primary beneficiary of 767 due to its power to direct the activities of 767 that most significantly impacted 767's economic performance and the Company's obligation to absorb 25 % of 767's gains/losses and, accordingly, 767 was consolidated by the Company as a VIE. During the year ended December 31, 2021, 767 distributed $ 38 million to AEPC along with the return of certain vehicles, and there were no cash contributions from AEPC to 767. 101 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 4— Revenue Earning Vehicles The components of revenue earning vehicles, net are as follows: December 31, (In millions) 2023 2022 Revenue earning vehicles $ 16,164 $ 13,654 Less accumulated depreciation ( 2,155 ) ( 1,649 ) 14,009 12,005 Revenue earning vehicles held for sale, net (1) 642 490 Revenue earning vehicles, net $ 14,651 $ 12,495 (1) Represents the carrying amount of vehicles classified as held for sale as of the respective balance sheet date, including the EV Disposal Group as disclosed below. Depreciation of revenue earning vehicles and lease charges, net includes the following: Years ended December 31, (In millions) 2023 2022 2021 Depreciation of revenue earning vehicles $ 1,853 $ 1,806 $ 963 (Gain) loss on disposal of revenue earning vehicles (1) 157 ( 1,125 ) ( 502 ) Rents paid for vehicles leased 29 20 36 Depreciation of revenue earning vehicles and lease charges, net $ 2,039 $ 701 $ 497 (1) Includes the write-down to fair value for vehicles classified as held for sale, including the EV Disposal Group as disclosed below, for the year ended December 31, 2023. In December 2023, the Company identified the EV Disposal Group it desired to sell to in response to management's determination that the supply of EVs exceed customer demand, elevated EV damage and collision costs and a decline in EV residual values. As a result, the EV Disposal Group, included in the Company's Americas RAC segment, has been classified as held for sale with an aggregate carrying value of $ 542 million and is included in revenue earning vehicles, net in the accompanying consolidated balance sheet as of December 31, 2023. The carrying values of the vehicles included in the EV Disposal Group were written down to fair value less costs to sell and resulted in a write-down of $ 245 million, which is included in depreciation of revenue earning vehicles and lease charges, net in the accompanying consolidated statement of operations for the year ended December 31, 2023. The Company expects to complete the sale of the EV Disposal Group, primarily through its standard disposition channels, within the next 12 months. Note 5— Goodwill and Intangible Assets, Net Recoverability of Goodwill and Indefinite-lived Intangible Assets On an annual basis as of October 1, and at interim periods when circumstances require as a result of a triggering event as defined by ASC 350 - Intangibles, Goodwill and Other ("Topic 350"), the Company tests the recoverability of its goodwill and indefinite-lived intangible assets by performing an impairment analysis. An impairment is deemed to exist if the carrying value of goodwill or indefinite-lived intangible assets exceed their fair value as determined using level 3 inputs under the U.S. GAAP fair value hierarchy. The reviews of fair value involve judgment and estimates, including projected revenues, long-term growth rates, royalty rates and discount rates. The Company believes that its valuation techniques and assumptions are reasonable for this purpose. The Company performed the goodwill impairment analyses using the income approach, a measurement using level 3 inputs under the U.S. GAAP fair value hierarchy. In performing the impairment analyses, the weighted-average cost of capital used in the discounted cash flow model was calculated based upon the fair value of the Company's debt and share price with a debt-to-equity ratio comparable to the vehicle rental car industry. This present value model requires management to estimate future cash flows and forecasted EBITDA margins and 102 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) capital investments of each reporting unit. The assumptions the Company used to estimate future cash flows and EBITDA margins are consistent with the assumptions that the reporting units use for internal planning purposes, which the Company believes would be generally consistent with that of a market participant. The discount rate used for each reporting unit ranged from 13.0 % to 14.0 %. Each of the Company's reporting units had a fair value that exceeded its respective carrying value, the lowest of which was greater than 25 %. The Company performed the intangible impairment analyses for indefinite-lived intangible assets using the relief-from-royalty income approach, a measurement using level 3 inputs under the U.S. GAAP fair value hierarchy. The Company considered consistent factors as described above related to goodwill in addition to royalty rates. The assumptions the Company uses to estimate royalty rates are consistent with the assumptions that the reporting units use for internal planning purposes, which the Company believes would be generally consistent with that of a market participant. The discount rate used for each indefinite-lived intangible ranged from 13.0 % to 14.5 %. All indefinite-lived intangibles were noted to have fair values that exceeded their carrying values, the lowest of which was greater than 25 %. Goodwill The following summarizes the changes in the Company's goodwill by segment: (In millions) Americas RAC segment International RAC segment Total Balance as of January 1, 2023 Goodwill $ 1,028 $ 236 $ 1,264 Accumulated impairment losses — ( 220 ) ( 220 ) 1,028 16 1,044 Goodwill disposal and other changes during the period — — — — — — Balance as of December 31, 2023 Goodwill 1,028 236 1,264 Accumulated impairment losses — ( 220 ) ( 220 ) $ 1,028 $ 16 $ 1,044 (In millions) Americas RAC segment International RAC segment Total Balance as of January 1, 2022 Goodwill $ 1,029 $ 236 $ 1,265 Accumulated impairment losses — ( 220 ) ( 220 ) 1,029 16 1,045 Goodwill disposal and other changes during the period ( 1 ) — ( 1 ) ( 1 ) — ( 1 ) Balance as of December 31, 2022 Goodwill 1,028 236 1,264 Accumulated impairment losses — ( 220 ) ( 220 ) $ 1,028 $ 16 $ 1,044 103 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Intangible Assets, Net Intangible assets, net, consists of the following major classes: December 31, 2023 (In millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Amortizable intangible assets: Customer-related $ 269 $ ( 269 ) $ — Concession rights 407 ( 406 ) 1 Technology-related intangibles 342 ( 300 ) 42 Other (1) 38 ( 36 ) 2 Total 1,056 ( 1,011 ) 45 Indefinite-lived intangible assets: Tradenames (2) 2,794 — 2,794 Other (3) 24 — 24 Total 2,818 — 2,818 Total intangible assets, net $ 3,874 $ ( 1,011 ) $ 2,863 December 31, 2022 (In millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Amortizable intangible assets: Customer-related $ 269 $ ( 269 ) $ — Concession rights 407 ( 405 ) 2 Technology-related intangibles 378 ( 312 ) 66 Other (1) 43 ( 42 ) 1 Total 1,097 ( 1,028 ) 69 Indefinite-lived intangible assets: Tradenames (2) 2,794 — 2,794 Other (3) 24 — 24 Total 2,818 — 2,818 Total intangible assets, net $ 3,915 $ ( 1,028 ) $ 2,887 (1) Other amortizable intangible assets primarily include reacquired franchise rights. (2) As of December 31, 2023 and 2022, $ 2.2 billion was recorded in the Company's Americas RAC segment and $ 600 million in the Company's International RAC segment. (3) Other indefinite-lived intangible assets primarily consist of reacquired franchise rights. Years Ended December 31, (In millions) 2023 2022 2021 Amortization of intangible assets $ 48 $ 45 $ 88 104 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the Company's expected amortization expense based on its amortizable intangible assets as of December 31, 2023: (In millions) 2024 $ 21 2025 18 2026 5 2027 — 2028 — After 2028 1 Total expected amortization expense $ 45 Note 6— Debt The Company's debt, including its available credit facilities, consists of the following ($ in millions) as of December 31, 2023 and 2022: Facility Weighted-Average Interest Rate as of December 31, 2023 Fixed or Floating Interest Rate Maturity December 31, 2023 December 31, 2022 Non-Vehicle Debt First Lien RCF N/A Floating 6/2026 $ — $ — Term B Loan 8.69 % Floating 6/2028 1,268 1,281 Incremental Term B Loan 9.09 % Floating 6/2028 500 — Term C Loan 8.69 % Floating 6/2028 245 245 Senior Notes Due 2026 4.63 % Fixed 12/2026 500 500 Senior Notes Due 2029 5.00 % Fixed 12/2029 1,000 1,000 Other Non-Vehicle Debt (1) 5.71 % Fixed Various 2 9 Unamortized Debt Issuance Costs and Net (Discount) Premium ( 66 ) ( 58 ) Total Non-Vehicle Debt 3,449 2,977 Vehicle Debt HVF III U.S. ABS Program HVF III U.S. Vehicle Variable Funding Notes HVF III Series 2021-A Class A (2) 6.99 % Floating 6/2025 1,492 2,363 HVF III Series 2021-A Class B (2) 9.44 % Fixed 8/2025 188 188 1,680 2,551 HVF III U.S. Vehicle Medium Term Notes HVF III Series 2021-1 (2) 1.66 % Fixed 12/2024 2,000 2,000 HVF III Series 2021-2 (2) 2.12 % Fixed 12/2026 2,000 2,000 HVF III Series 2022-1 (2) 2.44 % Fixed 6/2025 750 750 HVF III Series 2022-2 (2) 2.78 % Fixed 6/2027 750 652 HVF III Series 2022-3 (2) 3.89 % Fixed 3/2024 192 383 HVF III Series 2022-4 (2) 4.22 % Fixed 9/2025 667 667 HVF III Series 2022-5 (2) 4.39 % Fixed 9/2027 364 317 HVF III Series 2023-1 (2) 6.17 % Fixed 6/2026 500 — HVF III Series 2023-2 (2) 6.30 % Fixed 9/2028 300 — 105 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Facility Weighted-Average Interest Rate as of December 31, 2023 Fixed or Floating Interest Rate Maturity December 31, 2023 December 31, 2022 HVF III Series 2023-3 (2) 6.46 % Fixed 2/2027 500 — HVF III Series 2023-4 (2) 6.66 % Fixed 3/2029 500 — 8,523 6,769 Vehicle Debt - Other Repurchase Facility N/A Fixed N/A — 86 European ABS (2) 5.80 % Floating 3/2026 1,205 811 Hertz Canadian Securitization (2) 6.95 % Floating 6/2025 350 283 Australian Securitization (2) 5.95 % Floating 6/2025 203 168 New Zealand RCF 8.47 % Floating 6/2025 70 54 U.K. Financing Facility 7.85 % Floating 1/2024-9/2027 173 101 Other Vehicle Debt (3) 5.17 % Floating 1/2024-11/2027 110 125 2,111 1,628 Unamortized Debt Issuance Costs and Net (Discount) Premium ( 72 ) ( 62 ) Total Vehicle Debt 12,242 10,886 Total Debt $ 15,691 $ 13,863 N/A - Not applicable (1) Other non-vehicle debt is primarily comprised of $ 8 million and $ 6 million in finance lease obligations as of December 31, 2023 and 2022, respectively. (2) Maturity reference is to the earlier "expected final maturity date" as opposed to the subsequent "legal final maturity date." The expected final maturity date is the date by which Hertz and investors in the relevant indebtedness originally expect the outstanding principal of the relevant indebtedness to be repaid in full. The legal final maturity date is the date on which the outstanding principal of the relevant indebtedness is legally due and payable in full. (3) Other vehicle debt is primarily comprised of $ 104 million and $ 76 million in finance lease obligations as of December 31, 2023 and 2022, respectively. Non-Vehicle Debt First Lien Credit Agreement Pursuant to the Plan of Reorganization, on the Effective Date, Hertz entered into the First Lien Credit Agreement that provided for the following: • the First Lien RCF for revolving loans and letters of credit up to an aggregate principal amount of $ 1.3 billion; • Term B Loan for term loans in an aggregate principal amount of $ 1.3 billion; and • Term C Loan for term loans that are available to cash collateralize letters of credit in an aggregate principal amount of $ 245 million. 106 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) First Lien RCF : The First Lien RCF bears interest at a benchmark rate plus spread. The following table indicates the various currencies and benchmark rates applicable to loans under the First Lien RCF. Currencies Benchmark rates U.S. dollar Term SOFR (1) or Prime rate (as per terms of loan) Eurodollar EURIBOR rate or Base rate (as per terms of loan) Australian dollar Bank Bill Swap Reference Bid Rate Canadian dollar Canadian prime rate or an adjusted Canadian Dollar Offered Rate ("CDOR") (as per terms of loan) Sterling Daily Simple Sterling Overnight Index Average ("SONIA") (1) Prior to March 2022, the First Lien RCF had a benchmark rate of USD LIBOR or Prime rate. As of December 31, 2023, ABR Loans and Canadian Prime Rate Loans, as defined under the First Lien Credit Agreement, bear interest at the relevant benchmark rate plus an applicable margin of 2.00 %. In addition, the pricing for U.S. dollar, Eurodollar, Sterling and Canadian dollar loans are equal to a local currency benchmark plus a margin of 3.00 %. The above referenced margins are dependent upon the Company's Consolidated Total Corporate Leverage Ratio, as defined under the First Lien Credit Agreement. In each case, the margin may change depending on Hertz’s Total Corporate Leverage Ratio. The First Lien RCF matures on June 30, 2026. Hertz increased the aggregate committed amount of the First Lien RCF from $ 1.3 billion to $ 1.9 billion and the sublimit for letters of credit from $ 1.1 billion to $ 1.8 billion through various increases that occurred during the year ended December 31, 2022. In March 2023, Hertz increased the aggregate committed amount of the First Lien RCF from $ 1.9 billion to $ 2.0 billion. Term B Loan and Term C Loan : In May 2023, the First Lien Credit Agreement was amended to change the benchmark interest rate on the Term Loans from USD LIBOR to term SOFR in connection with the cessation of USD LIBOR. As per the amended First Lien Credit Agreement, the Term Loans bear interest based on an alternate base rate ("ABR") or term SOFR, in each case, plus an applicable margin of (i) 2.25 % in the case of the ABR, or (ii) 3.25 % in the case of term SOFR. In each case, the margin may change depending on Hertz's consolidated total corporate leverage ratio, as defined in the First Lien Credit Agreement (the "Total Corporate Leverage Ratio"). The First Lien Credit Agreement requires the Term B Loan to be repaid in quarterly installments of $ 3.3 million per quarter. Each of the Term B Loan and Term C Loan mature on June 30, 2028. Incremental Term B Loan: In November 2023, the First Lien Credit Agreement was amended to provide for the Incremental Term B Loan in an aggregate principal amount of $ 500 million. The Incremental Term B Loan bears interest based on an ABR or term SOFR, in each case, plus an applicable margin of (i) 2.75 % in the case of the ABR, or (ii) 3.75 % in the case of term SOFR. The amended First Lien Credit Agreement requires the Incremental Term B Loan to be repaid in quarterly installments of $ 1.25 million beginning March 31, 2024 until maturity. The Incremental Term B Loan matures on June 30, 2028. 2021 Senior Notes In November 2021, Hertz issued $ 1.5 billion of unsecured senior notes consisting of $ 500 million Senior Notes Due 2026 and $ 1.0 billion Senior Notes Due 2029. The Senior Notes Due 2026 and the Senior Notes Due 2029 are Hertz's senior unsecured obligations and are guaranteed by each of Hertz’s direct and indirect U.S. subsidiaries that are guarantors under the First Lien Credit Agreement. 107 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Vehicle Debt HVF III U.S. ABS Program In June 2021, Hertz established the HVF III securitization platform (the "HVF III U.S. ABS Program") to facilitate its financing activities relating to vehicles used by Hertz in the U.S. vehicle rental operations. HVF III is the issuer of variable funding notes and medium-term notes under the HVF III U.S. ABS Program. HVF III entered into a base indenture that permits it to issue term and variable funding rental car asset-backed securities, secured by a collateral pool consisting primarily of the rental vehicles used in the Company's U.S. vehicle rental operations and the related incentive and repurchase program vehicle receivables. Within each series of HVF III U.S. Vehicle Medium Term Notes, the issued notes are subordinated based on class. Pursuant to the Plan of Reorganization, in June 2021, HVF III issued Series 2021-A Variable Funding Rental Car Asset Backed Notes (the "Series 2021-A Notes"), the Series 2021-1 Fixed Rate Rental Car Asset Backed Notes (the "Series 2021-1 Notes") and the Series 2021-2 Fixed Rate Rental Car Asset Backed Notes (the "Series 2021-2 Notes" and, together with the Series 2021-A Notes and the Series 2021-1 Notes, the “HVF III Series 2021 Notes”). In June 2021, in connection with the issuance of the HVF III Series 2021 Notes, Hertz entered into a new Master Motor Vehicle Operating Lease and Servicing Agreement (the “Operating Lease”) among HVF III, as lessor, Hertz, as a lessee, servicer and guarantor, DTG Operations, Inc., a wholly-owned subsidiary of the Company, as a lessee and other permitted lessees (together with Hertz and DTG Operations, Inc., the "Lessees"), pursuant to which HVF III will lease vehicles to the Lessees. From time to time, Hertz or any of its subsidiaries (all affiliates of HVF III), at their discretion, may purchase and retain any part or portion of an issued notes’ series or class within a series under the HVF III U.S. ABS Program depending on market conditions and other factors at the time of issuance. In addition, any retained notes issued under the HVF III U.S. ABS Program may be sold to third parties at a subsequent date or may be sold and repurchased under the Repurchase Facilities, as disclosed below, in each case, depending on market conditions and other factors at the time. References to the HVF III U.S. ABS Program include HVF III's U.S. Vehicle Variable Funding Notes and HVF III's U.S. Vehicle Medium Term Notes. HVF III U.S. Vehicle Variable Funding Notes HVF III Series 2021-A Notes: HVF III increased the commitments for the Series 2021-A Notes through various increases during the year ended December 31, 2022, increasing the maximum principal amount that may be outstanding from $ 3.0 billion to $ 3.9 billion. Additionally, in June 2022, the maturity date of the Series 2021-A Notes Class A Notes was extended to June 2024. In June 2023, HVF III increased the commitments for the Series 2021-A Notes, increasing the maximum principal amount that may be outstanding from $ 3.9 billion to $ 4.1 billion. Additionally, the maturity dates of the Series 2021-A Class A Notes and Class B Notes were extended to June 2025 and August 2025, respectively. HVF III U.S. Vehicle Medium Term Notes HVF III Series 2022-1 Notes and Series 2022-2 Notes : In January 2022, HVF III issued the Series 2022-1 Notes and Series 2022-2 Notes in aggregate principal amounts of $ 750 million, respectively. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Series 2022-1 Class D Notes and Series 2022-2 Class D Notes in aggregate principal amounts of $ 98 million, respectively. The Series 2022-1 Class D Notes were subsequently sold to third parties in July and August 2022. HVF III Series 2022-3 Notes : In March 2022, HVF III issued the Series 2022-3 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 383 million. At the time of issuance, Hertz, an affiliate 108 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) of HVF III, purchased the Class D Notes in an aggregate principal amount of $ 50 million which were subsequently sold to third parties in July 2022. HVF III Series 2022-4 Notes : In March 2022, HVF III issued the Series 2022-4 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 667 million. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Class D Notes in an aggregate principal amount of $ 87 million which were subsequently sold to third parties in August 2022. HVF III Series 2022-5 Notes : In March 2022, HVF III issued the Series 2022-5 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 364 million. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Class D Notes in an aggregate principal amount of $ 47 million. HVF III Series 2023-1 Notes : In March 2023, HVF III issued the Series 2023-1 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 500 million. At the time of issuance, Hertz, an affiliate of HVF III, purchased the Class D Notes in an aggregate principal amount of $ 40 million. HVF III Series 2023-2 Notes : In March 2023, HVF III issued the Series 2023-2 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 300 million. HVF III Series 2023-3 Notes : In August 2023, HVF III issued the Series 2023-3 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 500 million. HVF III Series 2023-4 Notes : In August 2023, HVF III issued the Series 2023-4 Notes in four classes (Class A, Class B, Class C and Class D) in an aggregate principal amount of $ 500 million. There is subordination within each of the preceding series based on class. HVF III Series 2022-2, Series 2022-5 and Series 2023-1 Class D Notes (the "Class D Notes") : In September 2023, Hertz sold the Class D Notes to third parties. (In millions) Aggregate Principal Amount HVF III Series 2022-2 Class D Notes $ 98 HVF III Series 2022-5 Class D Notes 47 HVF III Series 2023-1 Class D Notes 40 Total $ 185 Vehicle Debt-Other Repurchase Facilities Beginning in 2022, Hertz entered into, and in the future may continue to enter into, the Repurchase Facilities, whereby Hertz can sell and repurchase at a pre-determined price any retained notes under the HVF III U.S. ABS Program. Transactions occurring under the Repurchase Facilities are based on mutually agreeable terms and prevailing rates. As of December 31, 2023, Hertz does not hold any retained notes under the HVF III U.S. ABS Program and there were no repurchase transactions outstanding under the Repurchase Facilities. European ABS The European ABS is the primary vehicle financing facility for the Company's vehicle rental operations in France, the Netherlands, Germany, Spain and Italy. The lenders under the European ABS have been granted a security interest in the owned rental vehicles used in the Company's vehicle rental operations in these countries and certain contractual rights related to such vehicles. 109 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In December 2022, the European ABS was amended to (i) increase the aggregate maximum borrowings to € 1.1 billion, (ii) extend the maturity to November 2024, and (iii) incorporate the Italian fleet within the European ABS financing structure. In connection with the amendment, the Hertz performance guarantee was amended to accommodate certain obligations of its Italian subsidiaries in their capacities as lessees, servicers and administrators under the amended European ABS. In September 2023, the European ABS was amended to (i) increase the aggregate maximum borrowings to € 1.2 billion, (ii) extend the maturity date to March 2026 and (iii) amend certain other provisions to provide for further operating flexibility. Hertz Canadian Securitization Hertz maintains a financing through TCL Funding Limited Partnership, a bankruptcy remote, indirect, wholly-owned, special purpose subsidiary of Hertz, for the purpose of financing its rental car fleet operations in Canada (the "Hertz Canadian Securitization"). In June 2022, the Hertz Canadian Securitization was amended to extend the maturity to June 2024. In June 2023, the Hertz Canadian Securitization was amended to provide for aggregate maximum borrowings of CAD$ 475 million and to extend the maturity date to June 2025. Australian Securitization Hertz maintains a financing through HA Fleet Pty. Limited, an indirect wholly-owned subsidiary of Hertz, for the purpose of financing its rental car fleet operations in Australia (the "Australian Securitization"). HA Fleet Pty. Limited serves as the issuer under the Australian Securitization. The lender under the Australian Securitization has been granted a security interest primarily in the owned rental vehicles used in its vehicle rental operations in Australia and certain contractual rights related to such vehicles. In January 2022, the Australian Securitization was amended to increase the aggregate maximum borrowings to AUD$ 250 million and to extend the maturity to April 2024. In June 2023, the Australian Securitization was amended to provide for aggregate maximum borrowings of AUD$ 340 million and to extend the maturity date to June 2025. New Zealand RCF Hertz maintains a financing through Hertz New Zealand Holdings Limited ("Hertz New Zealand"), an indirect wholly-owned subsidiary of Hertz, for the purpose of financing its rental car fleet operations in New Zealand. Hertz New Zealand is the borrower under a credit agreement that provides for aggregate maximum borrowings on a revolving basis under an asset-based revolving credit facility (the “New Zealand RCF”). In April 2022, the New Zealand RCF was amended to extend the maturity of the aggregate maximum borrowings of NZD$ 60 million to June 2024. In August 2023, the New Zealand RCF was amended to provide for aggregate maximum borrowings of NZD$ 120 million and to extend the maturity date to June 2025. U.K. Financing Facility In April 2022, the U.K. Financing Facility was amended to extend the maturity of the aggregate maximum borrowings of £ 100 million to October 2023. 110 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In June 2023, the U.K. Financing Facility was amended to provide for aggregate maximum borrowings of £ 135 million and to extend the maturity date to November 2024. Loss on Extinguishment of Debt In June 2021, in accordance with the Plan of Reorganization, substantially all existing non-vehicle debt and all existing ABS facilities under the HVF II U.S. ABS Program and the HVIF U.S. ABS Program were repaid in full and cancelled. As a result, the Company incurred losses in the form of early redemption premiums and/or the write-off of deferred financing costs associated with certain redemptions, terminations and waiver agreements. For the year ended December 31, 2021, loss on extinguishment of debt is presented in reorganization items, net, unless otherwise noted in the table below, in the accompanying consolidated statements of operations. There were no losses on extinguishment of debt recognized for the years ended December 31, 2023 and 2022. The following table reflects the amount of loss for each respective redemption/termination: Year Ended December 31, Redemption/Termination (in millions) 2021 Non-Vehicle Debt HIL Credit Agreement (1) $ 8 Second HIL Credit Agreement 5 Total Non-Vehicle Debt 13 Non-Vehicle Debt (subject to compromise) Senior Term Loan 16 Senior RCF 22 Senior Notes 29 Senior Second Priority Secured Notes 4 Promissory Notes 2 Alternative Letter of Credit Facility 7 Letter of Credit Facility 8 Total Non-Vehicle Debt (subject to compromise) 88 Vehicle Debt HVF II U.S. Vehicle Variable Funding Notes 9 HVF II U.S. Vehicle Medium Term Notes 39 HVIF II Series 2020-1 21 European Vehicle Notes 29 Total Vehicle Debt 98 Total Loss on Extinguishment of Debt $ 199 (1) The loss on extinguishment is recorded in non-vehicle interest expense, net in the accompanying consolidated income statement for the year ended December 31, 2021. 111 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Maturities As of December 31, 2023, the nominal amounts of maturities of debt for each of the years ending December 31 are as follows: (In millions) 2024 2025 2026 2027 2028 After 2028 Non-Vehicle Debt $ 20 $ 18 $ 518 $ 18 $ 1,941 $ 1,000 Vehicle Debt 2,322 3,792 4,096 1,304 550 250 Total $ 2,342 $ 3,810 $ 4,614 $ 1,322 $ 2,491 $ 1,250 The Company has reviewed its debt facilities and determined that it is probable that the Company will be able, and has the intent, to refinance these facilities at such times as the Company determines appropriate prior to their respective maturities. Borrowing Capacity and Availability Borrowing capacity and availability comes from the Company's revolving credit facilities, which are a combination of variable funding asset-backed securitization facilities, cash-flow based revolving credit facilities, asset-based revolving credit facilities and the First Lien RCF. Creditors under each such asset-backed securitization facility and asset-based revolving credit facility have a claim on a specific pool of assets as collateral. With respect to each such asset-backed securitization facility and asset-based revolving credit facility, the Company refers to the amount of debt it can borrow given a certain pool of assets as the borrowing base. The Company refers to "Remaining Capacity" as the maximum principal amount of debt permitted to be outstanding under the respective facility (i.e., with respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the amount of debt the Company could borrow assuming it possessed sufficient assets as collateral) less the principal amount of debt then-outstanding under such facility and, in the case of the First Lien RCF, less any issued standby letters of credit. With respect to a variable funding asset-backed securitization facility or asset-based revolving credit facility, the Company refers to "Availability Under Borrowing Base Limitation" as the lower of Remaining Capacity or the borrowing base less the principal amount of debt then-outstanding under such facility (i.e., the amount of debt that can be borrowed given the collateral possessed at such time). 112 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following facilities were available to the Company as of December 31, 2023 and are presented net of any outstanding letters of credit: (In millions) Remaining Capacity Availability Under Borrowing Base Limitation Non-Vehicle Debt First Lien RCF $ 1,266 $ 1,266 Total Non-Vehicle Debt 1,266 1,266 Vehicle Debt HVF III Series 2021-A 2,382 — European ABS 128 — Hertz Canadian Securitization 10 — Australian Securitization 30 1 New Zealand RCF 6 — U.K. Financing Facility — — Other Vehicle Debt 47 — Total Vehicle Debt 2,603 1 Total $ 3,869 $ 1,267 Letters of Credit As of December 31, 2023, there were outstanding standby letters of credit totaling $ 995 million comprised primarily of $ 734 million issued under the First Lien RCF and $ 245 million issued under the Term C Loan. As of December 31, 2023, no capacity remains to issue additional letters of credit under the Term C Loan. Such letters of credit have been issued primarily to provide credit enhancement for the Company's asset-backed securitization facilities and to support the Company's insurance programs, as well as to support the Company's vehicle rental concessions and leaseholds. As of December 31, 2023, none of the issued letters of credit have been drawn upon. Pledges Related to Vehicle Financing Substantially all of the Company's revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of the lenders under the various credit facilities, other secured financings or asset-backed securities programs. None of the value of such assets (including the assets owned by Hertz Vehicle Financing III LLC and various other domestic and international subsidiaries that facilitate the Company's international securitizations) will be available to satisfy the claims of unsecured creditors unless the secured creditors are paid in full. The Company has a 25 % ownership interest in IFF No. 2, whose sole purpose is to provide commitments to lend under the European ABS in various currencies subject to borrowing bases comprised of revenue earning vehicles and related assets of certain of Hertz International, Ltd.'s subsidiaries. IFF No. 2 is a VIE and the Company is the primary beneficiary, therefore, the assets, liabilities and results of operations of IFF No. 2 are included in the accompanying consolidated financial statements. As of December 31, 2023 and 2022, IFF No. 2 had total assets of $ 1.7 billion and $ 1.3 billion, respectively, comprised primarily of intercompany receivables, and total liabilities of $ 1.7 billion and $ 1.3 billion, respectively, comprised primarily of debt. Covenant Compliance The First Lien Credit Agreement r e quires Hertz to comply with the following financial covenant: a First Lien Ratio of less than or equal to 3.00 to 1.00 in the first and last quarters of the calendar year and 3.50 to 1.00 in the second and third quarters of the calendar year. As of December 31, 2023, Hertz was in compliance with the First Lien Ratio. 113 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In addition to the financial covenant, the First Lien Credit Agreement contains customary affirmative covenants including, among other things, the delivery of quarterly and annual financial statements and compliance certificates, and covenants related to conduct of business, maintenance of property and insurance, compliance with environmental laws and the granting of security interests for the benefit of the secured parties under that agreement on after-acquired real property, fixtures and future subsidiaries. The First Lien Credit Agreement also contains customary negative covenants, including, among other things, restrictions on the incurrence of liens, indebtedness, asset dispositions and restricted payments. As of December 31, 2023, the Company was in compliance with all covenants in the First Lien Credit Agreement. Accrued Interest As of December 31, 2023 and 2022, accrued interest was $ 26 million and $ 19 million, respectively, which is included in accrued liabilities in the accompanying consolidated balance sheets. Restricted Net Assets Hertz and certain of its subsidiaries are subject to contractual restrictions under the terms of its debt, including restrictions on the ability to pay dividends (directly or indirectly). As of December 31, 2023, the restricted net assets of the subsidiaries of Hertz and Hertz Global exceed 25 % of their total consolidated net assets, respectively. Note 7— Employee Retirement Benefits The Company sponsors multiple domestic and international employee retirement benefit plans where benefits are based upon years of service and compensation. The Hertz Corporation Account Balance Defined Benefit Pension Plan (the “Hertz Retirement Plan”) is a U.S. cash balance plan, which was amended in 2014 to permanently discontinue future benefit accruals and participation under the plan for non-union employees. The majority of union employees have since discontinued participation in the Hertz Retirement Plan as the result of collective bargaining. Some of the Company’s international subsidiaries have defined benefit retirement plans. In certain countries, when the subsidiaries make the required funding payments, they have no further obligations under such plans. The Company also sponsors defined contribution plans for certain eligible U.S. and non-U.S. employees, where contributions are matched based on specific guidelines in the plans. Management makes certain assumptions relating to discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors when determining amounts to be recognized. These assumptions are reviewed annually by management, assisted by the enrolled actuary, and updated as warranted. The Company uses a December 31 measurement date for all of the plans and utilizes fair value to calculate the market-related value of pension assets for purposes of determining the expected return on plan assets and accounting for asset gains and losses. Actual results that differ from the Company's assumptions are accumulated and amortized over future periods and, therefore, significant differences in actual experience or significant changes in assumptions would affect the Company's pension costs and obligations. The Company recognizes an asset for each over-funded plan and a liability for each underfunded plan in the consolidated balance sheets. Pension plan liabilities are revalued annually based on updated assumptions and information about the individuals covered by the plan. For pension plans, if accumulated actuarial gains and losses are in excess of a 10 percent corridor, the excess is amortized on a straight-line basis over the average remaining service period of active participants. Prior service cost is amortized on a straight-line basis from the date recognized over the average remaining service period of active participants, when applicable. 114 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following tables set forth the funded status and the net periodic pension cost of the Hertz Retirement Plan and other U.S. based retirement plans and the retirement plans for international operations (“Non-U.S.”), together with amounts included in the accompanying consolidated balance sheets and statements of operations: Pension Benefits U.S. Non-U.S. (In millions) 2023 2022 2023 2022 Change in Benefit Obligation Benefit obligation as of January 1 $ 371 $ 465 $ 172 $ 307 Service cost — — 1 1 Interest cost 19 16 8 5 Plan settlements ( 21 ) ( 24 ) — ( 5 ) Benefits paid ( 3 ) ( 3 ) ( 7 ) ( 5 ) Foreign currency exchange rate translation — — 10 ( 27 ) Actuarial (gain) loss 7 ( 83 ) 7 ( 104 ) Benefit obligation as of December 31 $ 373 $ 371 $ 191 $ 172 Change in Plan Assets Fair value of plan assets as of January 1 $ 338 $ 468 $ 131 $ 255 Actual return gain (loss) on plan assets 28 ( 103 ) 6 ( 91 ) Company contributions — — 3 2 Plan settlements ( 21 ) ( 24 ) — ( 5 ) Benefits paid ( 3 ) ( 3 ) ( 7 ) ( 5 ) Foreign currency exchange rate translation — — 9 ( 25 ) Fair value of plan assets as of December 31 $ 342 $ 338 $ 142 $ 131 Funded Status of the Plan Plan assets (less than) in excess of the benefit obligation $ ( 31 ) $ ( 33 ) $ ( 49 ) $ ( 41 ) In 2023, discount rates decreased, resulting in actuarial losses for the U.S. and Non-U.S. pension plans, partially offset by changes in the inflation and mortality assumptions in the United Kingdom ("U.K."). In 2022, discount rates increased, resulting in actuarial gains for the U.S. and Non-U.S. pension plans, partially offset by census data updates and experience. 115 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Pension Benefits U.S. Non-U.S. ($ in millions) 2023 2022 2023 2022 Amounts recognized in balance sheets: Prepaid expenses and other assets $ — $ — $ 11 $ 12 Accrued liabilities ( 31 ) ( 33 ) ( 60 ) ( 53 ) Net asset (obligation) recognized in the balance sheets $ ( 31 ) $ ( 33 ) $ ( 49 ) $ ( 41 ) Prior service credit $ — $ — $ ( 1 ) $ ( 1 ) Net gain (loss) ( 47 ) ( 58 ) ( 66 ) ( 56 ) Accumulated other comprehensive income (loss) ( 47 ) ( 58 ) ( 67 ) ( 57 ) Funded/(Unfunded) accrued pension or postretirement benefit 16 25 18 16 Net obligation recognized in the balance sheets $ ( 31 ) $ ( 33 ) $ ( 49 ) $ ( 41 ) Total recognized in other comprehensive (income) loss $ ( 10 ) $ 29 $ 11 $ ( 17 ) Total recognized in net periodic benefit cost and other comprehensive (income) loss $ ( 2 ) $ 35 $ 14 $ ( 15 ) Accumulated Benefit Obligation as of December 31 $ 373 $ 371 $ 190 $ 171 Weighted-average assumptions as of December 31 Discount rate 5.1 % 5.4 % 4.4 % 4.7 % Expected return on assets 6.2 % 6.0 % 5.2 % 5.2 % Average rate of increase in compensation — % — % 2.2 % 2.1 % Interest crediting rate 3.8 % 3.8 % N/A N/A N/A - Not applicable The discount rate used to determine the December 31, 2023 and 2022 benefit obligations for U.S. pension plans was based on the rate from the Mercer Pension Discount Curve-Above Mean Yield that is appropriate for the duration of the Company's plan liabilities. For its plans outside the U.S., the discount rate reflected the market rates for an optimized subset of high-quality corporate bonds currently available with the discount rate in a country determined based on a yield curve constructed from high quality corporate bonds in that country. The rate selected from the yield curve has a duration that matches its plan. The expected return on plan assets for each funded plan is based on expected future investment returns considering the target investment mix of plan assets. 116 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table sets forth the net periodic pension expense charged to net income (loss). The components of net periodic pension expense (benefit), other than service cost, were included in other (income) expense, net in the accompanying consolidated statements of operations. Pension Benefits U.S. Non-U.S. Years Ended December 31, ($ in millions) 2023 2022 2021 2023 2022 2021 Components of Net Periodic Pension and Postretirement Expense (Benefit) Service cost $ — $ — $ — $ 1 $ 1 $ 1 Interest cost 19 16 12 8 5 4 Expected return on plan assets ( 14 ) ( 14 ) ( 18 ) ( 7 ) ( 7 ) ( 7 ) Net amortizations — — — 1 1 2 Settlement loss 3 4 12 — 2 1 Net pension and postretirement expense (benefit) $ 8 $ 6 $ 6 $ 3 $ 2 $ 1 Weighted-average discount rate for expense (January 1) 5.4 % 2.7 % 2.2 % 4.7 % 1.7 % 1.4 % Weighted-average assumed long-term rate of return on assets (January 1) 6.0 % 4.5 % 4.5 % 5.2 % 3.0 % 3.0 % Weighted-average interest crediting rate for expense 3.8 % 3.8 % 3.8 % N/A N/A N/A N/A - Not applicable The net of tax loss in accumulated other comprehensive income (loss) as of December 31, 2023 and 2022 relating to pension benefits of the Hertz Retirement Plan was $ 95 million and $ 92 million, respectively. The provisions charged to net income (loss) for the years ended December 31, 2023, 2022 and 2021 for all other pension plans were approximately $ 6 million, $ 6 million and $ 5 million, respectively. The provisions charged to net income (loss) for the years ended December 31, 2023, 2022 and 2021 for the defined contribution plans were approximately $ 20 million, $ 20 million and $ 16 million, respectively. Plan Assets The Company has a long-term investment outlook for the assets held in the Company sponsored plans, which is consistent with the long-term nature of each plan's respective liabilities. The Company has two major plans which reside in the U.S. and the U.K. The U.S. Plan The U.S. Plan (the “Plan”) has a target asset allocation mix of 70 % in investments intended to hedge the impact of capital market movements ("Immunizing Portfolio Investments"), comprised primarily of fixed income securities, and 30 % in investments intended to earn more than the pension liability growth over the long-term ("Growth Portfolio Investments"). The Growth Portfolio Investments are primarily invested in passively managed equity funds, international and emerging market funds that are actively managed and non-investment grade fixed income funds. The overall strategy and the Immunizing Portfolio Investments are managed by professional investment managers. The investments within these asset classes are diversified in order to minimize the risk of large losses. The Plan assumes a 6.2 % expected long-term annual weighted-average rate of return on assets. 117 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The fair value measurements of the Company's U.S. pension plan assets are based upon inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable (Level 1) and significant observable inputs (Level 2) that reflect quoted prices for similar assets or liabilities in active markets. The fair value measurements of the U.S. pension plan assets relate to common collective trusts and other pooled investment vehicles consisting of the following asset categories: (In millions) December 31, 2023 December 31, 2022 Asset Category Level 1 Level 2 Measured at NAV (1) Level 1 Level 2 Measured at NAV (1) Cash $ 9 $ — $ — $ 8 $ — $ — Short Term Investments — 36 — — 31 — Equity Funds (2) : U.S. Large Cap — 45 — — 40 — U.S. Small Cap — 5 — — 5 — International Large Cap — 20 — — 19 — International Small Cap — 3 — — 4 — International Emerging Markets — 5 4 — 5 4 Fixed Income Securities: U.S. Treasuries — 1 — — — — Corporate Bonds — 155 32 — 161 29 Government Bonds — 4 — — 4 — Municipal Bonds — 4 — — 6 — Derivatives - Interest Rate — — — — 1 — Non-Investment Grade Fixed Income (2) — 19 — — 21 — Total fair value of pension plan assets $ 9 $ 297 $ 36 $ 8 $ 297 $ 33 (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. (2) The Level 2 investments relate to investment funds that publish daily NAV per unit. The daily NAV is available to participants in the funds and redemptions can be made daily at the current NAV. The fair value and units are determined and published and are the basis for current transactions. The investments are not eligible for the NAV practical expedient. However, they are measured at the published NAV because the quoted NAV per unit represents the price at which the investment would be sold in a transaction between independent market participants. The U.K. Plan The Company's United Kingdom defined benefit pension plan (the "U.K. Plan") has a target allocation of 30 % actively managed diversified growth and multi-asset credit funds, 10 % passive equity funds and 60 % protection portfolio that consists of liability driven investments, Sterling liquidity fund and United Kingdom corporate bonds. The actively managed diversified growth and multi-asset credit funds are intended to deliver a long-term equity-like return but with reduced levels of volatility. The protection portfolio is designed to partially hedge the interest rate and inflation expectation exposure of the liabilities which are measured on a local regulatory basis. The amount that is required to be invested in each fund to maintain target hedge ratios will vary over time as the value of the liabilities change and the allocations within the protection portfolio will be allowed to vary accordingly. All of the invested assets of the U.K. Plan are held via pooled funds managed by professional investment managers. The U.K. Plan assumes a 5.2 % expected long-term weighted-average rate of return on assets for the Plan in total. The Company's U.K. Plan comprises $ 135 million of the $ 142 million in fair value of Non-U.S. plan assets as of December 31, 2023 and comprises $ 126 million of the $ 131 million in fair value of Non-U.S. plan assets as of December 31, 2022. The fair value measurements of the Company's U.K. Plan assets are based upon inputs that reflect quoted prices for identical assets or liabilities in active markets that are observable (Level 1) and significant observable inputs that reflect quoted prices for similar assets or liabilities in active markets (Level 2). The fair value 118 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) measurements of the U.K. Plan assets relate to common collective trusts and other pooled investment vehicles consisting of the following asset categories: (In millions) December 31, 2023 December 31, 2022 Asset Category Level 1 Level 2 Measured at NAV (1) Level 1 Level 2 Measured at NAV (1) Actively Managed Multi-Asset Funds: Diversified Growth Funds (2) $ — $ — $ — $ 11 $ — $ — Multi Asset Credit — — 16 — — 21 Passive Equity Funds: U.K. Equities (2) 5 — — 4 — — Overseas Equities (2) 6 — — 5 — — Passive Bond Funds: Corporate Bonds 4 — — 4 — — Liability Driven Investments (2) 103 — — 76 — — Liquidity Fund 1 — — 5 — — Total fair value of pension plan assets $ 119 $ — $ 16 $ 105 $ — $ 21 (1) Includes certain investments where the fair value measurement utilizes NAV and as such, are not classified in the fair value levels above. (2) The Level 2 investments relate to investment funds that publish daily NAV per unit. The daily NAV is available to participants in the funds and redemptions can be made daily at the current NAV. The fair value and units are determined and published and are the basis for current transactions. The investments are not eligible for the NAV practical expedient. However, they are measured at the published NAV because the quoted NAV per unit represents the price at which the investment would be sold in a transaction between independent market participants. Contributions The Company's policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations and union agreements. From time to time, the Company makes contributions beyond those legally required. In 2023 and 2022, the Company did not make any cash contributions to its U.S. qualified pension plan. In 2023 and 2022, the Company made no contributions to its U.S. non-qualified pension plans. In 2023 and 2022, the Company made no discretionary contributions to its U.K. Plan. The Company does no t currently anticipate contributing to the U.S. qualified pension plan during 2024. The Company anticipates contributing approximately $ 2 million to the U.K. Plan and approximately $ 2 million to its other international plans during 2024. The level of 2024 and future contributions will vary, and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation. Estimated Future Benefit Payments The following table presents estimated future benefit payments: (In millions) Pension Benefits 2024 $ 34 2025 35 2026 39 2027 41 2028 43 2027 to 2031 221 Total estimated future benefits payments $ 413 119 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 8— Stock-Based Compensation The stock-based compensation expense associated with the Hertz Holdings stock-based compensation plans is pushed down from Hertz Global and recorded at Hertz. 2021 Omnibus Incentive Plan During 2021, Hertz Global's Board approved the Hertz Global Holdings, Inc. 2021 Omnibus Incentive Plan (the “2021 Omnibus Plan"). The Company initially authorized 62,250,055 shares of its common stock pursuant to awards granted under the 2021 Omnibus Plan. In addition, beginning on June 30, 2022, and ending on June 20, 2031 (an “Evergreen Date”), the total authorized shares under the 2021 Omnibus Plan will automatically increase by a number of shares equal to 2 % of the total number of shares of the Company's common stock outstanding on the June 29th immediately preceding the applicable Evergreen Date (the "Evergreen Increase"). Notwithstanding the foregoing, the Company's Board may act prior to the Evergreen Date of a given year to provide that there will be no Evergreen Increase for such year, or that the increase for such year will be a lesser number of shares. As of December 31, 2023, 51,394,974 shares of the Company's common stock are authorized and remain available for future grants under the 2021 Omnibus Plan , which reflects application of the Evergreen Increase as prescribed by the 2021 Omnibus Plan in each of June 2022 and 2023. Vesting of the outstanding equity awards is also subject to accelerated vesting as set forth in the 2021 Omnibus Plan. A summary of the total employee compensation expense and related income tax benefits recognized for grants made under the 2021 Omnibus Plan is as follows: Years Ended December 31, (In millions) 2023 2022 2021 Employee compensation expense $ 85 $ 129 $ 7 Income tax benefit ( 8 ) ( 7 ) ( 2 ) Employee compensation expense, net $ 77 $ 122 $ 5 As of December 31, 2023, there was $ 179 million of total unrecognized compensation cost expected to be recognized over the remaining 2.1 years, on a weighted average basis, of the requisite service period that began on the grant dates of outstanding awards. The 2021 Omnibus Plan provides for the award of stock options, stock appreciation rights ("SARs"), performance stock, PSUs, performance units ("PUs"), restricted stock, RSUs, share awards and deferred stock units to eligible recipients. Under the 2021 Omnibus Plan, the Compensation Committee of the Board (the "Compensation Committee") has the authority to determine the eligible recipients to whom awards may be granted, the types of awards and their terms or conditions. The Board exercises these rights for certain executive officers. Stock Options and SARs The 2021 Omnibus Plan provides that stock option grants may be either incentive stock options or non-statutory stock options, however, the Company may not grant incentive stock options until such time as the plan has been approved by the Company's stockholders. Except in the case of replacement awards, stock options will have an exercise price per share that is no less than fair market value of the Company's common stock on the stock option grant date. SARs may be granted to participants in tandem with stock options or on their own. Unless otherwise determined by the Compensation Committee or Board at or after the grant date, tandem SARs will have substantially similar terms as the stock options with which they are granted. Generally, each SAR will entitle the participant upon exercise to an amount (in cash, shares or a combination of cash and shares, as determined by the Compensation Committee or Board) equal to the product of (i) the excess of (A) the fair market value on the exercise date of one share of 120 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) common stock, over (B) the strike price per share, times (ii) the number of shares of common stock covered by the SAR. The Company accounts for stock options as equity-classified awards and recognizes compensation cost on a straight-line basis over the vesting period. The value of each stock option award is estimated on the grant date using a Black-Scholes option valuation model that incorporates the assumptions noted in the following table. The Company calculates the expected volatility based on the historical movement of its share price. Grants Assumption 2021 Expected volatility 75 % Expected dividend yield — % Expected term (years) 6 Risk-free interest rate 1.19 % Weighted-average grant date fair value $ 17.12 A summary of stock option activity under the 2021 Omnibus Plan as of December 31, 2023 is presented below: Options Shares Weighted Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (In millions) Outstanding as of January 1, 2023 3,144,983 $ 26.17 8.2 $ — Granted — — — — Exercised — — — — Forfeited or Expired ( 713,480 ) 26.17 — — Outstanding as of December 31, 2023 2,431,503 26.17 6.7 — Exercisable as of December 31, 2023 ( 1,722,398 ) 26.17 6.3 — Non-vested as of December 31, 2023 709,105 Performance Stock Awards, Performance Stock Units and Performance Units PSAs, PSUs and PUs granted under the 2021 Omnibus Plan will vest based on the achievement of predetermined performance goals over performance periods determined by the Compensation Committee or Board or upon the occurrence of certain events, as determined by the Compensation Committee or Board. PSAs are awards of common stock that are subject to forfeiture until predetermined performance conditions have been achieved. A PSU is a contractual right to receive a stated number of shares of common stock, or if provided by the Compensation Committee or Board on or after the grant date, cash equal to the fair market value of such shares of common stock or any combination of shares of common stock and cash having an aggregate fair market value equal to such stated number of shares of common stock, which right is forfeitable until the achievement of predetermined performance conditions. PUs represent the right to receive a cash denominated award, payable in cash or shares of common stock or a combination thereof, and are forfeitable until the achievement of predetermined performance conditions. 121 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A summary of the PSU activity as of December 31, 2023 under the 2021 Omnibus Plan is presented below: Shares Weighted- Average Fair Value Aggregate Intrinsic Value (In millions) Outstanding as of January 1, 2023 9,292,749 $ 17.62 $ 143 Granted (1) 537,471 17.25 — Vested ( 560,518 ) 18.56 — Forfeited or Expired ( 166,964 ) 18.53 — Outstanding as of December 31, 2023 9,102,738 17.52 95 (1) Presented assuming the issuance at the original target award amount ( 100 %). Compensation expense for PSUs is based on the grant date fair value. For grants issued in 2023, vesting eligibility is based on market, performance and service conditions of two to three years . Accordingly, the number of shares issued at the end of the performance period could range between 0 % and 200 % of the original target award amount ( 100 %) disclosed in the table above. Certain PSUs were valued on the grant date using a Monte Carlo simulation model that incorporates the assumptions noted in the following table: Grants Assumption 2022 Expected volatility 68 % Expected dividend yield — % Expected term (years) 5 Risk-free interest rate 1.71 % Weighted-average grant date fair value $ 17.61 As of December 31, 2023, there were no issued or outstanding grants of PSAs or PUs under the 2021 Omnibus Plan. Restricted Stock and Restricted Stock Units Restricted stock and RSUs granted under the 2021 Omnibus Plan vest based on a minimum period of service or the occurrence of events specified by the Compensation Committee or Board. Restricted stock and RSUs are subject to forfeiture until vested. Compensation expense for RSUs is based on the grant date fair value, and is recognized ratably over the vesting period. RSU grants issued in 2023 vest ratably over a period of primarily three to four years . A summary of RSU activity as of and for the year ended December 31, 2023 under the 2021 Omnibus Plan is presented below: Shares Weighted- Average Fair Value Aggregate Intrinsic Value (In millions) Outstanding as of January 1, 2023 3,412,763 $ 20.82 $ 53 Granted 4,698,669 13.87 — Vested ( 1,300,465 ) 20.76 — Forfeited or Expired ( 496,403 ) 20.27 — Outstanding as of December 31, 2023 6,314,564 15.71 66 122 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Additional information pertaining to RSU activity under the 2021 Omnibus Plan is as follows: Years Ended December 31, 2023 2022 2021 Total fair value of awards that vested (in millions) $ 27 $ 49 $ — Weighted-average grant-date fair value of awards granted $ 13.87 $ 19.94 26.17 Deferred Stock Units Each deferred stock unit granted under the 2021 Omnibus Plan represents a contractual right to receive a stated number of shares of common stock of the Company or if provided by the Compensation Committee or Board in accordance with the 2021 Omnibus Plan on or after the grant date, cash equal to the fair value of such shares of common stock or any combination of shares of common stock and cash having an aggregate fair market value equal to such stated number of shares of common stock, on a specified future date. As of December 31, 2023 and 2022, there were approximately 114,000 and 68,000 outstanding shares, respectively, of deferred stock units under the 2021 Omnibus Plan. Note 9— Leases The Company enters into certain agreements as a lessor under which it rents vehicles and leases fleets to customers. The Company enters into certain agreements as a lessee to rent real estate, vehicles and other equipment and to conduct its vehicle rental operations under concession agreements. If any of the following criteria are met, the Company classifies the lease as a financing lease (as a lessee) or as a direct financing or sales-type lease (both as a lessor): • 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. Leases that do not meet any of the above criteria are accounted for as operating leases. The Company combines lease and non-lease components in its contracts under ASC 842, Lease Accounting ("Topic 842"), when permissible. The following further describes the Company's leasing transactions. Lessor The Company's operating leases for vehicle rentals have rental periods that are typically short term (e.g., daily or weekly) and can generally be extended for up to one month or terminated at the customer's discretion. Rental charges are computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge. In connection with the vehicle rental, the Company offers supplemental equipment rentals (e.g., child seats and ski racks) which are deemed lease components. The Company also offers value-added services in connection with the vehicle rental, which are deemed non-lease components, such as loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and satellite radio. Additionally, the Company charges for variable services primarily consisting of tolls, refueling and recharging during the rental period, and for fees associated with the early or late termination of the vehicle lease. The Company 123 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) mitigates residual value risk of its revenue earning vehicles by utilizing manufacturer repurchase and guaranteed depreciation programs, using sophisticated vehicle diagnostic and repair equipment to maintain the condition of its vehicles and through periodic reviews of vehicle depreciation rates based on management's ongoing assessment of present and estimated future market conditions. The following table summarizes the amount of operating lease income and other income included in total revenues in the accompanying consolidated statements of operations for each of the years ended December 31, 2023, 2022 and 2021: (In millions) 2023 2022 2021 Operating lease income from vehicle rentals $ 8,546 $ 8,243 $ 6,885 Operating lease income from fleet leasing — — 149 Variable operating lease income 588 212 131 Revenue accounted for under Topic 842 9,134 8,455 7,165 Revenue accounted for under Topic 606 237 230 171 Total revenues $ 9,371 $ 8,685 $ 7,336 Lessee As a lessee, the Company has the following types of operating leases: • 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. The Company's lease terms generally range from one month to thirty-five years and a number of agreements contain escalation clauses, which increase the payment obligation based on a fixed or variable rate and renewal options. The length of renewals vary and may result in different payment terms. Payment terms are based on fixed rates explicit in the lease, including guaranteed minimums and/or variable rates based on: • 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. The Company recognizes a right-of-use asset and lease liability in its accompanying consolidated balance sheets for leases with a term greater than twelve months. Options to extend or terminate a lease are included in the Company's right-of-use asset and lease liability when it is reasonably certain that such options will be exercised. The Company does not recognize right-of-use assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less) and recognizes lease expense on a straight-line basis over the lease term, as applicable. To determine the present value of its lease payments, the Company utilizes the interest rate implicit in the lease agreement. If the implicit interest rate cannot be determined in the lease agreement, the Company utilizes the Company's collateralized incremental borrowing rate as of January 1, 2019, the adoption date of Topic 842, or the commencement date of the lease, whichever is later. 124 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the amount of lease costs incurred by the Company for each of the years ended December 31, 2023, 2022 and 2021: Years ended December 31, (In millions) 2023 2022 2021 Minimum fixed lease costs: Short-term lease costs $ 92 $ 142 $ 171 Operating lease costs 543 438 449 Total 635 580 $ 620 Variable lease costs 339 334 165 Total lease costs $ 974 $ 914 $ 785 The following summarizes the weighted-average remaining lease term and weighted-average discount rate for the Company's operating leases as a lessee as of December 31, 2023: Weighted-average remaining lease term (in years) 10.9 Weighted-average discount rate 8.9 % The following table summarizes the Company's minimum fixed lease obligations under existing agreements as a lessee, excluding variable concession obligations in excess of minimum annual guarantees and short-term leases, as of December 31, 2023: (In millions) 2024 $ 554 2025 454 2026 373 2027 309 2028 250 After 2028 1,535 Total lease payments 3,475 Interest ( 1,333 ) Operating lease liabilities as of December 31, 2023 $ 2,142 Note 10— Income Tax (Provision) Benefit The components of income (loss) before income taxes for the Company's domestic and foreign operations are as follows: Hertz Global As of December 31, (In millions) 2023 2022 2021 Domestic $ 180 $ 2,120 $ 710 Foreign 106 329 ( 27 ) Total income (loss) before income taxes $ 286 $ 2,449 $ 683 125 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Hertz As of December 31, (In millions) 2023 2022 2021 Domestic $ 17 $ 1,416 $ 1,501 Foreign 106 329 ( 27 ) Total income (loss) before income taxes $ 123 $ 1,745 $ 1,474 The total income tax provision (benefit) consists of the following: Hertz Global and Hertz As of December 31, (In millions) 2023 2022 2021 Current: Federal $ 1 $ — $ — Foreign 42 41 24 State and local 7 32 21 Total current 50 73 45 Deferred: Federal ( 348 ) 338 252 Foreign ( 33 ) 42 19 State and local 1 ( 63 ) 2 Total deferred ( 380 ) 317 273 Total provision (benefit) - Hertz Global ( 330 ) 390 318 Federal deferred tax (provision) benefit applicable to Hertz Holdings 1 — — Total provision (benefit) - Hertz $ ( 329 ) $ 390 $ 318 126 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The principal items of the U.S. and foreign net deferred tax assets and liabilities are as follows: Hertz Global and Hertz As of December 31, (In millions) 2023 2022 Deferred tax assets: Employee benefit plans $ 19 $ 18 Net operating loss carry forwards 1,741 1,737 Capital loss carryforwards 3 194 Federal and state tax credit carry forwards 343 81 Deferred interest expense 240 70 Accrued and prepaid expenses 172 147 Operating lease liabilities 544 430 Total deferred tax assets 3,062 2,677 Less: valuation allowance ( 305 ) ( 511 ) Total net deferred tax assets 2,757 2,166 Deferred tax liabilities: Depreciation on tangible assets ( 2,388 ) ( 2,297 ) Intangible assets ( 716 ) ( 714 ) Operating lease right-of-use assets ( 576 ) ( 456 ) Total deferred tax liabilities ( 3,680 ) ( 3,467 ) Net deferred tax liability - Hertz Global ( 923 ) ( 1,301 ) Deferred tax asset - net operating loss applicable to Hertz Holdings ( 3 ) ( 3 ) Net deferred tax liability - Hertz $ ( 926 ) $ ( 1,304 ) Hertz Global and Hertz In determining valuation allowances, an assessment of positive and negative evidence was performed regarding realization of the deferred tax assets. This assessment included the evaluation of cumulative earnings and losses in recent years, scheduled reversals of deferred tax liabilities, the availability of carryforwards and the remaining period of the respective carry forward, future taxable income and any applicable tax-planning strategies that are available. As of December 31, 2023, the Company has approximately $ 1.3 billion of tax-effected U.S. federal net operating loss carryforwards ("Federal NOLs"), which have an indefinite carryforward period and may offset 80% of taxable income generate in any future year. The Company has approximately $ 306 million of federal tax credits which begin expiring in 2037. The Company has approximately $ 185 million of tax-effected federal deferred interest expense which has an indefinite carryforward period. The Company has not recorded a valuation allowance on its Federal NOLs, federal credits, or deferred interest expense as there were adequate U.S. deferred tax liabilities that could be realized within the carry forward periods. As of December 31, 2023, the Company has approximately $ 223 million of tax-effected state net operating loss carryforwards. Some of these net operating losses have an indefinite carryforward period, and those that do not will begin to expire in 2024 if not utilized. These net operating losses are offset, in part, by a valuation allowance totaling $ 83 million. The Company has approximately $ 36 million in state tax credits for which a full valuation allowance is recorded. The state tax credits expire over various years beginning in 2028. The Company has approximately $ 40 million of tax-effected deferred interest expense which has an indefinite carryforward period. The tax effected amounts for all state tax attributes are net of federal benefit. 127 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of December 31, 2023, the Company has approximately $ 225 million of tax-effected foreign net operating loss carry forwards. Some of the net operating losses have an indefinite carryforward period, and those that do not will begin to expire in 2035 if not utilized. These net operating losses are offset, in part, by a valuation allowance totaling $ 152 million. The Company has no tax credits in foreign jurisdictions. The Company has approximately $ 15 million of tax-effected foreign deferred interest which has an indefinite carryforward period. The deferred interest is offset, by a valuation allowance of $ 15 million. The Company has approximately $ 3 million of tax-effected foreign capital loss carryforwards for which a full valuation allowance has been recorded. Due to the ownership changes before and upon emergence from Chapter 11, the utilization of the Company's federal, state and foreign NOLs may be subject to limitations. Estimates of these limitations have been reflected in the tax provision. The significant items in the reconciliation of the statutory and effective income tax rates consists of the following items in the table below. Percentages are calculated from the underlying numbers in thousands, and as a result, may not agree to the amount when calculated in millions. Hertz Global and Hertz Years Ended December 31, 2023 2022 2021 Statutory federal tax rate 21 % 21 % 21 % State and local income taxes, net of federal effect 6 4 7 Change in state rates, net of federal effect ( 3 ) — 2 Foreign tax rate differential 2 — — Change in foreign statutory rates — — ( 2 ) Federal and foreign permanent differences 2 1 1 Tax credits ( 70 ) ( 1 ) ( 1 ) Withholding taxes 2 1 1 Valuation allowance ( 73 ) ( 6 ) 11 Change in fair value of Public Warrants ( 14 ) ( 7 ) 22 Non-deductible bankruptcy expenses — — 15 European reorganization 6 — ( 46 ) Uncertain tax positions 1 — 12 U.S. tax on foreign earnings — 1 2 Nondeductible officer compensation 5 1 — Other — 1 2 Effective tax rate - Hertz Global ( 115 ) 16 47 Hertz Holdings exclusive items (1) ( 153 ) 6 ( 25 ) Effective tax rate - Hertz ( 268 ) % 22 % 22 % (1) Represents the tax rate differential due to the exclusion of the change in fair value of Public Warrants from Hertz's income (loss) before income taxes. The change in tax provision in 2023 compared to 2022 is driven by lower pre-tax income in 2023, benefits from EV credits generated in 2023, the release of valuation allowances in 2023 primarily related to the characterization of the loss on the restructuring of European operations (as disclosed below) and the non-taxable change in the fair value of Public Warrants. The change in tax provision in 2022 compared to 2021 was primarily driven by improvements in financial performance in 2022, as well as the non-taxable change in fair value of Public Warrants, the tax benefits associated with the restructuring in Europe recognized in 2021, the impact of changes in state and foreign valuation allowances, and non-deductible bankruptcy costs incurred in 2021. Hertz Holdings exclusive items are comprised of transactions specific to Hertz Holdings only. 128 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Hertz Global and Hertz Years Ended December 31, (In millions) 2023 2022 2021 Balance as of January 1 $ 298 $ 106 $ 53 Increase (decrease) attributable to tax positions taken during prior periods ( 192 ) 184 65 Increase (decrease) attributable to tax positions taken during the current year 24 9 19 Decrease attributable to settlements with taxing authorities — ( 1 ) ( 31 ) Balance as of December 31 $ 130 $ 298 $ 106 The total amount of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate is $ 11 million. Net, after-tax interest and penalties related to tax liabilities are classified as a component of income tax in the accompanying consolidated statements of operations which were not significant for the years ended December 31, 2023, 2022 and 2021. Net, after-tax interest and penalties were accrued as a component of tax in the Company's consolidated balance sheet in the amount of $ 8 million and $ 7 million as of December 31, 2023 and 2022, respectively. During 2021, as part of a restructuring of European operations, we generated a tax loss of approximately $ 1.3 billion, which was initially characterized as a capital loss in the 2021 provision. On February 9, 2023, the Company and the IRS agreed to the amount and to the character of the loss as ordinary. This resulted in a reduction in the amount of loss and a release of valuation allowances for a net benefit of $ 163 million in 2023. The Company is subject to examination by taxing authorities throughout the world. The tax years that are open for examination span from 2010 to 2023. Additionally, the Company is under audit in several U.S. states and other foreign jurisdictions, and it is reasonably possible that the amount of unrecognized tax benefits may change as the result of the completion of ongoing examinations, the expiration of the statute of limitations or unforeseen circumstances. The Company's assumptions and estimates pertaining to uncertain tax positions require significant judgment. It is possible that the tax authorities could challenge the Company's estimates and assumptions used to assess the tax benefits, and the actual amount of the tax benefits related to uncertain tax positions may differ materially from these estimates. The Company has provided for deferred taxes on undistributed earnings of foreign subsidiaries. However, it is not practicable to estimate the deferred taxes on other differences on investments in foreign subsidiaries. On December 15, 2022, the European Union ("EU") Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A number of other countries have or are expected to implement similar legislation with varying effective dates in the future. The Company is continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries. Note 11— Financial Instruments The Company employs established risk management policies and procedures, and, under the terms of our ABS facilities, may be required to enter into interest rate derivatives, which seek to reduce the Company’s commercial risk exposure to fluctuations in interest rates and currency exchange rates. Although the instruments utilized involve 129 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) varying degrees of credit, market and interest risk, the Company contracts with multiple counterparties to mitigate concentrations of risk and the counterparties to the agreements are expected to perform fully under the terms of the agreements. The Company monitors counterparty credit risk, including lenders, on a regular basis, but cannot be certain that all risks will be discerned or that its risk management policies and procedures will always be effective. Additionally, upon the occurrence of an event of default under the Company’s International Swaps and Derivatives Association ("ISDA") master derivative agreements, the non-defaulting party generally has the right, but not the obligation, to set-off any early termination amounts under any such agreements against any other amounts owed with regard to any other agreements between the parties to each such agreement. None of the Company's financial instruments have been designated as hedging instruments as of December 31, 2023 and 2022. The Company classifies cash flows from financial instruments according to the classification of the cash flows of the economically hedged item(s). Interest Rate Risk The Company uses a combination of interest rate caps and swaps to manage its exposure to interest rate movements and to manage its mix of floating and fixed-rate debt. Currency Exchange Rate Risk The Company uses foreign currency exchange rate derivative financial instruments to manage its currency exposure resulting from intercompany transactions and other cross currency obligations. Fair Value The following table summarizes the estimated fair value of financial instruments: Fair Value of Financial Instruments Asset Derivatives (1) Liability Derivatives (1) December 31, December 31, (In millions) 2023 2022 2023 2022 Interest rate instruments (2) $ 10 $ 140 $ — $ — Foreign currency forward contracts 5 1 2 2 Total $ 15 $ 141 $ 2 $ 2 (1) All asset derivatives are recorded in prepaid expenses and other assets and all liability derivatives are recorded in accrued liabilities in the accompanying consolidated balance sheets. (2) The activity in 2023 is primarily due to net cash received on monthly settlements, including the sale of interest rate caps disclosed below. The following table summarizes the gains or (losses) on financial instruments for the period indicated: Location of Gain (Loss) Recognized on Derivatives Amount of Gain (Loss) Recognized in Income on Derivatives Years Ended December 31, (In millions) 2023 2022 2021 Interest rate instruments Vehicle interest expense, net (1) $ ( 6 ) $ 127 $ 3 Foreign currency forward contracts Selling, general and administrative expense (2) 8 ( 2 ) 2 Total $ 2 $ 125 $ 5 (1) In 2021, $ 6 million of gains on interest rate instruments were recorded in other (income) expense, net, offset by $ 3 million of losses on interest rate instruments which were recorded in selling, general and administrative expense. (2) In 2022 and 2021, all gains (losses) on foreign currency forward contracts were recorded in other (income) expense, net. 130 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In the first quarter of 2023, the Company sold certain of its interest rate caps resulting in a net gain of $ 10 million based on the recognition of a $ 98 million realized gain on the unwind, of which $ 88 million was previously unrealized. The Company's foreign currency forward contracts and certain interest rate instruments are subject to enforceable master netting agreements with their counterparties. The Company does not offset such derivative assets and liabilities in its consolidated balance sheets, and the potential effect of the Company’s use of the master netting arrangements is not material. Note 12— Fair Value Measurements Under U.S. GAAP, entities are allowed to measure certain financial instruments and other items at fair value. The Company has not elected the fair value measurement option for any of its assets or liabilities that meet the criteria for this option. Irrespective of the fair value option previously described, U.S. GAAP requires certain financial and non-financial assets and liabilities of the Company to be measured on either a recurring basis or on a nonrecurring basis. Fair Value Disclosures The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments. Debt Obligations The fair value of the debt facilities is estimated based on quoted market rates as well as borrowing rates currently available to the Company for loans with similar terms and average maturities (i.e., Level 2 inputs). December 31, 2023 December 31, 2022 (In millions) Nominal Unpaid Principal Balance Aggregate Fair Value Nominal Unpaid Principal Balance Aggregate Fair Value Non-Vehicle Debt $ 3,515 $ 3,285 $ 3,035 $ 2,685 Vehicle Debt 12,314 11,878 10,948 10,304 Total $ 15,829 $ 15,163 $ 13,983 $ 12,989 Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes the Company's cash equivalents, restricted cash equivalents and Public Warrants that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as follows: December 31, 2023 December 31, 2022 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Cash equivalents and restricted cash equivalents $ 362 $ — $ — $ 362 $ 443 $ — $ — $ 443 Liabilities: Public Warrants $ 453 $ — $ — $ 453 $ 617 $ — $ — $ 617 Cash Equivalents and Restricted Cash Equivalents The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and bank money market and interest-bearing accounts. The Company determines the fair value of cash 131 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) equivalents and restricted cash equivalents using a market approach based on quoted prices in active markets (i.e., Level 1 inputs). Public Warrants Hertz Global's Public Warrants are classified as liabilities and recorded at fair value in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity ("Topic 480"). See Note 17, "Public Warrants - Hertz Global," for further details. Upon issuance on the Effective Date, the initial fair value of the Public Warrants was $ 800 million. The Company calculates the fair value based on the end-of-day quoted market price, a Level 1 input of the fair value hierarchy. For the years ended December 31, 2023, 2022 and 2021, the fair value adjustments resulted in gains of $ 163 million and $ 704 million and a loss of $ 627 million, respectively, and were recorded in change in fair value of Public Warrants in the accompanying consolidated statements of operations for Hertz Global. Financial Instruments The fair value of the Company's financial instruments as of December 31, 2023 and 2022 are disclosed in Note 11, "Financial Instruments." The Company's financial instruments are classified as Level 2 assets and liabilities and are priced using quoted market prices for similar assets or liabilities in active markets. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis In response to management's determination that the supply of EVs in the Company's fleet exceeded customer demand, elevated EV damage and collision costs and a decline in residual values, the EV Disposal Group has been classified as held for sale as of December 31, 2023. The EV Disposal Group has been recorded at the lower of carrying value or fair value (as determined using level 2 inputs) less costs to sell. See Note 4, "Revenue Earning Vehicles," for additional information. Note 13— Accumulated Other Comprehensive Income (Loss) Changes in the accumulated other comprehensive income (loss) balance by component (net of tax) is as follows: (In millions) Pension and Other Post-Employment Benefits Foreign Currency Items Unrealized Losses from Currency Translation Adjustments on Terminated Net Investment Hedges Accumulated Other Comprehensive Income (Loss) Balance as of January 1, 2023 $ ( 92 ) $ ( 183 ) $ ( 19 ) $ ( 294 ) Other comprehensive income (loss) before reclassification ( 6 ) 49 — 43 Amounts reclassified from accumulated other comprehensive income (loss) 3 — — 3 Balance as of December 31, 2023 $ ( 95 ) $ ( 134 ) $ ( 19 ) $ ( 248 ) 132 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (In millions) Pension and Other Post-Employment Benefits Foreign Currency Items Unrealized Losses from Currency Translation Adjustments on Terminated Net Investment Hedges Accumulated Other Comprehensive Income (Loss) Balance as of January 1, 2022 $ ( 88 ) $ ( 107 ) $ ( 19 ) $ ( 214 ) Other comprehensive income (loss) before reclassification ( 10 ) ( 76 ) — ( 86 ) Amounts reclassified from accumulated other comprehensive income (loss) 6 — — 6 Balance as of December 31, 2022 $ ( 92 ) $ ( 183 ) $ ( 19 ) $ ( 294 ) Note 14— Contingencies and Off-Balance Sheet Commitments Legal Proceedings Self-Insured Liabilities The Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet commenced for self-insured liabilities arising from the operation of motor vehicles rented from the Company. The obligation for self-insured liabilities on self-insured U.S. and international vehicles, as stated in the accompanying consolidated balance sheets, represents an estimate for both reported accident claims not yet paid and claims incurred but not yet reported. The related liabilities are recorded on an undiscounted basis and are based on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses, premiums and administrative costs. As of December 31, 2023 and 2022, the Company's liability recorded for self-insured liabilities was $ 471 million and $ 472 million, of which $ 336 million and $ 326 million relates to liabilities incurred by the Company's Americas RAC operations, respectively. The Company believes that its analysis is based on the most relevant information available, combined with reasonable assumptions. The liability is subject to significant uncertainties. The adequacy of the liability is monitored quarterly based on evolving accident claim history and insurance related state legislation changes. If the Company's estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results. Loss Contingencies From time to time the Company is a party to various legal proceedings, typically involving operational issues common to the vehicle rental business. The Company has summarized below the material legal proceedings to which the Company was a party during the year ended December 31, 2023 or the period after December 31, 2023, but before the filing of this 2023 Annual Report. Make-Whole and Post-Petition Interest Claims - On July 1, 2021, Wells Fargo Bank, N.A., in its capacity as indenture trustee of (1) 6.250 % Unsecured Notes due 2022 (the "2022 Notes"), (2) 5.500 % Unsecured Notes due 2024 (the "2024 Notes"), (3) 7.125 % Unsecured Notes due 2026 (the "2026 Notes"), and (4) 6.000 % Unsecured Notes due 2028 (the "2028 Notes") issued by The Hertz Corporation (collectively, the “Unsecured Notes”), filed a complaint (the “Complaint”) against The Hertz Corporation and multiple direct and indirect subsidiaries thereof (collectively referred to in this summary as “Defendants”). The filing of the Complaint initiated the adversary proceeding captioned Wells Fargo Bank, National Association v. The Hertz Corporation, et al. in the United States Bankruptcy Court for the District of Delaware, Adv. Pro. No. 21-50995 (MFW). The Complaint seeks a declaratory judgment that the holders of the Unsecured Notes are entitled to payment of certain redemption premiums and post-petition interest that they assert total approximately $ 272 million or, in the alternative, are entitled to payment of post-petition interest at a contractual rate that they assert totals approximately $ 125 million. The Complaint also asserts the right to pre-judgment interest from July 1, 2021, to the date of any judgment. On December 22, 2021, the Bankruptcy Court dismissed Wells Fargo’s claims with respect to (i) the redemption premium allegedly owed on 133 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) the 2022 and 2024 Notes and (ii) post-petition interest at the contract rate. On November 9, 2022, the Bankruptcy Court ruled that the make-whole premium is the same as unmatured interest and is disallowed under the U.S. Bankruptcy Code, granting summary judgment in the Defendants’ favor. The Bankruptcy Court certified the matter directly to the U.S. Court of Appeals for the Third Circuit (the “Third Circuit”) and, on January 25, 2023, the Third Circuit accepted Wells Fargo’s appeal. The Third Circuit held oral argument for this appeal on October 25, 2023 and the parties are awaiting the Third Circuit's decision. The Company cannot predict the ultimate outcome or timing of this litigation, however an adverse ruling by the Third Circuit, followed by an entry of judgement against Hertz by the Bankruptcy Court could have a material adverse effect on the Company's financial condition, results of operations or cash flows. Claims Related to Alleged False Arrests - A group of claims involving allegations that the police detained or arrested individuals in error after the Company reported rental cars as stolen were previously advanced against the Company. These claims first arose from actions allegedly taken by the Company prior to its emergence from bankruptcy reorganization; some claims alleged post-emergence behavior by the Company. These claims have been the subject of press coverage and the Company has received government inquiries on the matter. The Company has policies to help ensure the proper treatment of its customers and to seek to protect itself against the theft of its services or assets, and has taken significant steps to modernize and update those policies. In December 2022, the Company entered into settlement agreements with 364 claimants in full and final resolutions of their claims for an aggregated amount of approximately $ 168 million (the "Settlement"), all of which amount was paid by the Company during December 2022. The Settlement resolved nearly all of the false arrest-related claims being advanced in the U.S. Bankruptcy Court for the District of Delaware, Adv. Pro. No. 20-11247 (MFW) and state court in Delaware (captioned Flannery, et al. v. Hertz Global Holdings, Inc., et al., C.A. No. N22C-07-100 and Okoasia, et al. v. Hertz Global Holdings, Inc., et al., C.A. No. N22C-09-531 ). Also as a result of the Settlements, state court matters pending in Pennsylvania, captioned Lovelace, et al. v. Hertz Global Holdings, Inc., et al., Case No. 220801729 , and in Florida, captioned Lizasoain, et al. v. Hertz Global Holdings, Inc., et al., Case No. 2022-015316-CA-1, were dismissed with prejudice. The Company continues to vigorously defend itself and believes that the ultimate resolution of any remaining claims will not have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. Relatedly, in May 2022, the Company filed a complaint against several of its insurers seeking a determination of its rights under its commercial general liability, and directors and officers liability, insurance policies for these alleged claims in a declaratory judgment action pending in Delaware Superior Court, Hertz Global Holdings, Inc., et al. v. ACE American Insurance Co., et al., C.A. No. N22C-05-130 MMJ (CCLD) . On June 30, 2023, Hertz entered into a confidential settlement with ACE American Insurance Company. The case is ongoing against the remaining insurers. Share Repurchase Program Litigation - On May 11, 2023, Angelo Cascia, a purported stockholder of Hertz Global, filed a putative class and derivative lawsuit in the Delaware Court of Chancery against certain current directors of Hertz Global, Knighthead Capital Management, LLC, Certares Opportunities LLC, and CK Amarillo LP. The claims in the complaint relate to the Company’s share repurchase programs approved in November 2021 and June 2022. Among other allegations, the plaintiff claims Board members breached their fiduciary duties in approving these share repurchase programs, and that Knighthead, Certares, and CK Amarillo were unjustly enriched because they gained a majority stake in Hertz Global as a result of share repurchases. Defendants’ motion to dismiss the complaint was filed on July 24, 2023. Plaintiff filed an answering brief on December 15, 2023. The Company has established reserves for matters where the Company believes that losses are probable and can be reasonably estimated. Other than the aggregate reserve established for claims for self-insured liabilities, none of those reserves are material. For matters where the Company has not established a reserve, the ultimate outcome or resolution cannot be predicted at this time, or the amount of ultimate loss, if any, cannot be reasonably estimated. These matters are subject to many uncertainties and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings could be decided unfavorably to the Company or any of its subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding could exceed the amount accrued in an amount that could be material to the Company's consolidated financial condition, results of operations or cash flows in any particular reporting period. 134 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Indemnification Obligations In the ordinary course of business, the Company has executed contracts involving indemnification obligations customary in the relevant industry and indemnifications specific to a transaction such as the sale of a business. These indemnification obligations might include claims relating to the following: environmental matters; intellectual property rights; governmental regulations and employment-related matters; customer, supplier and other commercial contractual relationships and financial matters. Specifically, the Company has indemnified various parties for the costs associated with remediating numerous hazardous substance storage, recycling or disposal sites in many states and, in some instances, for natural resource damages. The amount of any such expenses or related natural resource damages for which the Company may be held responsible could be substantial. In addition, Hertz entered into customary indemnification agreements with Hertz Holdings and certain of the Company's stockholders and their affiliates pursuant to which Hertz Holdings and Hertz will indemnify those entities and their respective affiliates, directors, officers, partners, members, employees, agents, representatives and controlling persons, against certain liabilities arising out of performance of a consulting agreement with Hertz Holdings and each of such entities and certain other claims and liabilities, including liabilities arising out of financing arrangements or securities offerings. The Company has entered into customary indemnification agreements with each of its directors and certain of its officers. Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-party claim. In connection with the separation of the car rental business in 2016, the Company executed an agreement with Herc Holdings Inc. that contains mutual indemnification clauses and a customary indemnification provision with respect to liability arising out of or resulting from assumed legal matters. The Company regularly evaluates the probability of having to incur costs associated with these indemnification obligations and has accrued for expected losses that are probable and estimable. Note 15— Related Party Transactions Other Relationships In connection with its vehicle rental businesses, the Company enters into millions of rental transactions every year involving millions of customers. In order to conduct those businesses, the Company also procures goods and services from thousands of vendors. Some of those customers and vendors may be affiliated with members of the Company's Board. The Company believes that all such rental and procurement transactions involved terms no less favorable to the Company than those that it believes would have been obtained in the absence of such affiliation. The Company's Audit Committee oversees compliance through our Standards of Business Conduct, reviews conflicts of interest involving directors and determines whether to approve each transaction that involves the Company or any of its affiliates, on one hand, and (directly or indirectly) a director or member of his or her family or any entity managed by any such person, on the other hand. Note 16— Equity and Earnings (Loss) Per Common Share – Hertz Global Equity of Hertz Global Holdings, Inc. As of December 31, 2023 and 2022, there were 100,000,000 shares of preferred stock authorized, par value $ 0.01 per share, and 1,000,000,000 shares of Hertz Global common stock authorized, par value $ 0.01 per share. Public Warrants On the Effective Date, in accordance with the Plan of Reorganization, reorganized Hertz Global issued 89,049,029 Public Warrants. See Note 17 , " Public Warrants - Hertz Global," for attributes of the Public Warrants, which are classified at fair value as a liability for financial reporting purposes under U.S. GAAP. Share Repurchase Programs for Common Stock In November 2021, Hertz Global's independent Audit Committee recommended, and its Board approved, the 2021 Share Repurchase Program, which was announced on November 29, 2021. In 2022, the Company completed the 135 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 2021 Share Repurchase Program by repurchasing 80,677,021 shares of Hertz Global's common stock during the first half of 2022 at an average share price of $ 19.74 for an aggregate purchase price of $ 1.6 billion. Under the completed 2021 Share Repurchase Program, a total of 97,783,047 shares of Hertz Global common stock were repurchased for an aggregate purchase price of $ 2.0 billion. In June 2022, Hertz Global's independent Audit Committee recommended, and its Board approved, the 2022 Share Repurchase Program that authorized additional repurchases of up to an incremental $ 2.0 billion worth of shares of Hertz Global's outstanding common stock. The 2022 Share Repurchase Program, announced on June 15, 2022, has no initial time limit, does not obligate Hertz Global to acquire any particular amount of common stock and can be discontinued at any time. As of December 31, 2023, approximately $ 874 million remains available under the 2022 Share Repurchase Program. Between inception and December 31, 2022, a total of 47,303,009 shares of Hertz Global's common stock were repurchased in open-market transactions under the 2022 Share Repurchase Program at an average share price of $ 17.64 for an aggregate purchase price of $ 835 million. During the year ended December 31, 2023, a total of 19,381,160 shares of Hertz Global's common stock were repurchased in open-market transactions at an average share price of $ 15.01 for an aggregate purchase price of $ 291 million. Since inception of the 2022 Share Repurchase program a total of 66,684,169 shares of Hertz Global's common stock have been repurchased in open-market transactions at an average share price of $ 16.88 for an aggregate purchase price of $ 1.1 billion. There were no share repurchases after December 31, 2023 through the date of the filing of this 2023 Annual Report. Common shares repurchased are included in treasury stock in the accompanying Hertz Global consolidated balance sheets as of December 31, 2023 and 2022. Hertz Global funded the share repurchases with available cash and dividend distributions from Hertz. Any future repurchases will be made at the discretion of Hertz Global's management through a variety of methods, such as open-market transactions (including pre-set trading plans pursuant to Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, and other transactions in accordance with applicable securities laws. There can be no assurance as to the timing or number of shares of any repurchases. Earnings (Loss) Per Common Share Basic earnings (loss) per common share has been computed based upon the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share has been computed based upon the weighted-average number of common shares outstanding plus the effect of all potentially dilutive common stock equivalents, including Public Warrants, computed using the treasury stock method, except when the effect would be anti-dilutive. For the years ended December 31, 2023 and 2022, the diluted weighted-average shares outstanding included the dilutive impact of Public Warrants where the Company assumed share settlement of the Public Warrants as of the beginning of the reporting period. Additionally, the Company removes the change in fair value of Public Warrants when computing diluted earnings (loss) per common share, when the impact of Public Warrants is dilutive. In connection with the repurchase of the Series A Preferred Stock by Hertz Global, the difference between the carrying value of the Series A Preferred Stock and the redemption value paid by Hertz Global was deemed a dividend to the holders of the Series A Preferred Stock. As dividends represent earnings that were not available to the holders of Hertz Global's common stock when computing basic and diluted earnings (loss) per common share, they are reflected as an adjustment to net income (loss) available to common stockholders when computing basic and diluted earnings (loss) per common share for Hertz Global for the year ended December 31, 2021. 136 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table sets forth the computation of basic and diluted earnings (loss) per common share: Years Ended December 31, (In millions, except per share data) (1) 2023 2022 2021 Numerator: Net income (loss) attributable to Hertz Global $ 616 $ 2,059 $ 366 Series A Preferred Stock deemed dividends (2) — — ( 450 ) Net income (loss) available to Hertz Global common stockholders, basic 616 2,059 ( 84 ) Change in fair value of Public Warrants ( 163 ) ( 704 ) — Net income (loss) available to Hertz Global common stockholders, diluted $ 452 $ 1,355 $ ( 84 ) Denominator: Basic weighted-average common shares outstanding 313 379 315 Dilutive effect of stock options, RSUs and PSUs 1 1 — Dilutive effect of Public Warrants 11 23 — Diluted weighted-average common shares outstanding 326 403 315 Antidilutive Public Warrants — — 14 Antidilutive stock options, RSUs and PSUs 6 6 1 Total antidilutive 6 6 15 Earnings (loss) per common share: Basic $ 1.97 $ 5.43 $ ( 0.27 ) Diluted $ 1.39 $ 3.36 $ ( 0.27 ) (1) The table above is denoted in millions, excluding earnings (loss) per common share. Amounts are calculated from the underlying numbers in thousands, and as a result, may not agree to the amounts shown in the table when calculated in millions. (2) Reflects the difference between the carrying value of the Series A Preferred Stock and the redemption value paid by Hertz Global, including certain fees. Note 17— Public Warrants - Hertz Global The Company accounts for its Public Warrants in accordance with the provisions of Topic 480, under which the Public Warrants meet the definition of a freestanding financial instrument. Although these are publicly traded warrants, they are classified as liabilities due to certain settlement provisions that are only applicable in the event of change of control (as defined by the Public Warrant Agreement). The Public Warrants are recorded at fair value in the accompanying consolidated balance sheets as of December 31, 2023 and 2022. See Note 12, "Fair Value Measurements." The Public Warrants entitle the holders to receive one share of reorganized Hertz Global common stock upon exercise. The Public Warrants have a 30-year term and are exercisable from the date of issuance until June 30, 2051, at which time any unexercised Public Warrants will expire, and the rights of the holders to purchase reorganized Hertz Global common stock will terminate. The exercise price of the Public Warrants is subject to adjustment from time to time upon any payment of cash dividends relating to reorganized Hertz Global's common stock and the occurrence of certain dilutive events as described in the Public Warrant Agreement. As of December 31, 2023, the exercise price remains $ 13.80 . During the years ended December 31, 2023 and 2022, 48,965 and 245,959 Public Warrants were exercised, of which 31,034 and 60,661 were cashless exercises and 17,931 and 185,298 were exercised for $ 13.80 per share, respectively. As of December 31, 2023, 82,737,554 Public Warrants remain outstanding. 137 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 18— Segment Information The Company's chief operating decision maker assesses performance and allocates resources based upon the financial information for the Company's reportable segments. The Company has identified two reportable segments, which are consistent with its operating segments and organized based on the products and services provided and the geographic areas in which business is conducted, as follows: • Americas RAC - Rental of vehicles, as well as sales of value-added services, in the U.S., Canada, Latin America and the Caribbean; and • International RAC - Rental of vehicles, as well as sales of value-added services, in locations other than the U.S., Canada, Latin America and the Caribbean. In the second quarter of 2021, as a result of the Donlen Sale, as disclosed in Note 3, "Divestitures," the All Other Operations reportable segment, which consisted primarily of the Company's former Donlen business, was no longer deemed a reportable segment. In addition to its reportable segments and other operating activities, the Company has corporate operations ("Corporate") which includes general corporate assets and expenses and certain interest expense (including net interest on non-vehicle debt). Corporate includes other items necessary to reconcile the reportable segments to the Company's total amounts. The following tables provide significant statement of operations and balance sheet information by reportable segment for each of Hertz Global and Hertz, as well as Adjusted EBITDA, the measure used to determine segment profitability. Years Ended December 31, (In millions) 2023 2022 2021 Revenues Americas RAC $ 7,722 $ 7,280 $ 6,215 International RAC 1,649 1,405 985 Total reportable segments 9,371 8,685 7,200 All other operations (1) — — 136 Total Hertz Global and Hertz $ 9,371 $ 8,685 $ 7,336 Depreciation of revenue earning vehicles and lease charges, net Americas RAC (2) $ 1,775 $ 553 $ 343 International RAC 264 148 154 Total Hertz Global and Hertz $ 2,039 $ 701 $ 497 Depreciation and amortization, non-vehicle assets Americas RAC $ 125 $ 114 $ 166 International RAC 11 13 16 Total reportable segments 136 127 182 All other operations (1) — — 2 Corporate 13 15 12 Total Hertz Global and Hertz $ 149 $ 142 $ 196 138 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Years Ended December 31, (In millions) 2023 2022 2021 Interest expense, net Americas RAC $ 434 $ 60 $ 198 International RAC 89 19 62 Total reportable segments 523 79 260 All other operations (1) — — 13 Corporate 270 249 196 Total Hertz Global and Hertz $ 793 $ 328 $ 469 Adjusted EBITDA Americas RAC $ 585 $ 2,292 $ 2,173 International RAC 302 350 90 Total reportable segments 887 2,642 2,263 All other operations (1) — — 13 Corporate ( 326 ) ( 337 ) ( 146 ) Total Hertz Global and Hertz $ 561 $ 2,305 $ 2,130 As of December 31, (In millions) 2023 2022 Revenue earning vehicles, net Americas RAC (3) $ 12,450 $ 10,813 International RAC 2,201 1,682 Total Hertz Global and Hertz $ 14,651 $ 12,495 Property and equipment, net Americas RAC $ 501 $ 482 International RAC 73 64 Total reportable segments 574 546 Corporate 97 91 Total Hertz Global and Hertz $ 671 $ 637 Total assets Americas RAC $ 19,252 $ 17,645 International RAC 4,245 3,638 Total reportable segments 23,497 21,283 Corporate 1,108 1,214 Total Hertz Global (4) 24,605 22,497 Corporate - Hertz ( 1 ) ( 1 ) Total Hertz (4) $ 24,604 $ 22,496 (1) Substantially comprised of the Company's Donlen business, which was sold on March 30, 2021. (2) For the year ended December 31, 2023, includes the write-down to carrying value of vehicles classified as held for sale, including the EV Disposal Group. See Note 4, "Revenue Earning Vehicles." (3) Includes the carrying amount of vehicles classified as held for sale as of the respective balance sheet date, including the EV Disposal Group in 2023. See Note 4, "Revenue Earning Vehicles." (4) The consolidated total assets of Hertz Global and Hertz as of December 31, 2023 and 2022 include total assets of VIEs of $ 1.7 billion and $ 1.3 billion, respectively, which can only be used to settle obligations of the VIEs. See "Pledges Related to Vehicle Financing" in Note 6, "Debt," for further information. 139 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Years Ended December 31, (In millions) 2023 2022 2021 Revenue earning vehicles and non-vehicle capital assets Americas RAC: Expenditures $ ( 7,736 ) $ ( 9,352 ) $ ( 5,935 ) Proceeds from disposals 4,376 5,768 2,137 Net expenditures - Hertz Global and Hertz $ ( 3,360 ) $ ( 3,584 ) $ ( 3,798 ) International RAC: Expenditures $ ( 1,921 ) $ ( 1,379 ) $ ( 1,123 ) Proceeds from disposals 1,298 741 626 Net expenditures - Hertz Global and Hertz $ ( 623 ) $ ( 638 ) $ ( 497 ) All other operations: (1) Expenditures $ — $ — $ ( 155 ) Proceeds from disposals — — 70 Net expenditures - Hertz Global and Hertz $ — $ — $ ( 85 ) Corporate: Expenditures $ ( 45 ) $ ( 15 ) $ ( 12 ) Proceeds from disposals 5 1 1 Net expenditures - Hertz Global and Hertz $ ( 40 ) $ ( 14 ) $ ( 11 ) (1) Substantially comprised of the Company's Donlen business, which was sold on March 30, 2021. The Company operates in the U.S. and in international countries. International operations are substantially in Europe. The operations within major geographic areas for each of Hertz Global and Hertz are summarized below: Years Ended December 31, (In millions) 2023 2022 2021 Revenues U.S. $ 7,392 $ 6,985 $ 6,186 International 1,979 1,700 1,150 Total Hertz Global and Hertz $ 9,371 $ 8,685 $ 7,336 As of December 31, (In millions) 2023 2022 Revenue earning vehicles, net U.S. (1) $ 11,980 $ 10,427 International 2,671 2,068 Total Hertz Global and Hertz $ 14,651 $ 12,495 Property and equipment, net U.S. $ 577 $ 558 International 94 79 Total Hertz Global and Hertz $ 671 $ 637 140 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of December 31, (In millions) 2023 2022 Total assets U.S. $ 19,550 $ 18,149 International 5,055 4,348 Total Hertz Global 24,605 22,497 U.S. - Hertz ( 1 ) ( 1 ) Total Hertz $ 24,604 $ 22,496 (1) Includes the carrying amount of vehicles classified as held for sale as of the respective balance sheet date, including the EV Disposal Group in 2023. See Note 4, "Revenue Earning Vehicles." Reconciliations of Adjusted EBITDA by reportable segment to consolidated amounts are summarized below: Hertz Global Years Ended December 31, (In millions) 2023 2022 2021 Adjusted EBITDA: Americas RAC $ 585 $ 2,292 $ 2,173 International RAC 302 350 90 Total reportable segments 887 2,642 2,263 All other operations (1) — — 13 Corporate (2) ( 326 ) ( 337 ) ( 146 ) Total Hertz Global 561 2,305 2,130 Adjustments: Non-vehicle depreciation and amortization ( 149 ) ( 142 ) ( 196 ) Non-vehicle debt interest, net (3) ( 238 ) ( 169 ) ( 185 ) Vehicle debt-related charges (4) ( 42 ) ( 35 ) ( 72 ) Restructuring and restructuring related charges (5) ( 17 ) ( 45 ) ( 76 ) Reorganization items, net (6) — — ( 677 ) Pre-reorganization charges and non-debtor financing charges (7) — — ( 42 ) Gain from the Donlen Sale (8) — — 400 Change in fair value of Public Warrants (9) 163 704 ( 627 ) Unrealized gains (losses) on financial instruments (10) ( 117 ) 111 4 Gain on sale of non-vehicle capital assets (11) 162 — — Litigation settlements (12) — ( 168 ) — Other items (13) ( 37 ) ( 112 ) 24 Income (loss) before income taxes $ 286 $ 2,449 $ 683 141 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Hertz Years Ended December 31, (In millions) 2023 2022 2021 Adjusted EBITDA: Americas RAC $ 585 $ 2,292 $ 2,173 International RAC 302 350 90 Total reportable segments 887 2,642 2,263 All other operations (1) — — 13 Corporate (2) ( 326 ) ( 337 ) ( 146 ) Total Hertz 561 2,305 2,130 Adjustments: Non-vehicle depreciation and amortization ( 149 ) ( 142 ) ( 196 ) Non-vehicle debt interest, net (3) ( 238 ) ( 169 ) ( 185 ) Vehicle debt-related charges (4) ( 42 ) ( 35 ) ( 72 ) Restructuring and restructuring related charges (5) ( 17 ) ( 45 ) ( 76 ) Reorganization items, net (6) — — ( 513 ) Pre-reorganization charges and non-debtor financing charges (7) — — ( 42 ) Gain from the Donlen Sale (8) — — 400 Unrealized gains (losses) on financial instruments (10) ( 117 ) 111 4 Gain on sale of non-vehicle capital assets (11) 162 — — Litigation settlements (12) — ( 168 ) — Other items (13) ( 37 ) ( 112 ) 24 Income (loss) before income taxes $ 123 $ 1,745 $ 1,474 (1) Substantially comprised of the Company's Donlen business, which was sold on March 30, 2021 as disclosed in Note 3, "Divestitures." (2) Represents other reconciling items primarily consisting of general corporate expenses and non-vehicle interest expense, as well as other business activities. (3) In 2021, includes $ 8 million of loss on extinguishment of debt associated with the payoff and termination of the HIL Credit Agreement resulting from the implementation of the Plan of Reorganization. (4) Represents vehicle debt-related charges relating to the amortization of deferred financing costs and debt discounts and premiums. (5) Represents charges incurred under restructuring actions as defined in U.S. GAAP. Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives. (6) Represents charges incurred associated with the filing of and the emergence from the Chapter 11 Cases, as disclosed in Note 19, "Reorganization Items, Net." (7) Represents charges incurred prior to the filing of the Chapter 11 Cases comprised of preparation charges for the reorganization, such as professional fees. Also, includes certain non-debtor financing and professional fee charges. (8) Represents the net gain from the sale of the Company's Donlen business on March 30, 2021 as disclosed in Note 3, "Divestitures." (9) Represents the change in fair value during the reporting period for Hertz Global's outstanding Public Warrants. (10) Represents unrealized gains (losses) on derivative financial instruments. See Note 11, "Financial Instruments." (11) Represents gain on sale of certain non-vehicle capital assets sold in March 2023. See Note 3, "Divestitures." (12) Represents payments made for the settlement of certain claims related to alleged false arrests. See Note 14, "Contingencies and Off-Balance Sheet Commitments." (13) Represents miscellaneous items. For 2023, primarily includes certain IT-related costs, charges for certain storm-related vehicle damages and certain professional fees and charges related to the settlement of bankruptcy claims, partially offset by a loss recovery settlement. For 2022, primarily includes certain bankruptcy claims, certain professional fees and charges related to the settlement of bankruptcy claims and certain non-cash stock-based compensation charges. For 2021, primarily includes $ 100 million associated with the suspension of depreciation during the first quarter for the Donlen business while classified as held for sale, partially offset by $ 17 million for certain professional fees, $ 14 million of charges related to the settlement of bankruptcy claims, charges for a multiemployer pension plan withdrawal liability and letter of credit fees. 142 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 19— Reorganization Items, Net The Debtors incurred incremental costs as a result of the Chapter 11 Cases and settlement of liabilities under the Plan of Reorganization which were recorded as reorganization items, net in the accompanying consolidated statements of operations for the year ended December 31, 2021. The following tables summarize reorganization items, net: Hertz Global Year Ended December 31, (In millions) 2021 Professional fees and other bankruptcy related costs $ 257 Loss on extinguishment of debt (1) 191 Backstop fee 164 Breakup fee (2) 77 Contract settlements 25 Cancellation of share-based compensation grants ( 10 ) Net gain on settlement of liabilities subject to compromise ( 22 ) Other, net ( 5 ) Reorganization items, net $ 677 Hertz Year Ended December 31, (In millions) 2021 Professional fees and other bankruptcy related costs $ 257 Loss on extinguishment of debt (1) 191 Breakup fee (2) 77 Contract settlements 25 Cancellation of share-based compensation grants ( 10 ) Net gain on settlement of liabilities subject to compromise ( 22 ) Other, net ( 5 ) Reorganization items, net $ 513 (1) Includes loss on extinguishment of debt resulting from the implementation of the Plan of Reorganization on the Effective Date. Primarily composed of write-offs of unamortized deferred loan origination costs and early termination fees associated with terminated debt agreements. See Note 6, "Debt," for further information. (2) Breakup fee paid to prior plan sponsors and certain of their respective affiliates and holders of certain notes upon emergence from Chapter 11 in accordance with an equity purchase and commitment agreement entered into in April 2021, which was subsequently terminated. Cash payments during the year ended December 31, 2021 totaled $ 485 million. As of December 31, 2021, $ 25 million was recorded in accounts payable in the accompanying consolidated balance sheet, which was paid through the claim settlement process during the first half of 2022. 143 Table of Contents SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY BALANCE SHEETS (In millions, except par value and share data) December 31, 2023 2022 ASSETS Cash and cash equivalents $ — $ — Restricted cash and cash equivalents — — Total cash and cash equivalents and restricted cash and cash equivalents — — Non-vehicle receivables, net of allowance — — Prepaid expenses and other assets 1 1 Investments in subsidiaries, net 3,543 3,279 Deferred income taxes, net 3 3 Total assets $ 3,547 $ 3,283 LIABILITIES AND STOCKHOLDERS' EQUITY Accrued liabilities $ — $ 21 Accrued taxes, net 2 Public Warrants 453 617 Total liabilities 455 638 Stockholders' equity: Preferred stock, $ 0.01 par value, no shares issued and outstanding — — Common stock, $ 0.01 par value, 479,990,286 and 478,914,062 shares issued, respectively, and 305,178,242 and 323,483,178 shares outstanding, respectively 5 5 Additional paid-in capital 6,405 6,326 Retained earnings (Accumulated deficit) 360 ( 256 ) Accumulated other comprehensive income (loss) ( 248 ) ( 294 ) Equity before treasury stock 6,522 5,781 Treasury stock, at cost, 174,812,044 and 155,430,884 common shares as of December 31, 2023 and 2022, respectively ( 3,430 ) ( 3,136 ) Total stockholders' equity 3,092 2,645 Total liabilities and stockholders' equity $ 3,547 $ 3,283 The accompanying notes are an integral part of these financial statements. 144 Table of Contents SCHEDULE I (Continued) CONDENSED FINANCIAL INFORMATION OF REGISTRANT HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY STATEMENTS OF OPERATIONS (In millions) Years Ended December 31, 2023 2022 2021 Revenues $ — $ — $ — Expenses: Reorganization items, net — — 164 Change in fair value of Public Warrants ( 163 ) ( 704 ) 627 Total expenses ( 163 ) ( 704 ) 791 Income (loss) before income taxes and equity in earnings (losses) of subsidiaries 163 704 ( 791 ) Income tax (provision) benefit 1 — — Equity in earnings (losses) of subsidiaries, net of tax 452 1,355 1,157 Net income (loss) 616 2,059 366 Series A Preferred Stock deemed dividends — — ( 450 ) Net income (loss) available to Hertz Holdings common stockholders $ 616 $ 2,059 $ ( 84 ) The accompanying notes are an integral part of these financial statements. PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In millions) Years Ended December 31, 2023 2022 2021 Net income (loss) $ 616 $ 2,059 $ 366 Total other comprehensive income (loss) 46 ( 80 ) ( 2 ) Total comprehensive income (loss) $ 662 $ 1,979 $ 364 The accompanying notes are an integral part of these financial statements. 145 Table of Contents SCHEDULE I (Continued) CONDENSED FINANCIAL INFORMATION OF REGISTRANT HERTZ GLOBAL HOLDINGS, INC. PARENT COMPANY STATEMENTS OF CASH FLOWS (In millions) Years Ended December 31, 2023 2022 2021 Net cash provided by (used in) operating activities $ 3 $ — $ — Cash flows from financing activities: Proceeds from Plan Sponsors — — 2,781 Proceeds from 2021 Rights Offering, net — — 1,639 Contributions to Hertz — — ( 5,642 ) Proceeds from exercises of Public Warrants — 3 77 Proceeds from issuance of preferred stock, net — — 1,433 Distributions to common stockholders — — ( 239 ) Share repurchases ( 315 ) ( 2,461 ) ( 654 ) Repurchase of preferred stock — — ( 1,883 ) Dividends from Hertz 321 2,477 2,470 Other ( 9 ) ( 20 ) ( 9 ) Net cash provided by (used in) financing activities ( 3 ) ( 1 ) ( 27 ) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents during the period — ( 1 ) ( 27 ) Cash and cash equivalents and restricted cash and cash equivalents at beginning of period — 1 28 Cash and cash equivalents and restricted cash and cash equivalents at end of period $ — $ — $ 1 The accompanying notes are an integral part of these financial statements. 146 Table of Contents SCHEDULE I (Continued) HERTZ GLOBAL HOLDINGS, INC. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS Note 1— Background and Basis of Presentation Hertz Global Holdings, Inc. was incorporated in Delaware in 2015 and wholly owns Rental Car Intermediate Holdings, LLC which wholly owns Hertz, Hertz Global's primary operating company. These condensed parent company financial statements reflect the activity of Hertz Holdings as the parent company to Hertz and have been prepared in accordance with Rule 12-04, Schedule 1 of Regulation S-X, as the restricted net assets of Hertz exceed 25% of the consolidated net assets of Hertz Holdings. This information should be read in conjunction with the consolidated financial statements of Hertz Global included in this 2023 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data." Note 2— Dividends In 2023 and 2022, $ 321 million and $ 2.5 billion in cash dividends were paid by Hertz to Hertz Holdings to fund common stock repurchases, respectively. In 2021, $ 2.5 billion in cash dividends were paid by Hertz to Hertz Holdings to fund preferred stock and common stock share repurchases. Additionally, in December 2021, a $ 65 million tax-related liability for a loan due from Hertz to Hertz Holdings was settled via a non-cash distribution. There were no non-cash dividends paid by Hertz in 2023, 2022 or 2021. Note 3— Share Repurchases For a discussion of the share repurchase programs of Hertz Holdings, refer to Note 16, "Equity and Earnings (Loss) Per Common Share – Hertz Global" to the Notes to its consolidated financial statements in this 2023 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data." In 2023 and 2022, Hertz Holdings repurchased 19,381,160 shares and 127,980,030 shares, for $ 291 million and, $ 2.4 billion, respectively. There were no share repurchases after December 31, 2023 through the filing of this 2023 Annual Report. These amounts are included in treasury stock in the accompanying parent-only balance sheets of Hertz Holdings as of December 31, 2023 and 2022. 147 Table of Contents SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES (In millions) Balance at Beginning of Period Additions Charged to Expense Translation Adjustments Deductions Balance at End of Period Receivables allowances: Year ended December 31, 2023 $ 45 $ 93 $ — $ ( 91 ) (1) $ 47 Year ended December 31, 2022 50 57 — ( 62 ) (1) 45 Year ended December 31, 2021 46 125 — ( 121 ) (1) 50 Tax valuation allowances: Year ended December 31, 2023 $ 511 $ 22 $ 10 $ ( 238 ) (2) $ 305 Year ended December 31, 2022 690 — ( 33 ) ( 146 ) (2) 511 Year ended December 31, 2021 651 78 ( 39 ) — 690 (1) Amounts written off, net of recoveries. (2) Activity represents the release of a valuation allowance. 148 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES HERTZ GLOBAL HOLDINGS, INC. Evaluation of Disclosure Controls and Procedures Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this 2023 Annual Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this inherent risk. Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control - Integrated Framework (2013). Based on this assessment, management has concluded that we did maintain effective internal control over financial reporting as of December 31, 2023. The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which appears in this 2023 Annual Report. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. HERTZ CORPORATION Evaluation of Disclosure Controls and Procedures Our senior management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by 149 Table of Contents HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES THE HERTZ CORPORATION AND SUBSIDIARIES