MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
−Removed: reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
−Removed: Factors which could be indicators of impairment include, but are not limited to, (i) significant decrease in market prices of the assets, (ii) current period operating or cash flow losses or a projection or forecast that demonstrates continuing losses and (iii) significant changes in the estimated useful lives.
−Removed: Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.
−Removed: 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.
−Removed: Long-lived assets to be disposed of are reported at the lower of carrying value or estimated fair value less costs to sell.
−Removed: During the third quarter of 2024, at the conclusion of our historical peak rental season, there was a reduction in the cash flow projections in our Americas RAC and International RAC segments, indicating that the carrying values of their long-lived assets may not be recoverable.
−Removed: The reduction was largely attributed to the acceleration of the rental fleet rotation in our segments, where shortening the useful life reduced the potential future cash flows expected to be earned from the fleet.
−Removed: Operating cash flow projections also deteriorated from delayed timing of operating cost improvements and longer timeframes associated with revenue maximization initiatives.
−Removed: As a result, we tested the recoverability of our long-lived assets in our Americas RAC and International RAC segments and determined that an impairment existed, which resulted in recognition of a total impairment charge of $1.0 billion, of which $923 million and $125 million were associated with our revenue earning vehicles and ROU assets, respectively.
−Removed: Further changes in market conditions or the performance of our long-lived assets could result in an additional impairment charge.
−Removed: See Note 3, "Long-Lived Assets Impairment," in Part II, Item 8 of this 2024 Annual Report for additional information.
Self-insured Liabilities
4 unchanged sentences
If our estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.
−Removed: During the year ended December 31, 2024, we experienced increased self-insurance liabilities as a result of adverse experience and case development.
Recoverability of Goodwill and Indefinite-lived Intangible Assets
2 unchanged sentences
GAAP fair value hierarchy.
−Removed: The reviews of fair value involve judgment and estimates, including projected revenues, projected cash flows, long-term growth rates, royalty rates and discount rates.
+Added: The reviews of fair value involve judgment and estimates, including projected revenues, projected cash flows, long-term growth rates, royalty rates and discount rates, which we deem reasonable for this purpose.
For goodwill, we determine the fair value using an income approach based on the discounted cash flows of each reporting unit.
6 unchanged sentences
The WACC used in the discounted cash flow model methodology is calculated based upon the fair value of our debt and share price with a debt-to-equity ratio comparable to the vehicle rental car industry as well specific risk factors for each reporting unit.
−Removed: The discount rate utilized for each reporting unit is indicative of the return
−Removed: HERTZ GLOBAL HOLDINGS, INC.
−Removed: AND SUBSIDIARIES
−Removed: THE HERTZ CORPORATION AND SUBSIDIARIES
−Removed: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
−Removed: an investor would expect to receive for investing in such a business.
+Added: The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in such a business.
Our cash flow projections represent management's most recent planning assumptions, which are based on a combination of industry outlooks, views on general economic conditions, our expected pricing plans and expected future savings.
6 unchanged sentences
If our expectations of the operating results, both in magnitude or timing, do not materialize, or if our weighted average cost of capital increases, we may be required to record goodwill and indefinite-lived intangible asset impairment charges, which could be material.
+Added: HERTZ GLOBAL HOLDINGS, INC.
+Added: AND SUBSIDIARIES
+Added: THE HERTZ CORPORATION AND SUBSIDIARIES
+Added: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid.
9 unchanged sentences
Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment or a loss of a tax attribute or deduction that is materially different from our current estimate of the unrecognized tax benefits.
−Removed: These differences will be reflected as increases or decreases to income tax expense in the period in which the change in judgement occurs.
+Added: These differences will be reflected as increases or decreases to income tax expense in the period in which the change in judgment occurs.
+Added: On July 4, 2025, the OBBBA was enacted, reinstating full bonus depreciation, allowing interest deductions based on EBITDA, expensing R&D costs and modifying certain international provisions of the Code.
+Added: As a result, we expect federal cash taxes to decrease in the near term, assuming fleet investments are maintained or increased from current levels.
+Added: These provisions are also expected to increase deferred tax assets, such as net operating losses, and may necessitate additional valuation allowances depending on future taxable income and loss trends.
Recent Accounting Pronouncements
4 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.