What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-02-26 compared with 2020-02-25 · 397 added, 551 removed, 278 unchanged (77% of the section changed)

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (Continued)

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG HERTZ GLOBAL HOLDINGS, INC.,

RUSSELL 1000 INDEX AND MORNINGSTAR RENTAL & LEASING SERVICES

INDUSTRY GROUP

ASSUMES DIVIDEND REINVESTMENT

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

In June 2020, subsequent to approval from the Bankruptcy Court and pursuant to a prospectus supplement to the Registration Statement on Form S-3 declared filed and effective by the SEC in June 2019 (the "Registration Statement"), Hertz Global entered into an open market sale agreement under which it may offer and sell, from time to time, shares of its common stock, par value $0.01 per share, having an aggregate offering price of up to $500 million (the "ATM Program").

Prior to its suspension on June 15, 2020 and ultimate termination on June 18, 2020, Hertz Global issued 13,912,368 shares under the ATM Program for net proceeds of approximately $28 million.

See Note 17, "Equity and Earnings (Loss) Per Share - Hertz Global," to the Notes to our consolidated financial statements included in this 2020 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data" for further details.

As a result of the filing of the Chapter 11 Cases, on October 29, 2020, the NYSE informed Hertz Global that its common stock was no longer suitable for listing on the NYSE and that the NYSE suspended trading of Hertz Global common stock (NYSE ticker symbol:

HTZ) after the market close on October 29, 2020.

On October 30, 2020, Hertz Global common stock began trading exclusively on the over-the-counter market under the symbol "HTZGQ".

Also on October 30, 2020, the NYSE applied to the SEC pursuant to Form 25 to remove the common stock of Hertz Global from listing and registration on the NYSE at the opening of business on November 10, 2020.

Pursuant to Form 25, Hertz Global common stock was delisted from the NYSE on November 10, 2020.

Upon deregistration of Hertz Global common stock under Section 12(b) of the Exchange Act, Hertz Global common stock remains registered under Section 12(g) of the Exchange Act.

As a result of trading on the over-the-counter market, quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

As of February 22, 2021, there were 1,219 holders of record of Hertz Holdings common stock.

Hertz Holdings paid no cash dividends on its common stock in 2020 or 2019, and it does not expect to pay dividends on its common stock for the foreseeable future.

Hertz Holdings has a Board-approved share repurchase program that authorizes it to repurchase shares of its common stock through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws.

It does not obligate Hertz Holdings to make any repurchases at any specific time or situation.

There were no shares repurchased under this program in 2020 or 2019.

As of December 31, 2020, there was $295 million available for use for repurchases under this program.

Since Hertz Holdings does not conduct business itself, it primarily funds dividends on, and repurchases of, its common stock using dividends from Hertz or amounts borrowed under the master loan agreement.

The credit agreements governing Hertz's Senior Facilities, Letter of Credit Facility, Alternative Letter of Credit Facility and DIP Credit Agreement restrict Hertz's ability to make dividends and certain payments, including payments to Hertz Holdings for dividends on Hertz Holdings' common stock or for share repurchases.

There is no established public trading market for the common stock of Hertz.

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Hertz did not pay dividends to Hertz Holdings in 2020 or 2019.

The credit agreements governing Hertz's Senior Facilities, Letter of Credit Facility and Alternative Letter of Credit Facility restrict Hertz's ability to make dividends and certain payments to Hertz Holdings.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

SELECTED FINANCIAL DATA

The selected statements of operations data for the years ended December 31, 2019, 2018 and 2017 and the selected balance sheet data as of December 31, 2019 and 2018 were derived from the audited consolidated financial statements of Hertz Global included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data.” The selected statement of operations data for the year ended December 31, 2016 and the selected balance sheet data as of December 31, 2017 and 2016 were derived from audited consolidated financial statements of Hertz Global, not included in this 2019 Annual Report.

The selected statement of operations data for the year ended December 31, 2015 and the selected balance sheet data as of December 31, 2015 were derived from audited consolidated financial statements of Old Hertz Holdings, not included in this 2019 Annual Report.

The information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and related notes thereto of Hertz Global included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data,” to fully understand factors that may affect the comparability of the information presented below.

The selected consolidated financial data in this section is not intended to replace the audited consolidated financial statements of Hertz Global.

(In millions, except per share data)

Years Ended December 31,

Statements of Operations Data

Worldwide vehicle rental (a)

All other operations

Total revenues

Direct vehicle and operating

Depreciation of revenue earning vehicles and lease charges

Selling, general and administrative

Interest expense, net:

Total interest expense, net

Goodwill and intangible asset impairments

Other (income) expense, net

Total expenses

Income (loss) from continuing operations before income taxes

Income tax (provision) benefit (b)

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Net income (loss)

Net (income) loss attributable to noncontrolling interests

Net income (loss) attributable to Hertz Global

Weighted-average shares outstanding:

Earnings (loss) per share:

Basic earnings (loss) per share

Diluted earnings (loss) per share

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

SELECTED FINANCIAL DATA (Continued)

(In millions)

As of December 31,

Balance Sheet Data

Cash and cash equivalents

Revenue earning vehicles, net

Total assets (d)

Total equity attributable to Hertz Global (e)

Includes U.S.

Rental Car and International Rental Car segments.

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

tax structure.

Basic weighted-average shares outstanding and weighted-average shares used to calculate diluted earnings (loss) per share have been adjusted retrospectively to give effect to the Rights Offering for the years ended December 31, 2018, 2017, 2016 and 2015.

See Note 16 , " Equity and Earnings (Loss) Per Share - Hertz Global ," to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data" for additional information.

The balance of total assets as of December 31, 2019 includes the impact upon adoption of guidance impacting leases, as further disclosed in Note 2 , " Significant Accounting Policies " to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data".

The balance of total assets as of December 31, 2015 includes the assets of certain entities that were spun-off on June 30, 2016.

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

THE HERTZ CORPORATION AND SUBSIDIARIES

SELECTED FINANCIAL DATA (Continued)

The selected statements of operations data for the years ended December 31, 2019, 2018 and 2017 and the selected balance sheet data as of December 31, 2019 and 2018 were derived from the audited consolidated financial statements of Hertz included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data.” The selected statement of operations data for the year ended December 31, 2016 and the selected balance sheet data as of December 31, 2017 and 2016 were derived from audited consolidated financial statements of Hertz, not included in this 2019 Annual Report.

The information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and related notes thereto of Hertz included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data,” to fully understand factors that may affect the comparability of the information presented below.

The selected consolidated financial data in this section is not intended to replace the audited consolidated financial statements of Hertz.

(In millions)

Years Ended December 31,

Statements of Operations Data

Worldwide vehicle rental (a)

All other operations

Total revenues

Direct vehicle and operating

Depreciation of revenue earning vehicles and lease charges

Selling, general and administrative

Interest expense, net:

Total interest expense, net

Goodwill and intangible asset impairments

Other (income) expense, net

Total expenses

Income (loss) from continuing operations before income taxes

Income tax (provision) benefit (b)

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Net income (loss)

Net (income) loss attributable to noncontrolling interests

Net income (loss) attributable to Hertz

THE HERTZ CORPORATION AND SUBSIDIARIES

SELECTED FINANCIAL DATA (Continued)

(In millions)

As of December 31,

Balance Sheet Data

Cash and cash equivalents

Revenue earning vehicles, net

Total assets (c)

Total equity attributable to Hertz (d)

Includes U.S.

Rental Car and International Rental Car segments.

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

tax structure.

The balance of total assets as of December 31, 2015 includes the assets of certain entities that were spun-off on June 30, 2016.

HERTZ GLOBAL HOLDINGS, INC.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

SELECTED FINANCIAL DATA

Not applicable.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Hertz Global Holdings, Inc.

(together with its consolidated subsidiaries and variable interest entities, “Hertz Global”) is a holding company and its principal, wholly-owned subsidiary is The Hertz Corporation (together with its consolidated subsidiaries and variable interest entities, "Hertz").

is a holding company and its principal, wholly-owned subsidiary is The Hertz Corporation.

Hertz Global consolidates Hertz for financial statement purposes, and Hertz comprises approximately the entire balance of Hertz Global’s assets, liabilities and operating cash flows.

In addition, Hertz’s operating revenues and operating expenses comprise nearly 100% of Hertz Global’s revenues and operating expenses.

As such, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") that follows herein is for Hertz and also applies to Hertz Global in all material respects, unless noted.

Differences between the operations and results of Hertz and Hertz Global are separately disclosed and explained.

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Our actual results may differ materially from those contained in or implied by any forward-looking statements.

You should read the following MD&A together with the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” Item 1A, "Risk Factors,” Item 6, "Selected Financial Data” and our consolidated financial statements and related notes included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data.”

You should read the following MD&A together with the sections entitled “Cautionary Note Regarding Forward-Looking Statements,” Item 1A, "Risk Factors,” and our consolidated financial statements and related notes included in this 2020 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data.”

In this MD&A we refer to the following non-GAAP measure and key metrics:

• Adjusted Corporate EBITDA - important non-GAAP measure to management because it allows management to assess the operational performance of our business, exclusive of certain items, and allows management to assess the performance of the entire business on the same basis as the segment measure of profitability.

Management believes that it is important to investors for the same reasons it is important to management and because it allows them to assess our operational performance on the same basis that management uses internally.

Management believes that it is important to investors for the same reasons it is important to management and because it allows investors to assess our operational performance on the same basis that management uses internally.

Adjusted EBITDA, the segment measure of profitability and accordingly a GAAP measure, is calculated exclusive of certain items which are largely consistent with those used in the calculation of Adjusted Corporate EBITDA.

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It is used as a component to measure Total RPD and Vehicle Utilization.

Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period.

Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.

Transaction Days represent the total number of 24-hour periods, with any partial period counted

HERTZ GLOBAL HOLDINGS, INC.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period.

Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.

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

Higher Vehicle Utilization means more vehicles are being utilized to generate revenues.

Our non-GAAP measure should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S.

Our non-GAAP measure and key metrics should not be considered in isolation and should not be considered superior to, or a substitute for, financial measures calculated in accordance with U.S.

The above non-GAAP measure and key metrics are defined, and the non-GAAP measure is reconciled to its most comparable U.S.

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OVERVIEW OF OUR BUSINESS AND OPERATING ENVIRONMENT

Impact of COVID-19 on our Business

In March 2020, the World Health Organization declared COVID-19 a pandemic, affecting multiple global regions.

The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in, and will likely continue to result in, significant disruptions to the global economy, as well as businesses around the world.

In an effort to halt the spread of COVID-19, many governments around the world placed significant restrictions on travel, individuals voluntarily reduced their air and other travel in attempts to avoid the outbreak and many businesses announced closures and imposed travel restrictions.

There is continued uncertainty about the duration of the negative impact from COVID-19 and the length and scope of travel restrictions and business closures imposed by governments of impacted countries and voluntarily undertaken by private businesses.

In response to COVID-19, we began aggressively managing costs and (i) initiated a restructuring program affecting approximately 11,000 employees in our U.S.

RAC segment and U.S.

corporate operations;

(ii) actively negotiated to abate or defer our airport rent and concession payments;

(iii) substantially reduced capital expenditures;

(iv) eliminated discretionary marketing spend;

and (v) reduced our commitments to purchase vehicles by approximately $4.0 billion from original commitments in our U.S.

Although we took aggressive action to eliminate costs, we faced significant ongoing monthly expenses, including monthly payments under our Operating Lease, pursuant to which Hertz leases vehicles which we use in our U.S.

RAC rental car operations.

On April 27, 2020, Hertz did not make certain payments in accordance with the Operating Lease, and as a result, an amortization event was in effect as of May 5, 2020 for all series of notes issued by HVF II and a liquidation event was in effect with respect to the Series 2013-A Notes issued by HVF II.

Refer to Note 1, "Background," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report for additional information on the Forbearance Agreement and Waiver Agreements which expired on May 22, 2020.

Voluntary Petitions for Bankruptcy

In connection with the expiration of the Forbearance Agreement and the Waiver Agreements described above and the continuing economic impact from COVID-19, on the Petition Date, the Debtors filed Petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

The Chapter 11 Cases are being jointly administered by the Bankruptcy Court under the caption In re The Hertz Corporation, et al., Case No.

20-11218 (MFW) .

Additional information about the Chapter 11 Cases, including access to documents filed with the Bankruptcy Court, is available online at https://restructuring.primeclerk.com/hertz, a website administered by Prime Clerk.

The information on this website is not incorporated by reference and does not constitute part of this 2020 Annual Report.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity Considerations Following the Chapter 11 Filing

Per the terms of the Interim Lease Order entered on July 24, 2020, the Debtors were directed to, among other things, (i) make $650 million of base rent payments under the Operating Lease to the HVF trustee in the amount of six equal monthly payments of approximately $108 million commencing in July 2020 through December 2020;

(ii) dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020, inclusive, where the proceeds of the dispositions, subject to certain exclusions set forth in the Interim Lease Order, were to be used to make payments under the Operating Lease;

(iii) fund interest payments on the Operating Lease from draws on certain existing letters of credit, which were reimbursable by the Debtors;

and (iv) suspend litigation relating to the Operating Lease until January 15, 2021 with all parties reserving all rights with respect to future litigation claims.

For the period June 1, 2020 through December 31,2020, we disposed of approximately 198,000 lease vehicles pursuant to or otherwise in satisfaction of our vehicle disposition obligations under the Interim Lease Order.

Also, refer to the "Liquidity and Capital Resources" section below.

On October 12, 2020, the Bankruptcy Court entered an order authorizing Hertz and Donlen to enter into certain agreements in connection with a new asset-based securitization facility with DFLF for the purposes of new interim fleet financing.

On October 16, 2020, DFLF issued the Series 2020-1 Notes in an aggregate principal amount up to $400 million pursuant to this new facility, as disclosed in Note 6, "Debt," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report.

On October 29, 2020, the Bankruptcy Court entered an order authorizing the Debtors to obtain certain debtor-in-possession financing.

In accordance with the Bankruptcy Court’s order, on October 30, 2020, Hertz, as borrower, and Hertz Global and certain of its subsidiaries located in the U.S.

and Canada, in each case that are debtors in these Chapter 11 Cases, as guarantors, entered into the DIP Credit Agreement.

The DIP Credit Agreement provides for a superpriority secured debtor-in-possession credit facility comprised of the DIP Loans, of which (i) up to $1.0 billion can be used as equity for new interim fleet financing, giving the Debtors the ability to replenish their vehicle fleet in the future, and (ii) up to $800 million can be used for working capital and general corporate purposes.

The DIP Loans are available in multiple draws of at least (i) $250 million each or (ii) the remaining available commitments if such commitments are less than $250 million.

The DIP Loans bear interest at a rate of LIBOR plus 7.25% (subject to a 1.00% floor), which is reduced to LIBOR plus 6.75% upon a significant repayment of Pre-petition first lien debt.

As of December 31, 2020, Hertz drew down $250 million from the DIP Credit Agreement.

Refer to Note 6, "Debt," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report for further details.

On February 16, 2021, Hertz borrowed an additional $250 million as per the minimum draw requirement of the DIP Credit Agreement.

On November 24, 2020, the Bankruptcy Court entered an order authorizing the formation of HVIF and for the Debtors to obtain interim fleet financing.

In accordance with the Bankruptcy Court's order, on November 25, 2020, HVIF issued the Series 2020-1 Notes in an aggregate principal amount up to $4.0 billion, as further described in Note 6, "Debt," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report.

In 2020, the Bankruptcy Court approved the Lease Rejection Orders which were comprised of 359 off airport locations and 66 airport locations in our U.S.

RAC segment, as further disclosed in Note 10, "Leases," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report for further details.

As a result of the Lease Rejection Orders, we have been consolidating our off airport rental locations and will continue to do so in 2021.

On January 20, 2021, the Bankruptcy Court authorized the Second Lease Order, which extended the forbearance period related to the Operating Lease to September 30, 2021, provided that the Debtors dispose of 121,510 lease vehicles, at least 113,381 of which will be non-program vehicles, and reach a minimum cumulative vehicle disposition proceeds of $2.0 billion by September 30, 2021.

Additionally, the Second Lease Order directed the Debtors to (i) have no more than 157,262 lease vehicles by September 30, 2021 and (ii) make $756 million of base

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

rent payments under the Operating Lease to the HVF trustee in the amount of nine equal monthly payments of $84 million commencing in January 2021 through September 2021.

On January 28, 2021, Hertz subsidiary, TCL Funding Limited Partnership, entered into the Funding LP Series 2021-A Notes which provide for aggregate maximum borrowings of CAD$350 million on a revolving basis, subject to availability.

The initial draw of CAD$120 million was used, in part, to pay the outstanding obligations under the Funding LP Series 2015-A Notes, including any unpaid default interest, as disclosed in Note 6, "Debt," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report.

As a result of our actions to eliminate costs in 2020, we (i) negotiated rent concessions in the form of abatement and payment deferrals of fixed and variable rent payments for our airport and off airport locations in the amount of approximately $300 million which substantially represents amounts previously due in 2020;

(ii) reduced our revenue earning vehicle expenditures by $8.2 billion, or 60%, in 2020 compared to 2019;

(iii) reduced our non-vehicle capital asset expenditures by $126 million, or 56%, in 2020 compared to 2019 primarily due to a reduction in information technology and finance transformation program costs;

and (iv) sold approximately 308,000, or 6%, more vehicles in our U.S.

RAC segment in 2020 compared to 2019 due primarily to the Interim Lease Order.

We continue to review our cost structure and fleet size to align with expected rental car volumes.

NYSE Delisting

As a result of the filing of the Chapter 11 Cases, on October 29, 2020, the NYSE informed us that Hertz Global common stock was no longer suitable for listing on the NYSE and that the NYSE suspended trading of Hertz Global common stock (NYSE ticker symbol:

HTZ) after the market close on October 29, 2020.

Hertz Global common stock began trading exclusively on the over-the-counter market on October 30, 2020 under the symbol HTZGQ and was delisted from the NYSE on November 10, 2020 pursuant to Form 25.

Upon deregistration of Hertz Global common stock under Section 12(b) of the Exchange Act, Hertz Global common stock remains registered under Section 12(g) of the Exchange Act.

We are engaged principally in the business of renting vehicles primarily through our Hertz, Dollar and Thrifty brands.

In addition to vehicle rental, we provide integrated vehicle leasing and fleet management solutions through our Donlen subsidiary.

We have a diversified revenue base and a highly variable cost structure and are generally able to adjust fleet capacity, the most significant determinant of our costs, to meet expectations of market demand.

In addition to vehicle rental, we provide integrated vehicle leasing and fleet management solutions through our Donlen subsidiary, where in the fourth quarter of 2020, we entered into a stock and asset purchase agreement to sell substantially all of the Donlen Assets as discussed below.

Our profitability is primarily a function of the volume, mix and pricing of rental transactions and the utilization of vehicles, the related ownership cost of vehicles and other operating costs.

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Our business requires significant expenditures for vehicles, and as such, we require substantial liquidity to finance such expenditures.

See the "Liquidity and Capital Resources" section of this MD&A.

However, as a result of the Interim Lease Order, Hertz was directed to dispose of at least 182,521 lease vehicles between June 1, 2020 and December 31, 2020, where the proceeds from the dispositions were to be used to make payments under the Operating Lease.

For the period from June 1, 2020 through December 31,2020, we disposed of approximately 198,000 lease vehicles pursuant to or otherwise in satisfaction of our vehicle disposition obligations under the Interim Lease Order.

Additionally, under the Second Lease Order issued in January 2021, Hertz was directed to dispose of an additional 121,510 lease vehicles between January 1, 2021 and September 30, 2021, where the proceeds from the dispositions will be used to make payments under the Operating Lease.

See the "Liquidity and Capital Resources" section of this MD&A for further information.

Our strategy includes optimization of our vehicle rental operations, disciplined performance management and evaluation of all locations and the pursuit of same-store sales growth.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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

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

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

• All other operations revenues - revenues from vehicle leasing and fleet management services by our Donlen business and other business activities, which in the fourth quarter of 2020, we entered into a stock and asset purchase agreement to sell substantially all of the Donlen Assets as discussed below.

Our expenses primarily consist of:

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

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

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

• Interest expense, net;

Generally, between 70% and 75% of our annual operating costs represent variable costs, while the remaining costs are fixed or semi-fixed.

To accommodate increased demand, we increase our available fleet and staff.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

declines, fleet and staff are decreased accordingly.

A number of our other major operating costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes.

In addition, our management expects to utilize enhanced process improvements to help manage our variable costs.

We also maintain a flexible workforce, with a significant number of part-time and seasonal workers.

Certain operating expenses, including real estate taxes, rent, insurance, utilities, maintenance and other facility-related expenses, and minimum staffing costs, remain fixed and cannot be adjusted for demand.

In addition to our typical expenses, we have been incurring significant costs associated with our multi-year initiatives to upgrade and modernize our information technology and finance systems and processes.

The information technology transformation is intended to increase the customer experience and ultimately drive efficiencies, service offerings and future productivity.

The technology transformation initiative is complex and will require continued investment and as is the case for most large scale technology transformations, there can be no assurance that all the benefits we anticipate can be achieved.

• Reorganization items, net, which includes charges associated with the Chapter 11 Cases, primarily professional fees.

Our Business Segments

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

In the fourth quarter of 2020, we entered into a stock and asset purchase agreement to sell substantially all of the Donlen Assets.

Accordingly, the Donlen Assets have been classified as held for sale in the accompanying consolidated balance sheet as of December 31, 2020.

The sale is expected to close in the first quarter of 2021.

See Note 3, "Divestitures," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report for further information.

In addition to the above reportable segments, we have Corporate operations.

We assess performance and allocate resources based upon the financial information for our operating segments.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Revenue Earning Vehicles

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Also included in revenue earning vehicles are vehicles placed on our retail lots for sale or actively in the process of being sold through other disposition channels.

Program vehicles are purchased under repurchase or guaranteed depreciation programs with vehicle manufacturers wherein the manufacturers agree to repurchase 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.

Guaranteed depreciation programs guarantee the residual value of the program vehicle upon sale, subject to, among other things, certain vehicle condition, mileage and holding period requirement.

Program vehicles generally provide us with flexibility to increase or reduce the size of our fleet based on economic demand.

Program vehicles are purchased under repurchase or guaranteed depreciation programs with vehicle manufacturers wherein the manufacturers agree to repurchase vehicles at a specified price or guarantee the depreciation rate on the vehicles during established repurchase periods, subject to, among other things, certain vehicle condition, mileage and holding period requirements.

Guaranteed depreciation programs guarantee the residual value of the program vehicle upon sale, subject to, among other things, certain vehicle condition, mileage and holding period requirements.

Program vehicles generally provide us with flexibility to increase or reduce the size of our fleet based on market demand.

When we increase the percentage of program vehicles, the average age of our fleet decreases since the average holding period for program vehicles is shorter than that for non-program vehicles.

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Depreciation rates are reviewed on a quarterly basis based on management's ongoing assessment of present and estimated future market conditions, their effect on residual values at the expected time of disposal and the estimated holding period of the vehicle.

Differences between actual residual values and those estimated

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

result in an adjustment to depreciation upon disposition of the vehicle.

Differences between actual residual values and those estimated result in an adjustment to depreciation upon disposition of the vehicle.

Our depreciation of revenue earning vehicles and lease charges also includes costs associated with the disposal of vehicles and rents paid for vehicles leased.

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2020 Operating Overview

The following provides an overview of our business and financial performance and key factors influencing our results:

◦ Total revenues increase d $459 million , or 7%

Total RPD increase d 2% , and Total RPU increase d 1%

Transaction Days increase d 4%

Depreciation of revenue earning vehicles and lease charges decrease d 1% to $1.7 billion

Depreciation Per Unit Per Month decrease d 7% to $258

Vehicle Utilization decrease d to 80% from 81%

DOE as a percentage of total revenues decrease d to 60% from 62%

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

International RAC

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

Total RPD increase d 1% , and Total RPU was flat

Transaction Days decrease d 1%

Depreciation of revenue earning vehicles and lease charges decrease d 2% to $440 million , and increase d $14 million , or 3% , excluding fx

Depreciation Per Unit Per Month increase d 3% to $205

Vehicle Utilization decrease d to 76% from 77%

DOE as a percentage of total revenues increase d to 61% from 57%

SG&A as a percentage of total revenues decrease d to 10% from 11%

COVID-19 has caused a substantial reduction to airline travel during 2020.

As a large portion of our business is generated at airport locations, these disruptions have had, and we expect it to continue to have, a material adverse impact on our results of operations until such travel returns to historic levels.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The following charts provide several key factors influencing our results for the years ended December 31, 2020 , 2019 and 2018.

(1) Includes impact of foreign currency exchange at average rates ("fx").

(2) Results shown are in constant currency as of December 31, 2019.

(3) The percentages shown in this chart reflect Vehicle Utilization versus period-over-period change.

For more information on the above, see the discussion of our results on a consolidated basis and by segment that follows herein.

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Amounts such as percentages are calculated from the underlying numbers in thousands, and as a result, may not agree to the amount when calculated from the tables in millions.

Adoption of the New Lease Standard

Effective January 1, 2019, we adopted the new lease standard, Topic 842, which did not have a significant impact to our results of operations for the year ended December 31, 2019.

See " Note 2 , " Significant Accounting Policies " to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data." for further information.

HERTZ GLOBAL HOLDINGS, INC.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Change in Segment Measure of Profitability

Effective during the three months ended June 30, 2019, we changed our segment measure of profitability to Adjusted EBITDA.

Prior to the three months ended June 30, 2019, our segment measure of profitability was Adjusted Pre-tax Income (Loss), which included non-vehicle depreciation and amortization, non-vehicle debt interest, net and certain other items.

For comparability purposes, we have adjusted retrospectively our 2018 and 2017 segment result tables in this MD&A to reflect the new segment measure of profitability.

CONSOLIDATED RESULTS OF OPERATIONS - HERTZ

Years Ended December 31,

Percent Increase/(Decrease)

($ In millions)

Years Ended December 31, Percent Increase/(Decrease)

($ In millions) 2020 2019 2018 2020 vs.

2019 2019 vs.

Total revenues $ 5,258 $ 9,779 $ 9,504 (46)% 3%

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Depreciation of revenue earning vehicles and lease charges

2,032 2,565 2,690 (21) (5)

Selling, general and administrative expenses

664 969 1,017 (31) (5)

Interest expense, net:

455 494 448 (8) 10

151 304 284 (50) 7

Interest expense, net

Goodwill and intangible asset impairments

606 798 732 (24) 9

Intangible and other asset impairments 213 — — NM —

Write-off of intercompany loan 133 — — NM —

Other (income) expense, net

Income (loss) before income taxes

(9) (59) (40) (85) 48

Reorganization items, net 175 — — NM —

Income (loss) before income taxes (2,183) 20 (250) NM NM

Income tax (provision) benefit

Net income (loss)

328 (65) 28 NM NM

Net income (loss) (1,855) (45) (222) NM (80)

Net (income) loss attributable to noncontrolling interests

9 (8) 2 NM NM

Net income (loss) attributable to Hertz

$ (1,846) $ (53) $ (220) NM (76)

Adjusted Corporate EBITDA (a)

$ (995) $ 649 $ 433 NM 50

Footnotes to the table above are shown at the end of the Results of Operations and Selected Operating Data by Segment section of this MD&A.

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Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

Total revenues increase d $ 276 million in 2019 compared to 2018 due to an increase of $ 459 million in our U.S.

RAC segment, partially offset by a decrease of $ 107 million and $76 million in our International RAC and All Other Operations segments, respectively.

RAC revenues increase d due to a 4% increase in volume and a 2% increase in Total RPD.

Total revenues decreased $4.5 billion in 2020 compared to 2019 due to reduced demand related to the impact from COVID-19 where there were decreases of $3.3 billion and $1.2 billion in our U.S.

RAC and International RAC segments, respectively.

RAC revenues decreased due primarily to lower volume.

Excluding a $5 million impact of fx, revenues for our International RAC segment decreased $1.2 billion also due primarily to lower volume and pricing.

DOE decreased $1.9 billion in 2020 compared to 2019 due primarily to decreases of $1.3 billion and $570 million in our U.S.

RAC and International RAC segments, respectively.

The decrease in our U.S.

RAC segment is due primarily to lower volume driven by the impact from COVID-19 on total revenues described above, lower personnel costs and other cost elimination initiatives.

Excluding the $3 million impact of fx, DOE for International RAC decreased $573 million due primarily to lower volume driven by the impact from COVID-19 on total revenues described above and lower personnel costs due to employee furloughs and associated government support across Europe related to COVID-19.

Depreciation of revenue earning vehicles and lease charges decreased $533 million in 2020 compared to 2019 due primarily to decreases of $333 million and $165 million in our U.S.

RAC and International RAC segments, respectively.

The decreases in our U.S.

RAC and International RAC segments are due primarily to a reduction in fleet size in response to pandemic-related declines in consumer demand.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

SG&A decreased $305 million in 2020 compared to 2019 due primarily to lower marketing costs in our U.S.

and International RAC segments, lower personnel costs in our U.S.

RAC segment and lower information technology and finance transformation costs in our corporate operations.

Vehicle interest expense, net decreased $38 million in 2020 compared to 2019 due primarily to lower vehicle debt levels primarily in our U.S.

Non-vehicle interest expense, net decreased $154 million in 2020 compared to 2019 due primarily to lower debt levels, lower market interest rates and the suspension of interest on certain non-vehicle debt as a result of filing the Chapter 11 Cases.

We incurred charges of $213 million for impairment of intangible and other assets in 2020 due primarily to $124 million impairment of technology-related intangible assets and $69 million impairment of capitalized cloud computing implementation costs in our corporate operations due to uncertainty surrounding our financial ability to complete certain information technology projects as a result of COVID-19 and the filing of the Chapter 11 Cases.

Additionally, we incurred a charge of $20 million for impairment of the Hertz tradename in our International RAC segment as a result of our annual testing of the recoverability of our indefinite-lived intangible assets.

We incurred a charge of $133 million in 2020 in our corporate operations resulting from the full write-off of the 2019 Master Loan with Hertz Holdings due to the filing of the Chapter 11 Cases.

Other income of $9 million in 2020 was primarily comprised of a $20 million gain due to additional cash received from the sale of non-vehicle capital assets, primarily offset by $11 million in pension-related settlement charges.

Other income of $59 million in 2019 was primarily comprised of a $30 million gain on marketable securities and a $39 million gain on non-vehicle capital assets.

We incurred $175 million of net reorganization charges in 2020 in our corporate operations for professional fees and other costs associated with the Chapter 11 Cases.

The effective tax rate in 2020 was 15% compared to 326% in 2019.

We recorded a tax benefit of $328 million in 2020 compared to a tax provision of $65 million in 2019.

The effective income tax rate and related tax benefit in 2020 compared to 2019 were driven by increased losses on our operations due to the effects of COVID-19, primarily offset by the impact of valuation allowances on net deferred tax assets for certain foreign and domestic jurisdictions.

Year Ended December 31, 2019 Compared with Year Ended December 31, 2018

Total revenues increased $276 million in 2019 compared to 2018 due to an increase of $459 million in our U.S.

RAC segment, partially offset by a decrease of $107 million and $76 million in our International RAC and our All Other Operations segments, respectively.

RAC revenues increased due to a 4% increase in volume and a 2% increase in Total RPD.

Excluding the impact of fx, revenues for our International RAC segment were flat.

The decrease in All Other Operations is due to the impact of a change in presentation for certain leased vehicles beginning in the first quarter of 2019.

DOE increase d $ 131 million in 2019 compared to 2018 primarily due to an increase of $ 132 million and $7 million in our U.S.

The decrease in All Other Operations was due to the impact of a change in presentation for certain leased vehicles beginning in the first quarter of 2019.

DOE increased $131 million in 2019 compared to 2018 primarily due to an increase of $132 million and $7 million in our U.S.

RAC and International RAC segments, respectively, partially offset by a $9 million decrease in our All Other Operations segment.

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RAC DOE was driven by increased volume.

Excluding the $69 million impact of fx, DOE for International RAC increase d $76 million driven primarily by an increase in vehicle-related expenses.

Excluding the $69 million impact of fx, DOE for International RAC increased $76 million driven primarily by an increase in vehicle-related expenses.

Depreciation of revenue earning vehicles and lease charges decreased $125 million in 2019 compared to 2018 primarily due to a decrease of $95 million and $22 million in our All Other Operations and U.S.

RAC segments, respectively.

The decrease in our All Other Operations segment was due to the impact of a change in presentation

HERTZ GLOBAL HOLDINGS, INC.

1 unchanged sentence

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Depreciation of revenue earning vehicles and lease charges decrease d $ 125 million in 2019 compared to 2018 primarily due to a decrease of $95 million and $22 million in our All Other Operations and U.S.

RAC segments, respectively.

The decrease in All Other Operations is due to the impact of a change in presentation for certain leased vehicles beginning in the first quarter of 2019.

for certain leased vehicles beginning in the first quarter of 2019.

The decrease in our U.S.

RAC segment is primarily due to our vehicle acquisition strategy and continued strength in residual values.

SG&A decrease d $ 47 million in 2019 compared to 2018 primarily due to a decrease in personnel-related expenses in our Corporate operations and International RAC segment and the impact from fx in our International RAC segment, partially offset by increased marketing charges in our U.S.

RAC segment was primarily due to our vehicle acquisition strategy and continued strength in residual values.

SG&A decreased $47 million in 2019 compared to 2018 primarily due to a decrease in personnel-related expenses in our Corporate operations and International RAC segment and the impact from fx in our International RAC segment, partially offset by increased marketing charges in our U.S.

RAC segment and increased information technology and finance transformation charges in our Corporate operations.

Vehicle interest expense, net increase d $ 45 million in 2019 compared to 2018 primarily due to an increase in debt levels resulting from higher average fleet primarily in our U.S.

Vehicle interest expense, net increased $45 million in 2019 compared to 2018 primarily due to an increase in debt levels resulting from higher average fleet primarily in our U.S.

RAC segment and higher market interest rates.

Additionally, there was a $20 million loss on extinguishment of debt recorded in our International RAC segment in 2018 with no comparable charge in 2019.

Non-vehicle interest expense, net increase d $ 20 million in 2019 compared to 2018 primarily due to a $43 million loss on extinguishment of debt primarily associated with the partial redemption of the Senior Second Priority Secured Notes in 2019 with no comparable charges in 2018, partially offset by lower levels of non-vehicle debt in 2019 due to net proceeds from the Rights Offering which were used to redeem the 2020 and 2021 Notes.

Non-vehicle interest expense, net increased $20 million in 2019 compared to 2018 primarily due to a $43 million loss on extinguishment of debt primarily associated with the partial redemption of the Senior Second Priority Secured Notes in 2019 with no comparable charges in 2018, partially offset by lower levels of non-vehicle debt in 2019 due to net proceeds from the Rights Offering which were used to redeem the 2020 and 2021 Notes.

Other income of $59 million in 2019 was primarily comprised of a $30 million gain on marketable securities and a $39 million gain on non-vehicle capital assets.

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jurisdictions and an increase in pretax operating results.

Year Ended December 31, 2018 Compared with Year Ended December 31, 2017

Total revenues increased $701 million, or 8%, due to an increase of $486 million, $108 million and $107 million in our U.S.

RAC, All Other Operations and International RAC segments, respectively.

RAC revenues increased due to a 6% increase in volume and a 1% increase in Total RPD.

Total revenues in our All Other Operations segment was largely driven by an increase in the number of vehicles leased under sales-type leases.

International RAC revenues increased due to a 3% increase in Total RPD and a $49 million fx impact.

DOE increased $397 million, or 8%, primarily due to increases of $363 million and $33 million in our U.S.

and International RAC segments, respectively.

The increase in our U.S.

RAC segment was primarily due to increased core rental volumes (those excluding TNC rentals) and TNC rental volumes and investments in additional personnel related to our transformation initiatives.

DOE for International RAC increased due to a $31 million fx impact.

Depreciation of revenue earning vehicles and lease charges decreased $108 million, or 4%, primarily due to a $226 million decrease in our U.S.

RAC segment resulting from stronger residual values and an increase in dispositions through higher-yielding dealer direct and retail sales channels.

The decrease was partially offset by an increase of $86 million and $32 million in our All Other Operations and International RAC segments, respectively.

The increase in All Other Operations was largely driven by an increase in the number of vehicles leased under sales-type leases .

Excluding a $12 million fx impact, depreciation of revenue earning vehicles and lease charges for our International RAC segment increased $20 million driven by declining residual values on diesel vehicles in Europe and an increase in average vehicles.

SG&A increased $137 million, or 16%, in 2018 compared to 2017, due to increases of $74 million and $36 million in our U.S.

RAC segment and our Corporate operations, respectively.

The increase in our U.S.

RAC segment was

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

primarily due to incremental marketing investments, additional advertising charges and increased marketing personnel, partially offset by decreased charges for labor-related matters.

The increase in our Corporate operations was primarily due to information technology and finance transformation program costs, litigation charges and incentive compensation, partially offset by decreased legal fees.

Vehicle interest expense, net increased $117 million, or 35%, in 2018 compared to 2017 primarily due to higher market interest rates, an increase in margins on bank funded facilities, an increase in debt levels due to higher average fleet and an increase in loss on extinguishment of debt.

Non-vehicle interest expense, net decreased $17 million, or 6%, in 2018 compared to 2017, primarily due to decreased outstanding non-vehicle debt balances during 2018 and a decrease in loss on extinguishment of debt, partially offset by the impact of higher interest rates largely attributable to a higher LIBOR and the issuance of our Senior Second Priority Secured Notes in June 2017.

We recorded goodwill and intangible asset impairment charges of $86 million related to the Dollar Thrifty tradename in 2017 with no comparable charges recorded in 2018.

Other income of $40 million in 2018 was primarily comprised of a $20 million gain on marketable securities, $10 million of net pension benefit income and a $6 million legal settlement related to an oil spill in the Gulf of Mexico in 2010.

Other expense of $19 million in 2017 was primarily comprised of a $30 million impairment of an equity method investment, partially offset by a $6 million gain on the sale of our Brazil Operations.

The effective tax rate in 2018 was 11% compared to 158% in 2017.

We recorded a tax benefit of $28 million in 2018 compared to $902 million in 2017.

The effective income tax rate and related tax benefit in 2018 are less than 2017 due to deferred tax liabilities being remeasured from a federal rate of 35% to 21% in 2017, and the impact in 2018 of the lower federal tax rate.

CONSOLIDATED RESULTS OF OPERATIONS - HERTZ GLOBAL

3 unchanged sentences

Hertz includes this amount as interest income in its statements of operations, but this amount is eliminated in consolidation for purposes of Hertz Global.

In 2020, Hertz Global had $1 million of income tax benefit that was incremental to the amounts shown for Hertz due primarily to the $133 million master loan write-off included in Hertz's consolidated statements of operations.

In 2019, Hertz had $2 million of tax provision that was incremental to the amounts shown for Hertz Global.

3 unchanged sentences

Rental Car operations had a total of approximately 3,900 corporate and franchisee locations, comprised of 1,500 airport and 2,400 off airport locations.

Rental Car operations sold approximately 290,000 , 263,000 and 280,000 non-program vehicles during the years ended December 31, 2019, 2018 and 2017 , respectively.

In 2018, the decrease in units sold was due to fewer non-program vehicle acquisitions during the year.

The approximate 7% decrease in total locations from 2019 is primarily the product of a location rationalization effort in the Chapter 11 Cases as reflected in the Lease Rejection Orders entered by the Bankruptcy Court.

See Note 10, "Leases," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report for further details.

HERTZ GLOBAL HOLDINGS, INC.

1 unchanged sentence

THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Rental Car operations sold approximately 308,000, 290,000 and 263,000 non-program vehicles during the years ended December 31, 2020, 2019 and 2018, respectively.

In 2020, the increase in units sold was due primarily to fleet size reductions in response to pandemic-related volume declines.

Results of operations and our discussion and analysis for our U.S.

RAC segment are as follows:

Years Ended December 31,

Percent Increase/(Decrease)

($ In millions, except as noted)

Years Ended December 31, Percent Increase/(Decrease)

($ In millions, except as noted) 2020 2019 2018 2020 vs.

2019 2019 vs.

Total revenues $ 3,656 $ 6,938 $ 6,480 (47)% 7%

Depreciation of revenue earning vehicles and lease charges

$ 1,323 $ 1,656 $ 1,678 (20) (1)

Direct vehicle and operating expenses $ 2,858 $ 4,146 $ 4,014 (31) 3

Direct vehicle and operating expenses as a percentage of total revenues

78 % 60 % 62 %

Selling, general and administrative expenses

$ 275 $ 490 $ 466 (44) 5

Selling, general and administrative expenses as a percentage of total revenues

Vehicle interest expense

$ 323 $ 345 $ 291 (6) 19

Adjusted EBITDA

$ (791) $ 480 $ 226 NM 113

Transaction Days (in thousands) (b)

82,678 155,859 149,463 (47) 4

Average Vehicles (in whole units) (c)

423,992 534,879 506,900 (21) 6

Vehicle Utilization (c)

53 % 80 % 81 %

Total RPD (in whole dollars) (d)

$ 42.88 $ 43.73 $ 42.67 (2) 2

Total RPU Per Month (in whole dollars) (e)

Net Depreciation Per Unit Per Month (in whole dollars) (f)

$ 697 $ 1,062 $ 1,049 (34) 1

Depreciation Per Unit Per Month (in whole dollars) (f)

$ 260 $ 258 $ 276 1 (7)

Percentage of program vehicles as of period end

2 unchanged sentences

Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

RAC revenues increase d $459 million in 2019 compared to 2018 due to higher volume and pricing.

The 4% increase in Transaction Days was driven by growth in retail and TNC rentals.

Volume increased in both our off airport and airport locations by 8% and 2% , respectively.

Total RPD increase d by 2% .

Off airport revenues comprised 32% of total revenues in 2019 as compared to 31% for 2018 .

RAC revenues decreased $3.3 billion in 2020 compared to 2019 due primarily to lower volume.

The 47% decrease in Transaction Days was driven by the impact from COVID-19 with declines in leisure and most business categories, excluding delivery services in our off airport locations where volume and pricing increased compared to 2019.

Volume decreased in both our airport and off airport locations by 58% and 30%, respectively.

Total RPD decreased by 2%.

Off airport revenues comprised 44% of total revenues in 2020 as compared to 32% for 2019 due primarily to customer demand changes associated with COVID-19.

Depreciation of revenue earning vehicles and lease charges for U.S.

RAC decrease d by $22 million in 2019 compared to 2018 .

Net Depreciation Per Unit Per Month decrease d to $258 in 2019 compared to $276 in 2018 primarily due to our vehicle acquisition strategy and continued strength in residual values.

RAC increase d $132 million in 2019 compared to 2018 driven by volume, partially offset by a decrease in other non-vehicle related charges.

RAC decreased $333 million in 2020 compared to 2019.

Average Vehicles decreased 21% due in part to a reduction in fleet size in response to pandemic-related declines in consumer demand.

Depreciation Per Unit Per Month was comparable to 2019.

RAC decreased $1.3 billion in 2020 compared to 2019 due primarily to lower volume driven by the impact from COVID-19 on total revenues described above, lower personnel costs due to an employee restructuring program that commenced in 2020 in response to COVID-19 and other cost elimination initiatives.

SG&A for U.S.

RAC increase d $23 million in 2019 compared to 2018 primarily due to increased marketing charges;

SG&A as a percentage of revenues was flat year over year.

Vehicle interest expense for U.S.

RAC increase d $54 million in 2019 compared to 2018 primarily due to higher average fleet and higher market interest rates.

RAC decreased $215 million in 2020 compared to 2019 due primarily to lower marketing and personnel costs in response to COVID-19 and other cost elimination initiatives.

HERTZ GLOBAL HOLDINGS, INC.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Vehicle interest expense for U.S.

RAC decreased $22 million in 2020 compared to 2019 due primarily to lower debt levels as a result of vehicle dispositions resulting from the Interim Lease Order.

Year Ended December 31, 2019 Compared with Year Ended December 31, 2018

RAC revenues increased $486 million, or 8%, from 2017 due to higher volume and pricing.

Off airport revenues comprised 31% of total revenues for the segment in 2018 as compared to 29% for 2017.

Off airport volume increased 14% largely driven by demand in TNC and insurance replacement rentals and airport volume was 2% higher on increased corporate demand and volume growth in our most profitable leisure rental categories.

TNC and retail rentals led the 1% increase in Total RPD.

RAC revenues increased $459 million in 2019 compared to 2018 due to higher volume and pricing.

The 4% increase in Transaction Days was driven by growth in retail and TNC rentals.

Volume increased in both our off airport and airport locations by 8% and 2%, respectively.

Total RPD increased by 2%.

Off airport revenues comprised 32% of total revenues in 2019 as compared to 31% for 2018.

Depreciation of revenue earning vehicles and lease charges for U.S.

RAC decreased by $226 million, or 12%, in 2018 compared to 2017.

The decrease year over year was primarily the result of improved residual values and an increase in dispositions through higher-yielding dealer direct and retail sales channels.

Net Depreciation Per Unit Per Month decreased to $276 in 2018 compared to $327 in 2017.

RAC increased $363 million, or 10%, of which $118 million was driven by core rental volume, $65 million was driven by growth in TNC rentals and $63 million was driven by incremental investments in additional personnel related to our transformation initiatives.

Also contributing to the increase were the following:

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

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

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

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

SG&A increased $74 million primarily due to incremental marketing investments, additional advertising charges and increased marketing personnel, partially offset by decreased charges for labor-related matters.

Vehicle interest expense increase d $65 million due to higher market interest rates and an increase in debt levels due to higher average fleet.

RAC decreased by $22 million in 2019 compared to 2018.

Net Depreciation Per Unit Per Month decreased to $258 in 2019 compared to $276 in 2018 primarily due to our vehicle acquisition strategy and continued strength in residual values.

RAC increased $132 million in 2019 compared to 2018 driven by volume, partially offset by a decrease in other non-vehicle related charges.

SG&A for U.S.

RAC increased $23 million in 2019 compared to 2018 primarily due to increased marketing charges;

SG&A as a percentage of revenues was flat year over year.

Vehicle interest expense for U.S.

RAC increased $54 million in 2019 compared to 2018 primarily due to higher average fleet and higher market interest rates.

International Rental Car

As of December 31, 2019 , our international vehicle rental operations had approximately 8,200 corporate and franchisee locations, comprised of 2,000 airport and 6,200 off airport locations in approximately 160 countries and regions including Australia, Canada, New Zealand and in the regions of Africa, Asia, the Caribbean, Europe, Latin America, and the Middle East.

As of December 31, 2020, our international vehicle rental operations had approximately 8,100 corporate and franchisee locations, comprised of 2,000 airport and 6,100 off airport locations in approximately 160 countries and regions including the countries of Australia, Canada, New Zealand, and in the regions of Africa, Asia, the Caribbean, Europe, Latin America and the Middle East.

HERTZ GLOBAL HOLDINGS, INC.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of operations and our discussion and analysis for our International RAC segment are as follows:

Years Ended December 31,

Percent Increase/(Decrease)

($ In millions, except as noted)

Years Ended December 31, Percent Increase/(Decrease)

($ In millions, except as noted) 2020 2019 2018 2020 vs.

2019 2019 vs.

Total revenues $ 972 $ 2,169 $ 2,276 (55)% (5)%

Depreciation of revenue earning vehicles and lease charges

$ 274 $ 440 $ 448 (38) (2)

Direct vehicle and operating expenses $ 742 $ 1,312 $ 1,306 (43) —

Direct vehicle and operating expenses as a percentage of total revenues

76 % 61 % 57 %

Selling, general and administrative expenses

$ 180 $ 221 $ 248 (19) (11)

Selling, general and administrative expenses as a percentage of total revenues

19 % 10 % 11 %

Vehicle interest expense

$ 86 $ 97 $ 114 (11) (15)

Adjusted EBITDA

$ (248) $ 147 $ 231 NM (36)

Transaction Days (in thousands) (b)

24,621 50,139 50,417 (51) (1)

Average Vehicles (in whole units) (c)

116,348 180,723 180,400 (36) —

Vehicle Utilization (c)

58 % 76 % 77 %

Total RPD (in whole dollars) (d)

$ 39.32 $ 43.45 $ 43.21 (10) 1

Total RPU Per Month (in whole dollars) (e)

$ 693 $ 1,005 $ 1,006 (31) —

Net Depreciation Per Unit Per Month (in whole dollars) (f)

$ 197 $ 204 $ 198 (3) 3

Percentage of program vehicles as of period end

28 % 38 % 37 %

Footnotes to the table above are shown at the end of the Results of Operations and Selected Operating Data by Segment section of this MD&A.

Year Ended December 31, 2019 Compared with Year Ended December 31, 2018

Total revenues for International RAC decrease d $ 107 million in 2019 compared to 2018 .

Excluding a $ 108 million fx impact, revenues were flat.

Depreciation of revenue earning vehicles and lease charges for International RAC decrease d $8 million in 2019 compared to 2018 .

Excluding a $22 million fx impact, depreciation increase d $14 million , or 3% .

Depreciation Per Unit Per Month for International RAC increase d to $205 from $199 for 2019 versus 2018 due in part to a richer fleet mix in Europe in 2019 versus 2018 and declining residual values year over year.

DOE for International RAC increase d $7 million in 2019 compared to 2018 .

Excluding a $69 million fx impact, DOE increase d $76 million , or 6% , primarily driven by vehicle-related expenses.

SG&A for International RAC decrease d $27 million in 2019 compared to 2018 due in part to a $12 million fx impact and a decrease in personnel-related expenses.

Vehicle interest expense for International RAC decrease d $17 million in 2019 compared to 2018 primarily due to a $20 million loss on extinguishment of debt associated with the redemption of the 4.375% European Vehicle Senior Notes in 2018.

NM - Not meaningful

Year Ended December 31, 2020 Compared with Year Ended December 31, 2019

Total revenues for International RAC increased $107 million, or 5%, in 2018 compared to 2017.

Excluding a $49 million fx impact, revenues increased $58 million, or 3%, driven by an increase in pricing.

Total RPD for International RAC increased 3% due to improved pricing in our leisure markets and the sale of our lower RPD operations in Brazil in the third quarter of 2017.

Transaction Days were flat mostly due to the sale of our Brazil Operations.

Excluding the impact

Total revenues for International RAC decreased $1.2 billion in 2020 compared to 2019 due to lower volume and pricing.

Transaction Days deceased 51% and Total RPD decreased 10%.

Excluding a $5 million fx impact, revenues decreased $1.2 billion due to lower volume and pricing, primarily in Europe, across all leisure and business categories driven by the impact of COVID-19.

Depreciation of revenue earning vehicles and lease charges for International RAC decreased $165 million in 2020 compared to 2019, where the fx impact was immaterial.

Average Vehicles for International RAC decreased 36% due to downsizing the fleet as a result of COVID-19.

Depreciation Per Unit Per Month for International RAC decreased to $197 from $204 for 2020 versus 2019.

DOE for International RAC decreased $570 million in 2020 compared to 2019.

Excluding a $3 million fx impact, DOE decreased $573 million due primarily to lower volume driven by the impact from COVID-19 on total revenues described above and lower personnel costs due to employee furloughs and associated government support across Europe related to COVID-19.

SG&A for International RAC decreased $41 million in 2020 compared to 2019.

Excluding a $9 million fx impact, SG&A decreased $51 million due primarily to lower marketing and facility costs.

Vehicle interest expense for International RAC decreased $11 million in 2020 compared to 2019 due primarily to downsizing the fleet as a result of COVID-19 market conditions.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

of the sale of our Brazil Operations, total revenues for International RAC increased $140 million, or 7%, Total RPD increased 1%, and Transaction Days increased 4%.

Depreciation of revenue earning vehicles and lease charges for International RAC increased $32 million, or 8%, in 2018 compared to 2017.

Excluding a $12 million fx impact, depreciation of revenue earning vehicles and lease charges increased $20 million or 5% primarily due to declining residual values on diesel vehicles in Europe and an increase in average vehicles.

Net Depreciation Per Unit Per Month for International RAC increased 3% to $209 from $202 for 2018 versus 2017.

Year Ended December 31, 2019 Compared with Year Ended December 31, 2018

Total revenues for International RAC decreased $107 million in 2019 compared to 2018.

Excluding a $108 million fx impact, revenues were flat.

Depreciation of revenue earning vehicles and lease charges for International RAC decreased $8 million in 2019 compared to 2018.

Excluding a $22 million fx impact, depreciation increased $14 million, or 3%.

Depreciation Per Unit Per Month for International RAC increased to $205 from $199 for 2019 versus 2018 due in part to a richer fleet mix in Europe in 2019 versus 2018 and declining residual values year over year.

DOE for International RAC increased $7 million in 2019 compared to 2018.

Excluding a $31 million fx impact, DOE was nearly flat driven by a $35 million decrease in public liability and property damage expense due to favorable case development and fewer large claims.

The decrease was partially offset by an increase of $15 million in vehicle damage charges and $13 million in field compensation, due in part to higher average vehicles in 2018 compared to 2017.

SG&A for International RAC increased $25 million primarily due to an increase in litigation charges in 2018 and the $7 million impact of fx.

Vehicle interest expense for International RAC increase d $39 million primarily due to a $20 million loss on extinguishment of debt associated with the redemption of the 4.375% European Vehicle Notes.

Excluding a $69 million fx impact, DOE increased $76 million, or 6%, primarily driven by vehicle-related expenses.

SG&A for International RAC decreased $27 million in 2019 compared to 2018 due in part to a $12 million fx impact and a decrease in personnel-related expenses.

Vehicle interest expense for International RAC decreased $17 million in 2019 compared to 2018 primarily due to a $20 million loss on extinguishment of debt associated with the redemption of the 4.375% European Vehicle Senior Notes in 2018.

All Other Operations

The All Other Operations segment is primarily comprised of our Donlen business, as such, our discussion is limited to Donlen.

In the fourth quarter of 2020, we entered into a stock and asset purchase agreement to sell the Donlen Assets.

The sale is expected to close in the first half of 2021.

Results of operations for this segment are as follows:

Years Ended December 31,

Percent Increase/(Decrease)

($ In millions)

Years Ended December 31, Percent Increase/(Decrease)

($ In millions) 2020 2019 2018 2020 vs.

2019 2019 vs.

Total revenues $ 630 $ 672 $ 748 (6)% (10)%

Depreciation of revenue earning vehicles and lease charges

$ 435 $ 469 $ 564 (7) (17)

Direct vehicle and operating expenses $ 27 $ 28 $ 37 (4) (24)

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Vehicle interest expense

$ 46 $ 52 $ 43 (11) 19

Adjusted EBITDA $ 93 $ 100 $ 82 (7) 22

Average Vehicles - Donlen

Footnotes to the table above are shown at the end of the Results of Operations and Selected Operating Data by Segment section of this MD&A.

Donlen had favorable re sults in 2019 as compared 2018.

192,900 210,000 188,100 (8) 12

In 2020 compared to 2019, the impact of COVID-19 on our Donlen business was less severe than our car rental operations, where revenues and Adjusted EBITDA decreased 6% and 7% as compared to 2019, respectively.

Donlen had favorable re sults in 2019 compared to 2018.

Lower year-over-year revenue and depreciation of revenue earning vehicles and lease charges were driven by the impact of a change in presentation for certain leased vehicles in 2019 versus 2018.

Excluding the $79 million reduction in revenues from the change in presentation in 2019 and the $53 million benefit in 2018 of vehicles leased under sales-type leases , revenue grew 8%.

The increase in overall average vehicles in 2019 as compared to 2018 is due to new customer acquisitions and growth in the existing customer portfolio.

In 2018, total revenues and depreciation of revenue earning vehicles and lease charges include a $53 million impact of vehicles leased under sales-type leases, which are presented on a gross basis.

Excluding the impact of sales-type leases, revenue increased 9% and depreciation of revenue earning vehicles increased 7% in 2018 as compared to 2017 driven by a 4% growth in units and a richer mix of vehicles under operating leases.

The decrease in overall

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Average Vehicles in 2018 compared to 2017 was due to a reduction in non-lease units in our maintenance management programs which drive a lower Revenue Per Unit when compared to lease units under these programs.

increase in overall average vehicles in 2019 as compared to 2018 is due to new customer acquisitions and growth in the existing customer portfolio.

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

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

(a) Adjusted Corporate EBITDA is calculated as net income (loss) attributable to Hertz or Hertz Global, adjusted for income taxes;

non-vehicle depreciation and amortization;

non-vehicle debt interest, net;

vehicle debt-related charges;

loss on extinguishment of vehicle debt;

restructuring and restructuring related charges;

goodwill, intangible and tangible asset impairments and write-downs;

intercompany loan write-offs;

information technology and finance transformation costs;

reorganization items, net;

pre-reorganization items and non-debtor financing charges;

and certain other miscellaneous items.

When evaluating our operating performance, investors should not consider Adjusted Corporate EBITDA in isolation of, or as a substitute for, measures of our financial performance determined in accordance with U.S.

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Restructuring and restructuring related charges (3)

Impairment charges and asset write-downs (4)

Intangible and other asset impairment (4)

Write-off of intercompany loan (5)

Information technology and finance transformation costs (6)

Reorganization items, net (7)

Pre-reorganization and non-debtor financing charges (8)

Other items (9)

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Restructuring and restructuring related charges (3)

Impairment charges and asset write-downs (4)

Intangible and other asset impairment (4)

Information technology and finance transformation costs (6)

Reorganization items, net (7)

Pre-reorganization and non-debtor financing charges (8)

Other items (9)

Adjusted Corporate EBITDA $ (995) $ 649 $ 433

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

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

Represents charges incurred under restructuring actions as defined in U.S.

GAAP, excluding impairments and asset write-downs.

Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.

In 2018 and 2017, also includes consulting costs, legal fees and other expenses related to the previously disclosed accounting review and investigation.

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THE HERTZ CORPORATION AND SUBSIDIARIES

(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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

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

(2) In 2020, represents a $5 million write-off of deferred financing costs resulting from the European ABS waiver agreements.In 2018, primarily represents $20 million of early redemption premium and write-off of deferred financing costs associated with the full redemption of the 4.375% European Vehicle Senior Notes due January 2019.

(3) Represents charges incurred under restructuring actions as defined in U.S.

GAAP, excluding impairments and asset write-downs.

Also includes restructuring related charges such as incremental costs incurred directly supporting business transformation initiatives.

In 2018, also includes consulting costs, legal fees and other expenses related to the previously disclosed accounting review and investigation.

(4) In 2020, represents a $193 million impairment of technology-related intangible and other assets and a $20 million impairment of the Hertz tradename, as disclosed in Note 5, "Goodwill and Intangible Assets, Net," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report.

(5) In 2020, represents the write-off of the 2019 Master Loan between Hertz and Hertz Holdings.

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

(7) In 2020, represents charges incurred associated with the filing of the Chapter 11 Cases, as described in Note 20, "Reorganization Items, Net," to the Notes to our consolidated financial statements under the caption Item 8, "Financial Statements and Supplementary Data” included in this 2020 Annual Report.

(8) In 2020, represents charges incurred prior to the filing of the Chapter 11 Cases, which are comprised of preparation charges for the reorganization, such as professional fees.

Also includes certain non-debtor financing and professional fee charges.

(9) Represents miscellaneous items, including non-cash stock-based compensation charges.

In 2019, includes a $30 million gain on marketable securities and a $39 million gain on the sale of non-vehicle capital assets.

In 2018, includes a $20 million gain on marketable securities and a $6 million legal settlement received related to an oil spill in the Gulf of Mexico in 2010.

In 2017, includes net expenses of $16 million resulting from hurricanes, charges of $8 million associated with strategic financings and charges of $5 million relating to PLPD as a result of a terrorist event, partially offset by a $6 million gain on the sale of our Brazil Operations and a $4 million return of capital from an equity method investment.

In 2020, also includes $16 million associated with the Donlen Asset Sale, partially offset by $18 million for losses associated with certain vehicle damages.

In 2019, also includes a $30 million gain on marketable securities and a $39 million gain on the sale of non-vehicle capital assets.

In 2018, also includes a $20 million gain on marketable securities and a $6 million legal settlement received related to an oil spill in the Gulf of Mexico in 2010.

(b) Transaction Days represent the total number of 24-hour periods, with any partial period counted as one Transaction Day, that vehicles were on rent (the period between when a rental contract is opened and closed) in a given period.

Thus, it is possible for a vehicle to attain more than one Transaction Day in a 24-hour period.

Average Vehicles are determined using a simple average of the number of vehicles at the beginning and end of a given period.

(c) Average Vehicles are determined using a simple average of the number of vehicles at the beginning and end of a given period.

Among other things, Average Vehicles is used to calculate our Vehicle Utilization which represents the portion of our vehicles that are being utilized to generate revenue.

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The calculation of Vehicle Utilization is shown in the table below:

International Rental Car

Rental Car International Rental Car

Years Ended December 31,

2020 2019 2018 2020 2019 2018

Transaction Days (in thousands) 82,678 155,859 149,463 24,621 50,139 50,417

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Vehicle Utilization 53 % 80 % 81 % 58 % 76 % 77 %

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

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AND SUBSIDIARIES

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(DEBTORS-IN-POSSESSION)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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

Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends.

The calculation of Total RPD is shown below:

International Rental Car

Rental Car International Rental Car

Years Ended December 31,

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Foreign currency adjustment (1)

— — — (5) 11 (98)

Total Rental Revenues $ 3,545 $ 6,816 $ 6,378 $ 967 $ 2,180 $ 2,178

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(1) Based on December 31, 2019 foreign currency exchange rates for all periods presented.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Total RPU Per Month is calculated as Total Rental Revenues divided by the Average Vehicles in each period and then divided by the number of months in the period reported.

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

The calculation of Total RPU Per Month is shown below:

International Rental Car

Rental Car International Rental Car

Years Ended December 31,

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Total RPU Per Month (in whole dollars) $ 697 $ 1,062 $ 1,049 $ 693 $ 1,005 $ 1,006

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

(f) Depreciation Per Unit Per Month represents the amount of average depreciation expense and lease charges, per vehicle per month and is calculated as depreciation of revenue earning vehicles and lease charges, with all periods adjusted to eliminate the effect of fluctuations in foreign currency exchange rates, divided by the Average Vehicles in each period and then dividing by the number of months in the period reported.

Our management believes eliminating the effect of fluctuations in foreign currency exchange rates is useful in analyzing underlying trends.

The calculation of Depreciation Per Unit Per Month is shown below:

International Rental Car

Rental Car International Rental Car

Years Ended December 31,

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Depreciation of revenue earning vehicles and lease charges

$ 1,323 $ 1,656 $ 1,678 $ 274 $ 440 $ 448

Foreign currency adjustment (1)

— — — 1 3 (19)

Adjusted depreciation of revenue earning vehicles and lease charges

$ 1,323 $ 1,656 $ 1,678 $ 275 $ 443 $ 429

Average Vehicles (in whole units) 423,992 534,879 506,900 116,348 180,723 180,400

Adjusted depreciation of revenue earning vehicles and lease charges divided by Average Vehicles (in whole dollars)

$ 3,120 $ 3,096 $ 3,310 $ 2,364 $ 2,451 $ 2,378

Number of months in period (in whole units) 12 12 12 12 12 12

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(1) Based on December 31, 2019 foreign currency exchange rates for all periods presented.

LIQUIDITY AND CAPITAL RESOURCES

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

and internationally.

As of December 31, 2019 , we had $865 million of cash and cash equivalents and $495 million of restricted cash and cash equivalents.

As of December 31, 2019 , $286 million of cash and cash equivalents and $147 million of restricted cash and cash equivalents were held by our subsidiaries outside of the U.S.

If not in the form of loan repayments, or an amount subject to our indefinite reinvestment assertion, repatriation of some of these funds under current regulatory and tax law for use in domestic operations could expose us to additional taxes.

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

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THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Cash Flows - Hertz

Hertz had cash, cash equivalents, restricted cash and restricted cash equivalents of $1.4 billion as of December 31, 2019 and 2018.

The following table summarizes the net change in cash, cash equivalents, restricted cash and restricted cash equivalents for the periods shown:

Years Ended December 31,

(In millions)

Cash provided by (used in):

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents

Year ended December 31, 2019 compared with year ended December 31, 2018

In 2019 , cash flows from operating activities, adjusted for non-cash, non-operating items and the net impact from operating leases, decreased by $111 million year over year due to a decrease in accrued liabilities for operational expenses, partially offset by an increase in cash primarily due to the timing of value added tax receivables in our International RAC segment.

Our primary investing activities relate to the acquisition and disposal of revenue earning vehicles.

There was a $228 million increase in the use of cash for investing activities year over year.

Net cash outflows for revenue earning vehicles increased $187 million primarily due to a higher volume of vehicles acquired, net of disposals in our International RAC segment.

Additionally, there was a $71 million increase in net cash outflows for the purchase of non-vehicle capital assets primarily in our Corporate operations for our information technology and finance transformation programs.

Net financing cash inflows were $1.5 billion in 2019 compared to $1.6 billion in 2018 driven by a reduction in net vehicle debt borrowings.

Net proceeds from the Rights Offering in 2019 were used to redeem non-vehicle debt resulting in a $702 million increase in net non-vehicle debt repayments.

Year ended December 31, 2018 compared with year ended December 31, 2017

In 2018, there was a $169 million decrease in cash outflows from working capital accounts period over period and an increase of cash inflows of $5 million from net income (loss), excluding non-cash and non-operating items.

The change from working capital accounts was due to a $231 million increase in cash primarily driven by additional accruals for operational expenses and an increase in accounts payable due to timing of payments, partially offset by a $62 million decrease in cash from additional customer receivables, resulting from increased rental volume during 2018.

Our primary investing activities relate to the acquisition and disposal of revenue earning vehicles.

We expended an additional $1.9 billion on revenue earning vehicles in 2018, primarily in our U.S.

RAC operations, to increase the average fleet size and enrich the fleet mix.

The additional use of cash in 2018 was partially offset by a $799 million increase in proceeds from the sale of revenue earnings vehicles due primarily to an increase in U.S.

RAC dispositions through higher-yielding dealer direct and retail sales channels.

Net financing cash inflows were $1.6 billion in 2018 compared to $983 million in 2017.

The variance was primarily driven by an increase of $1.1 billion in net cash inflows in 2018 for vehicle debt related to our richer fleet mix and larger fleet size.

Comparatively, in 2017, excluding draws and repayments under the Senior RCF, we issued non-vehicle debt of $1.25 billion and repaid $700 million of Senior Notes.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Cash Flows - Hertz Global

The following table summarizes the net change in cash, cash equivalents, restricted cash and restricted cash equivalents for Hertz Global for the periods shown:

Years Ended December 31,

(In millions)

Cash provided by (used in):

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents

Fluctuations in operating, investing and financing cash flows from period to period are due to the same factors as those disclosed for Hertz above, with the exception of any cash inflows or outflows related to the master loan agreement between Hertz and Hertz Global.

For complete disclosures and definitions related to our debt obligations, see Note 5 , " Debt ," to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data." Cash paid for interest during 2019 was $272 million for interest on non-vehicle debt and $431 million for interest on vehicle debt.

We are highly leveraged, and a substantial portion of our liquidity requirements arise from servicing our indebtedness, funding our operations, including purchases of revenue earning vehicles, and funding non-vehicle capital expenditures.

For a discussion of the risks associated with our high leverage, see Item 1A, "Risk Factors" in this 2019 Annual Report.

Our practice is to maintain sufficient liquidity through cash from operations, credit facilities and other financing arrangements to mitigate any adverse effect on operations resulting from adverse financial market conditions.

Our corporate liquidity, which excludes unused commitments under our vehicle debt, was as follows:

(In millions)

As of December 31, 2019

As of December 31, 2018

Cash and cash equivalents

Availability under the Senior RCF

Corporate liquidity

Significant financing activities during the year ended December 31, 2019 for our non-vehicle and vehicle debt, including the issuance of equity, were as follows:

Rights Offering

In June 2019, Hertz Global filed a prospectus supplement to its Registration Statement on Form S-3 declared effective by the SEC on June 12, 2019 for a Rights Offering to raise gross proceeds of approximately $750 million and providing for the issuance of up to an aggregate of 57,915,055 new shares of Hertz Global common stock.

Under the terms of the Rights Offering, each stockholder of Hertz Global was eligible to receive one transferable subscription right for each share of common stock held as of 5:00 p.m., Eastern Time, on June 24, 2019.

Each Right entitled the holder to purchase 0.688285 shares of common stock at a price of $12.95 per whole share of common stock.

The Rights Offering

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

also entitled rights holders who fully exercised their Basic Subscription Rights to subscribe for additional shares of Hertz Global's common stock that remain unsubscribed as a result of any unexercised Basic Subscription Rights.

The Rights Offering expired at 5:00 p.m., Eastern Time, on July 12, 2019.

Upon closing in July 2019, the Rights Offering was fully subscribed resulting in Hertz Global selling 57,915,055 shares of its common stock at the Subscription Price for gross proceeds of $750 million .

Pursuant to the terms of the Rights Offering, 55,816,783 shares of common stock were purchased under the Basic Subscription Right and 2,098,272 shares of common stock were purchased under the Over-Subscription Right.

Non-vehicle Debt

During 2019, Hertz issued $500 million in aggregate principal amount of 2026 Notes.

Hertz utilized the proceeds from the 2026 Notes, together with net proceeds from the Rights Offering described above, to redeem all $700 million of the outstanding 5.875% Senior Notes due 2020 and all $500 million of the 7.375% Senior Notes due 2021.

Additionally, Hertz issued $900 million in aggregate principal amount of 2028 Notes and utilized the proceeds, together with available cash, to redeem $900 million aggregate principal amount of its outstanding $1.25 billion of Senior Second Priority Secured Notes.

Letters of Credit

Hertz also entered into an unsecured $250 million letter of credit facility, the Alternative Letter of Credit Facility, that will mature on December 20, 2023 .

In January 2020 , under the terms of the Alternative Letter of Credit Facility, Hertz increased the commitments thereunder by $100 million , such that after giving effect to such increase, there are $200 million of standby letters of credit issued under the facility.

We organize our discussion of significant vehicle debt financing facilities below by reportable segment.

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

The remaining capacity under various U.S.

RAC revolving vehicle debt financing facilities increased from $725 million to $1.5 billion .

During 2019, we extended the maturities of $3.4 billion of existing commitments under the HVF II Series 2013-A Notes from March 2020 to March 2021 and added $400 million in new commitments.

Additionally, we issued $700 million of HVF II Series 2019-1 Notes, $750 million of HVF II Series 2019-2 Notes and $800 million of HVF II Series 2019-3 Notes to third parties.

In February 2020 , HVF II extended the maturity of the HVF II Series 2013-A Notes from March 2021 to March 2022 and increased the commitments thereunder by $750 million .

After giving effect to the transactions, the aggregate maximum principal amount of the HVF II Series 2013-A Notes was $4.9 billion , where $0.2 billion of commitments have a maturity of March 2021 .

All Other Operations - Donlen

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

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

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

During 2019, we issued $650 million of HFLF Series 2019-1 Asset Backed Notes and amended the HFLF Series 2013-2 Notes to extend the end of the revolving period from March 2020 to March 2021.

In February 2020 , HFLF amended the HFLF Series 2013-2 Notes to extend the end of the revolving period from March 2021 to March 2022 and increased the commitments thereunder by $100 million , such that the aggregate maximum borrowings of the HFLF Series 2013-2 Notes increased to $600 million .

Substantially all of our revenue earning vehicles and certain related assets are owned by special purpose entities or are encumbered in favor of our lenders under our various credit facilities, other secured financings and asset-backed securities programs.

None of such assets are available to satisfy the claims of our general creditors.

Approximately $20 million of non-vehicle debt and $2.3 billion of vehicle debt will mature during the twelve months following the issuance of this 2019 Annual Report ("the next twelve months"), and we will need to refinance a portion of these obligations.

We have reviewed the maturing debt obligations and determined that it is probable that we will be able, and have the intent, to repay or refinance these facilities at such times as we deem appropriate prior to their maturities.

Hertz and certain of its subsidiaries are referred to as the Hertz credit group.

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

Certain of our other debt instruments and credit facilities (including the Senior Facilities, the Letter of Credit Facility and the Alternative Letter of Credit Facility) contain a number of covenants that, among other things, limit or restrict the ability of the borrowers and the guarantors to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay certain indebtedness, make certain restricted payments (including paying dividends, share repurchases or making other distributions), create liens, make investments, make acquisitions, engage in mergers, fundamentally change the nature of their business, make capital expenditures, or engage in certain transactions with certain affiliates.

The Senior RCF, the Letter of Credit Facility and the Alternative Letter of Credit Facility contain a financial maintenance covenant applicable to such facilities.

Such covenant provides that Hertz’s consolidated first lien net leverage ratio, as defined in the credit agreements governing such facilities (together, the "Senior Credit Agreement"), as of the last day of any fiscal quarter may not exceed a ratio of 3.00 to 1.00 ("the Covenant Leverage Ratio").

As of December 31, 2019 , Hertz was in compliance with the Covenant Leverage Ratio.

Consolidated EBITDA, as defined in the Senior Credit Agreement, is a component of the calculation of the Covenant Leverage Ratio and is a non-GAAP financial measure that is not a measure of operating results, but instead is a measure used to determine compliance with the Covenant Leverage Ratio under the Senior Credit Agreement.

Consolidated EBITDA is generally defined in the Senior Credit Agreement as consolidated net income plus the sum of income taxes, non-vehicle interest expense, non-vehicle depreciation and amortization expense, and non-cash charges or losses, as further adjusted for certain other items permitted in calculating covenant compliance under the Senior RCF, the Letter of Credit Facility, and the Alternative Letter of Credit Facility including add-backs for non-recurring, unusual or extraordinary charges, business optimization expenses or other restructuring charges or reserves.

Based on available liquidity from our expected operating results, the Senior RCF and other financing arrangements, Hertz expects to continue to be in compliance with the Covenant Leverage Ratio for at least the next twelve months.

HERTZ GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

THE HERTZ CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Hertz's obligations under the indentures for the Senior Notes and the Senior Second Priority Secured Notes are guaranteed by each of its direct and indirect U.S.

subsidiaries that is a guarantor under the Senior Facilities.

The guarantees of all of the subsidiary guarantors may be released to the extent such subsidiaries no longer guarantee our Senior Facilities in the United States.

Vehicle Financing Risks

Our program vehicles are subject to repurchase by vehicle manufacturers under contractual repurchase or guaranteed depreciation programs.

Under these programs, vehicle manufacturers agree to repurchase vehicles at a specified price or guarantee the depreciation rate on the vehicles during a specified time period, typically subject to certain vehicle condition and mileage requirements.

We use values derived from this specified price or guaranteed depreciation rate to calculate financing capacity under certain asset-backed and asset-based financing arrangements.

In the event of a bankruptcy of a vehicle manufacturer, our liquidity could be impacted by several factors including reductions in fleet residual values and the risk that we would be unable to collect outstanding receivables due to us from such bankrupt manufacturer.

In addition, the program vehicles manufactured by any such company would need to be removed from our financing facilities or re-designated as non-program vehicles, which would require us to furnish additional credit enhancement associated with these program vehicles.

For a discussion of the risks associated with a manufacturer's bankruptcy or our reliance on asset-backed and asset-based financing, see Item 1A, "Risk Factors" included in this 2019 Annual Report.

We rely significantly on asset-backed and asset-based financing arrangements to purchase vehicles for our U.S.

and international vehicle rental fleet.

The amount of financing available to us pursuant to these programs depends on a number of factors, many of which are outside our control, including proposed and adopted SEC (and other federal agency) rules and regulations, other legislative and administrative developments, as well as rating agencies' methodologies.

In this regard, there continues to be uncertainty regarding the potential impact of various SEC rules and regulations governing asset-backed securities and additional requirements contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act (including risk retention requirements) and the Basel III regulatory capital rules, a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk.

While we will continue to monitor these developments and their impact on our ABS program, such rules and regulations may impact our ability and/or desire to engage in asset-backed financings in the future.

For further information concerning our asset-backed financing programs and our indebtedness, see Note 5 , " Debt ," to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data." For a discussion of the risks associated with our reliance on asset-backed and asset-based financing and the significant amount of indebtedness, see Item 1A, "Risk Factors" in this 2019 Annual Report.

Capital Expenditures

Revenue Earning Vehicles Expenditures and Disposals

The table below sets forth our revenue earning vehicles expenditures and related disposal proceeds for the annual periods shown:

Cash inflow (cash outflow)

Revenue Earning Vehicles

(In millions)

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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

Cash inflow (cash outflow)

Years Ended December 31,

($ in millions)

International Rental Car

All Other Operations

Year ended December 31, 2018 compared with year ended December 31, 2017

In 2018, net expenditures on revenue earning vehicles increased by $1.1 billion , primarily in our U.S.

RAC segment, to increase the average fleet size and enrich the fleet mix, partially offset by improved vehicle dispositions as we benefited from an increase in higher-yielding dealer direct and retail sales channels.

Non-Vehicle Capital Asset Expenditures and Disposals

The table below sets forth our non-vehicle capital asset expenditures, and related disposal proceeds from non-vehicle capital assets disposed of or to be disposed of for the annual periods shown:

Cash inflow (cash outflow)

Non-Vehicle Capital Assets

(In millions)

The table below sets forth non-vehicle capital asset expenditures, net of disposal proceeds, by segment:

Cash inflow (cash outflow)

Years Ended December 31,

($ in millions)

International Rental Car

All Other Operations

Year ended December 31, 2019 compared with year ended December 31, 2018

In 2019, net expenditures for non-vehicle capital assets increased by $36 million in our Corporate operations due to our information technology and finance transformation programs and increased by $30 million in our U.S.

RAC segment due to greater proceeds received from the sale of non-vehicle capital assets in 2018 versus 2019.

Share Repurchase Program - Hertz Global

As of December 31, 2019 , approximately $295 million of s hares remain available for purchase under its share repurchase program .

No shares were repurchased by Hertz Holdings under the program during 2019, 2018 or 2017.

Hertz Holdings primarily funds repurchases of its common stock through dividends from Hertz or amounts borrowed under the master loan agreement.

Credit agreements governing Hertz's Senior Facilities, Letter of Credit Facility and Alternative Letter of Credit Facility restrict Hertz's ability to make dividends and certain payments, including payments to Hertz Holdings for share repurchases.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

CONTRACTUAL OBLIGATIONS

The following table details our contractual cash obligations as of December 31, 2019 except where noted:

Payments Due by Period

(In millions)

Debt obligation

Interest on debt (a)

Debt obligation

Interest on debt (a)

Minimum fixed obligations for operating leases (b)

Commitments to purchase vehicles (c)

Purchase obligations and other (d)

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

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

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

Represents agreements to purchase goods or services that are legally binding on us and that specify all significant terms, including fixed or minimum quantities;

fixed, minimum or variable price provisions;

and the approximate timing of the transaction, as well as liabilities for uncertain tax positions and other liabilities, and excludes any obligations to employees.

Only the minimum non-cancelable portion of purchase agreements and related cancellation penalties are included as obligations.

In the case of contracts that state minimum quantities of goods or services, amounts reflect only the stipulated minimums;

all other contracts reflect estimated amounts.

Purchase obligations include $20 million representing our tax liability for uncertain tax positions and related net accrued interest and penalties.

The table excludes our pension and other postretirement benefit obligations as disclosed in Note 7 , " Employee Retirement Benefits ," to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data."

OFF BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

Indemnification Obligations

In the ordinary course of business, we execute 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.

Performance under these indemnification obligations would generally be triggered by a breach of terms of the contract or by a third-party claim.

We regularly evaluate the probability of having to incur costs associated with these indemnification obligations and have accrued for expected losses that are probable and estimable.

The types of indemnification obligations for which payments are possible include the following:

Certain former Stockholders;

We have entered into indemnification agreements with each of our directors and certain of our executive officers.

Hertz entered into customary indemnification agreements with Hertz Holdings pursuant to which Hertz Holdings and Hertz

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will indemnify those entities and certain of our former stockholders and their affiliates 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.

We do not believe that these indemnifications are reasonably likely to have a material impact on us.

Environmental

We have 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 we may be held responsible could be substantial.

The probable expenses that we expect to incur for such matters have been accrued, and those expenses are reflected in our consolidated financial statements within accrued liabilities.

Amounts accrued represent the estimated cost to study potential environmental issues at sites deemed to require investigation or clean-up activities, and the estimated cost to implement remediation actions, including on-going maintenance, as required.

Initial cost estimates are based on historical experience at similar sites and are refined over time on the basis of in-depth studies of the sites.

For many sites, the remediation costs and other damages for which we ultimately may be responsible cannot be reasonably estimated because of uncertainties with respect to factors such as our connection to the site, the materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies, and remediation to be undertaken (including the technologies to be required and the extent, duration, and success of remediation).

EMPLOYEE RETIREMENT BENEFITS

We sponsor defined benefit pension plans worldwide.

Pension obligations give rise to expenses that are dependent on assumptions discussed in Note 7 , " Employee Retirement Benefits ," to the Notes to our consolidated financial statements included in this 2019 Annual Report under the caption Item 8, "Financial Statements and Supplementary Data."

Our 2019 worldwide net periodic pension expense included in the accompanying consolidated statement of operations for the year ended December 31, 2019 is $9 million , which represents an increase in charges of $15 million from 2018 .

The net periodic pension charges increased in 2019 compared to 2018 primarily due to a decrease in expected return on plan assets year over year.

The funded status (i.e., the dollar amount by which the projected benefit obligations exceeded the market value of pension plan assets) of the Hertz Retirement Plan, in which most domestic employees participate, improved in December 31, 2019 , compared with December 31, 2018 primarily due to an increase in plan assets year over year.

We did not contribute to the Hertz Retirement Plan during 2019 , and we do not anticipate contributing to the Hertz Retirement Plan during 2020 .

For the international plans, we anticipate contributing $3 million during 2020 .

The level of 2020 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.

We participate in several "multiemployer" pension plans.

In the event that we withdraw from participation in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, payable in installments over a minimum of twenty years, which would be reflected as a liability on a discounted basis on our consolidated balance sheet.

Our withdrawal liability for any multiemployer plan would depend on the extent of the plan's funding of vested benefits.

Our multiemployer plans could have significant underfunded liabilities.

Such underfunding may increase in the event other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of withdrawing employers to pay their withdrawal liability.

In addition, such underfunding may increase as a result of lower than expected returns on pension fund assets or other funding deficiencies.

The occurrence of any of these events could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

For a discussion of the risks associated with our pension plans, see Item 1A, "Risk Factors” in this 2019 Annual Report.

LIQUIDITY AND CAPITAL RESOURCES

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

and internationally.

As of December 31, 2020, we had $1.1 billion of unrestricted cash and unrestricted cash equivalents and $383 million of restricted cash and restricted cash equivalents.

As of December 31, 2020, $479 million of unrestricted cash and unrestricted cash equivalents and $60 million of restricted cash and restricted cash equivalents were held by our subsidiaries outside of the U.S.

As a result of the impact of COVID-19 discussed above, we changed our indefinite reinvestment assertion with respect to our non-U.S.

earnings, and if not in the form of loan repayments or subject to favorable tax treaties, repatriation of some of these funds under current regulatory and tax law for use in domestic operations could expose us to additional cash taxes.

Liquidity Considerations Related to COVID-19

As discussed above, the outbreak of COVID-19 has spread across the globe, resulting in a global economic slowdown and disruptions of travel and other industries, all of which are continuing to negatively impact our business and industry.

In addition, COVID-19 has resulted in our employees, contractors, suppliers, customers and other business partners being prevented from conducting normal business activities temporarily or for an indefinite period of time.

This was largely caused by shutdowns that were initially requested or mandated by governmental authorities.

Additionally, individuals voluntarily reduced travel in attempts to avoid the outbreak.

rental car operations.

Voluntary Petitions for Bankruptcy

In connection with the expiration of the Forbearance Agreement and the Waiver Agreements described above and the continuing economic impact from COVID-19, on May 22, 2020, the Debtors filed Petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

The Chapter 11 Cases are being jointly administered by the Bankruptcy Court under the caption In re The Hertz Corporation, et al., Case No.

20-11218 (MFW) .

The information on this website is not incorporated by reference and does not constitute part of this 2020 Annual Report.

In May 2020, the Bankruptcy Court approved motions filed by the Debtors that were designed primarily to mitigate the impact of the Chapter 11 Cases on our operations, customers and employees.

The Debtors are authorized to conduct business activities in the ordinary course, and pursuant to orders entered by the Bankruptcy Court, the Debtors are authorized to, among other things and subject to the terms and conditions of such orders (i) pay employees’ wages and related obligations;

(ii) pay certain taxes;

(iii) pay critical vendors and certain fees to airport authorities and provide adequate protection;

(iv) continue to maintain certain customer programs;

(v) maintain insurance programs;

(vi) use certain cash collateral on an interim basis;

(vii) honor certain obligations to franchisees;

and (viii) maintain existing cash management systems.

Borrowing Capacity and Availability

The filing of the Chapter 11 Cases constituted defaults, termination events and/or amortization events with respect to certain of our existing debt obligations.

As a result of the filing of the Chapter 11 Cases, the remaining capacity

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Item 5. Market for Registrant’s Common Equity