MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
−Removed: on rental volume and actuarial evaluations of historical accident claim experience and trends, as well as future projections of ultimate losses, expenses and administrative costs.
−Removed: The adequacy of the liability is monitored quarterly based on evolving accident claim history and insurance related state legislation changes.
+Added: reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
+Added: Factors which could be indicators of impairment include, but are not limited to, (i) significant decrease in market prices of the assets, (ii) current period operating or cash flow losses or a projection or forecast that demonstrates continuing losses and (iii) significant changes in the estimated useful lives.
+Added: Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.
+Added: Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the estimated fair value of the asset.
+Added: Long-lived assets to be disposed of are reported at the lower of carrying value or estimated fair value less costs to sell.
+Added: During the third quarter of 2024, at the conclusion of our historical peak rental season, there was a reduction in the cash flow projections in our Americas RAC and International RAC segments, indicating that the carrying values of their long-lived assets may not be recoverable.
+Added: The reduction was largely attributed to the acceleration of the rental fleet rotation in our segments, where shortening the useful life reduced the potential future cash flows expected to be earned from the fleet.
+Added: Operating cash flow projections also deteriorated from delayed timing of operating cost improvements and longer timeframes associated with revenue maximization initiatives.
+Added: As a result, we tested the recoverability of our long-lived assets in our Americas RAC and International RAC segments and determined that an impairment existed, which resulted in recognition of a total impairment charge of $1.0 billion, of which $923 million and $125 million were associated with our revenue earning vehicles and ROU assets, respectively.
+Added: Further changes in market conditions or the performance of our long-lived assets could result in an additional impairment charge.
+Added: See Note 3, "Long-Lived Assets Impairment," in Part II, Item 8 of this 2024 Annual Report for additional information.
+Added: Self-insured Liabilities
+Added: Self-insured liabilities on our consolidated balance sheets primarily include public liability, property damage and liability insurance supplement.
+Added: These represent an estimate for both reported accident claims not yet paid, and claims incurred but not yet reported and are recorded on an undiscounted basis.
+Added: Reserve requirements are based on actuarially determined estimates using historical claims experience.
+Added: The adequacy of the liability is monitored quarterly based on evolving accident claim history.
If our estimates change or if actual results differ from these assumptions, the amount of the recorded liability is adjusted to reflect these results.
+Added: During the year ended December 31, 2024, we experienced increased self-insurance liabilities as a result of adverse experience and case development.
Recoverability of Goodwill and Indefinite-lived Intangible Assets
On an annual basis as of October 1, and at interim periods when circumstances require as a result of a triggering event, as defined by Accounting Standards Codification ("ASC") 350 – Intangibles, Goodwill and Other ("ASC 350"), we test the recoverability of our goodwill and indefinite-lived intangible assets by performing an impairment analysis.
−Removed: An impairment is deemed to exist if the carrying value of goodwill or indefinite-lived intangible assets exceed their fair value as determined using level 3 inputs under the GAAP fair value hierarchy.
+Added: An impairment is deemed to exist if the carrying value of goodwill or indefinite-lived intangible assets exceed their fair value as determined using Level 3 inputs, as described in Part II, Item 8 of this 2024 Annual Report, under the U.S.
+Added: GAAP fair value hierarchy.
The reviews of fair value involve judgment and estimates, including projected revenues, projected cash flows, long-term growth rates, royalty rates and discount rates.
−Removed: We believe our valuation techniques and assumptions are reasonable for this purpose.
For goodwill, we determine the fair value using an income approach based on the discounted cash flows of each reporting unit.
6 unchanged sentences
The WACC used in the discounted cash flow model methodology is calculated based upon the fair value of our debt and share price with a debt-to-equity ratio comparable to the vehicle rental car industry as well specific risk factors for each reporting unit.
−Removed: The discount rate utilized for each reporting unit is indicative of the return an investor would expect to receive for investing in such a business.
+Added: The discount rate utilized for each reporting unit is indicative of the return
+Added: HERTZ GLOBAL HOLDINGS, INC.
+Added: AND SUBSIDIARIES
+Added: THE HERTZ CORPORATION AND SUBSIDIARIES
+Added: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
+Added: an investor would expect to receive for investing in such a business.
Our cash flow projections represent management's most recent planning assumptions, which are based on a combination of industry outlooks, views on general economic conditions, our expected pricing plans and expected future savings.
4 unchanged sentences
Deterioration in the global economic conditions in the travel industry and the supply chain constraints affecting new vehicle production, our cash flows and our ability to obtain future financing to maintain our fleet or the weighted average cost of capital assumptions may result in an impairment charge to earnings in future periods.
−Removed: We will continue to closely monitor actual results versus our expectations as well as any significant changes in market events or conditions and the resulting impact to our assumptions about future estimated cash flows, projected revenues and the weighted average cost of capital.
+Added: We will continue to closely monitor actual results versus our expectations as well as any significant changes in market events or conditions and the resulting impact to our assumptions about future projected cash flows, projected revenues and the weighted average cost of capital.
If our expectations of the operating results, both in magnitude or timing, do not materialize, or if our weighted average cost of capital increases, we may be required to record goodwill and indefinite-lived intangible asset impairment charges, which could be material.
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid.
−Removed: We are subject to income taxes in the United States and numerous foreign jurisdictions.
+Added: We are subject to income taxes in the U.S.
+Added: and numerous foreign jurisdictions.
Significant judgments and estimates are required in the determination of the consolidated income tax expense.
−Removed: HERTZ GLOBAL HOLDINGS, INC.
−Removed: AND SUBSIDIARIES
−Removed: THE HERTZ CORPORATION AND SUBSIDIARIES
−Removed: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized.
12 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.