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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________________________________
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

HERTZ GLOBAL HOLDINGS, INC.
THE HERTZ CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 001-37665 61-1770902
Delaware 001-07541 13-1938568
(State or other jurisdiction of
incorporation or organization)		 (Commission File Number) (I.R.S. Employer Identification No.)
8501 Williams Road
Estero, Florida 33928
239 301-7000
(Address, including Zip Code, and
telephone number, including area code,
of registrant's principal executive offices)
Not Applicable
(Former name, former address and
former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which Registered
Hertz Global Holdings, Inc. Common Stock par value $0.01 per share HTZ New York Stock Exchange *
The Hertz Corporation None None None

*On October 29, 2020, Hertz Global Holdings, Inc. ("Hertz Global") received notification from the New York Stock Exchange ("NYSE") that Hertz Global's common stock is no longer suitable for listing on the NYSE and that the NYSE suspended trading in Hertz Global's common stock after the market close on October 29, 2020. On October 30, 2020, the NYSE applied to the Securities and Exchange Commission 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. Upon deregistration of Hertz Global's common stock under Section 12(b) of the Exchange Act, Hertz Global's common stock will remain registered under Section 12(g) of the Exchange Act. As a result of the suspension and expected delisting, Hertz Global's common stock began trading exclusively on the over-the-counter market on October 30, 2020 under the symbol HTZGQ.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Hertz Global Holdings, Inc.    Yes ☒ No ☐
The Hertz Corporation    Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Hertz Global Holdings, Inc.    Yes ☒ No ☐
The Hertz Corporation    Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Hertz Global Holdings, Inc. Large accelerated filer ☒ Accelerated filer  ☐ Non-accelerated filer ☐
Smaller reporting company  ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
The Hertz Corporation Large accelerated filer  ☐ Accelerated filer  ☐ Non-accelerated filer ☒
Smaller reporting company  ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Hertz Global Holdings, Inc.    Yes ☐ No ☒
The Hertz Corporation    Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Class Shares Outstanding as of November 2, 2020
Hertz Global Holdings, Inc. Common Stock, par value $0.01 per share 156,206,478
The Hertz Corporation(1)
 Common Stock, par value $0.01 per share 100
(1)(100% owned by
Rental Car Intermediate Holdings, LLC)

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
TABLE OF CONTENTS

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
PART I. FINANCIAL INFORMATION
ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Index
Page
Hertz Global Holdings, Inc. and Subsidiaries (Debtor-in-Possession)
2
3
4
5
7
The Hertz Corporation and Subsidiaries (Debtor-in-Possession)
9
Notes to the Condensed Consolidated Financial Statements

1


HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
September 30,
2020		 December 31,
2019
ASSETS
Cash and cash equivalents $ 1,137  $ 865 
Restricted cash and cash equivalents:
Vehicle 382  466 
Non-vehicle 363  29 
Total restricted cash and cash equivalents 745  495 
Total cash, cash equivalents, restricted cash and restricted cash equivalents 1,882  1,360 
Receivables:
Vehicle 629  791 
Non-vehicle, net of allowance of $63 and $35, respectively
 787  1,049 
Total receivables, net 1,416  1,840 
Prepaid expenses and other assets 429  689 
Revenue earning vehicles:
Vehicles 11,462  17,085 
Less: accumulated depreciation (3,011) (3,296)
Total revenue earning vehicles, net 8,451  13,789 
Property and equipment, net 699  757 
Operating lease right-of-use assets 1,737  1,871 
Intangible assets, net 3,062  3,238 
Goodwill 1,081  1,083 
Total assets(a)
 $ 18,757  $ 24,627 
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable:
Vehicle $ 84  $ 289 
Non-vehicle 501  654 
Total accounts payable 585  943 
Accrued liabilities 810  1,032 
Accrued taxes, net 119  150 
Debt:
Vehicle 8,753  13,368 
Non-vehicle 18  3,721 
Total debt 8,771  17,089 
Operating lease liabilities 1,703  1,848 
Self-insured liabilities 481  553 
Deferred income taxes, net 887  1,124 
Total liabilities not subject to compromise 13,356  22,739 
Liabilities subject to compromise 5,001  — 
Total liabilities(a)
 18,357  22,739 
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, no shares issued and outstanding
 —  — 
Common stock, $0.01 par value, 158,235,410 and 144,153,444 shares issued, respectively and 156,206,478 and 142,124,512 shares outstanding, respectively
 2  1 
Additional paid-in capital 3,047  3,024 
Accumulated deficit (2,392) (967)
Accumulated other comprehensive income (loss) (216) (189)
Treasury stock, at cost, 2,028,932 and 2,028,932 shares, respectively
 (100) (100)
Stockholders' equity attributable to Hertz Global 341  1,769 
Noncontrolling interests 59  119 
Total stockholders' equity 400  1,888 
Total liabilities and stockholders' equity $ 18,757  $ 24,627 
(a)Hertz Global Holdings, Inc.'s consolidated total assets as of September 30, 2020 and December 31, 2019 include total assets of variable interest entities (“VIEs”) of $705 million and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. Hertz Global Holdings, Inc.'s consolidated total liabilities as of September 30, 2020 and December 31, 2019 include total liabilities of VIEs of $647 million and $1.1 billion, respectively, for which the creditors of the VIEs have no recourse to Hertz Global Holdings, Inc. See "Special Purpose Entities" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note 14, "Related Party Transactions," for further information.
The accompanying notes are an integral part of these financial statements.
2

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions, except per share data)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2020 2019 2020 2019
Revenues:
Worldwide vehicle rental $ 1,119  $ 2,664  $ 3,535  $ 6,961 
All other operations 149  172  488  493 
Total revenues 1,268  2,836  4,023  7,454 
Expenses:
Direct vehicle and operating 832  1,492  2,777  4,147 
Depreciation of revenue earning vehicles and lease charges
 347  667  1,634  1,892 
Selling, general and administrative 143  232  519  723 
Interest expense, net:
Vehicle 110  134  360  372 
Non-vehicle (excludes contractual interest of $53 million and $75 million for the three and nine months ended September 30, 2020, respectively)
 17  70  118  214 
Total interest expense, net 127  204  478  586 
Technology-related intangible and other asset impairments
 —  —  193  — 
Other (income) expense, net —  (6) (15) (37)
Reorganization items, net 78  —  101  — 
Total expenses 1,527  2,589  5,687  7,311 
Income (loss) before income taxes
 (259) 247  (1,664) 143 
Income tax (provision) benefit
 36  (74) 232  (78)
Net income (loss) (223) 173  (1,432) 65 
Net (income) loss attributable to noncontrolling interests
 1  (4) 7  (4)
Net income (loss) attributable to Hertz Global
 $ (222) $ 169  $ (1,425) $ 61 
Weighted-average shares outstanding:
Basic 156  133  148  109 
Diluted 156  134  148  109 
Earnings (loss) per share:
Basic earnings (loss) per share
 $ (1.42) $ 1.26  $ (9.65) $ 0.56 
Diluted earnings (loss) per share
 $ (1.42) $ 1.26  $ (9.65) $ 0.56 


The accompanying notes are an integral part of these financial statements.
3

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2020 2019 2020 2019
Net income (loss) $ (223) $ 173  $ (1,432) $ 65 
Other comprehensive income (loss):
Foreign currency translation adjustments
 (6) (13) (32) (11)
Net gain (loss) on defined benefit pension plans
 15  1  1  1 
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans
 1  2  6  5 
Total other comprehensive income (loss) before income taxes
 10  (10) (25) (5)
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans
 (4) —  —  — 
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans
 (1) (1) (2) (1)
Total other comprehensive income (loss) 5  (11) (27) (6)
Total comprehensive income (loss)
 (218) 162  (1,459) 59 
Comprehensive (income) loss attributable to noncontrolling interests
 1  (4) 7  (4)
Comprehensive income (loss) attributable to Hertz Global
 $ (217) $ 158  $ (1,452) $ 55 
The accompanying notes are an integral part of these financial statements.
4

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Unaudited
(In millions)

Preferred Stock
Shares		 Common Stock Shares Common Stock Amount Additional
Paid-In Capital
Accumulated
Deficit(1)
 Accumulated
Other
Comprehensive
Income (Loss)		 Treasury Stock Shares Treasury Stock Amount Stockholders'
Equity
Attributable to
Hertz Global
Non-
controlling Interests(1)
 Total Stockholders' Equity
Balance as of:
December 31, 2018
 —  84  $ 1  $ 2,261  $ (909) $ (192) 2  $ (100) $ 1,061  $ 59  $ 1,120 
Net income (loss) —  —  —  —  (147) —  —  —  (147) (1) (148)
Other comprehensive income (loss) —  —  —  —  —  7  —  —  7  —  7 
Net settlement on vesting of restricted stock —  —  —  (2) —  —  —  —  (2) —  (2)
Stock-based compensation charges —  —  —  3  —  —  —  —  3  —  3 
Contributions from noncontrolling interests —  —  —  —  —  —  —  —  —  25  25 
March 31, 2019 —  84  1  2,262  (1,056) (185) 2  (100) 922  83  1,005 
Net income (loss) —  —  —  —  39  —  —  —  39  2  41 
Other comprehensive income (loss) —  —  —  —  —  (2) —  —  (2) —  (2)
Stock-based compensation charges —  —  —  5  —  —  —  —  5  —  5 
Contributions from noncontrolling interests —  —  —  —  —  —  —  —  —  21  21 
June 30, 2019 —  84  1  2,267  (1,017) (187) 2  (100) 964  106  1,070 
Net income (loss) —  —  —  —  169  —  —  —  169  4  173 
Other comprehensive income (loss) —  —  —  —  —  (11) —  —  (11) —  (11)
Net settlement on vesting of restricted stock —  —  —  (2) —  —  —  —  (2) —  (2)
Stock-based compensation charges —  —  —  6  —  —  —  —  6  —  6 
Contributions from noncontrolling interests —  —  —  —  —  —  —  —  —  5  5 
Rights Offering, net —  58  —  748  —  —  —  —  748  —  748 
September 30, 2019 —  142  $ 1  $ 3,019  $ (848) $ (198) 2  $ (100) $ 1,874  $ 115  $ 1,989 

(1)    Net income (loss) and Net income (loss) attributable to noncontrolling interests are computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to amounts in the accompanying unaudited condensed consolidated balance sheet.










HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Unaudited
(In millions)

Preferred Stock
Shares		 Common Stock Shares Common Stock Amount Additional
Paid-In Capital		 Accumulated
Deficit		 Accumulated
Other
Comprehensive
Income (Loss)		 Treasury Stock Shares Treasury Stock Amount Stockholders'
Equity
Attributable to
Hertz Global		 Non-
controlling Interests		 Total Stockholders' Equity
Balance as of:
December 31, 2019 —  142  $ 1  $ 3,024  $ (967) $ (189) 2  $ (100) $ 1,769  $ 119  $ 1,888 
Net income (loss) —  —  —  —  (356) —  —  —  (356) (1) (357)
Other comprehensive income (loss) —  —  —  —  —  (39) —  —  (39) —  (39)
Net settlement on vesting of restricted stock —  —  —  (2) —  —  —  —  (2) —  (2)
Contributions from noncontrolling interests —  —  —  —  —  —  —  —  —  1  1 
March 31, 2020 —  142  1  3,022  (1,323) (228) 2  (100) 1,372  119  1,491 
Net income (loss) —  —  —  —  (847) —  —  —  (847) (5) (852)
Other comprehensive income (loss) —  —  —  —  —  7  —  —  7  —  7 
Stock-based compensation charges —  —  —  (2) —  —  —  —  (2) —  (2)
Stock issuance, net —  14  1  28  —  —  —  —  29  —  29 
June 30, 2020 —  156  2  3,048  (2,170) (221) 2  (100) 559  114  673 
Net income (loss) —  —  —  —  (222) —  —  —  (222) (1) (223)
Other comprehensive income (loss) —  —  —  —  —  5  —  —  5  —  5 
Net settlement on vesting of restricted stock —  —  —  (1) —  —  —  —  (1) —  (1)
Distributions to noncontrolling interests —  —  —  —  —  —  —  —  —  (54) (54)
September 30, 2020 —  156  $ 2  $ 3,047  $ (2,392) $ (216) 2  $ (100) $ 341  $ 59  $ 400 


The accompanying notes are an integral part of these financial statements.
5

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)

  Nine Months Ended
September 30,
  2020 2019
Cash flows from operating activities:
Net income (loss) $ (1,432) $ 65 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles 1,809  2,056 
Depreciation and amortization, non-vehicle 168  151 
Amortization of deferred financing costs and debt discount (premium) 37  40 
Stock-based compensation charges (2) 14 
Provision for receivables allowance 66  35 
Deferred income taxes, net (243) 58 
Technology-related intangible and other asset impairments 193  — 
(Gain) loss on marketable securities —  (26)
(Gain) loss on sale of non-vehicle capital assets (24) (15)
(Gain) loss on derivatives (3) (10)
Other 7  6 
Changes in assets and liabilities:
Non-vehicle receivables 231  (132)
Prepaid expenses and other assets 33  (44)
Operating lease right-of-use assets 277  305 
Non-vehicle accounts payable 224  72 
Accrued liabilities (47) (48)
Accrued taxes, net (4) 25 
Operating lease liabilities (287) (323)
Self-insured liabilities (75) 4 
Net cash provided by (used in) operating activities 928  2,233 
Cash flows from investing activities:
Revenue earning vehicles expenditures (5,188) (11,536)
Proceeds from disposal of revenue earning vehicles 8,770  6,193 
Non-vehicle capital asset expenditures (89) (170)
Proceeds from non-vehicle capital assets disposed of or to be disposed of 56  21 
Sales of marketable securities 74  — 
Other (1) — 
Net cash provided by (used in) investing activities 3,622  (5,492)
Cash flows from financing activities:
Proceeds from issuance of vehicle debt 4,226  11,039 
Repayments of vehicle debt (8,931) (8,538)
Proceeds from issuance of non-vehicle debt 1,553  1,726 
Repayments of non-vehicle debt (854) (2,437)
Payment of financing costs (11) (33)
The accompanying notes are an integral part of these financial statements.
6

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)

  Nine Months Ended
September 30,
  2020 2019
Proceeds from the issuance of stock, net 28  — 
Contributions from (distributions to) noncontrolling interests (55) 49 
Proceeds from Rights Offering, net —  748 
Other (2) (3)
Net cash provided by (used in) financing activities (4,046) 2,551 
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
 18  (7)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
 522  (715)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
 1,360  1,410 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
 $ 1,882  $ 695 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized:
Vehicle $ 275  $ 331 
Non-vehicle 78  182 
Income taxes, net of refunds (13) 12 
Supplemental disclosures of non-cash information:
Purchases of revenue earning vehicles included in accounts payable, net of incentives
 $ 30  $ 43 
Sales of revenue earning vehicles included in vehicle receivables 575  712 
Fleet payables included in liabilities subject to compromise 11  — 
Purchases of non-vehicle capital assets included in accounts payable 7  48 
Purchases of non-vehicle capital assets included in liabilities subject to compromise
 20  — 


The accompanying notes are an integral part of these financial statements.
7


THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In millions, except par value and share data)
September 30,
2020		 December 31,
2019
ASSETS    
Cash and cash equivalents $ 1,137  $ 865 
Restricted cash and cash equivalents:
Vehicle 382  466 
Non-vehicle 335  29 
Total restricted cash and cash equivalents 717  495 
Total cash, cash equivalents, restricted cash and restricted cash equivalents 1,854  1,360 
Receivables:
Vehicle 629  791 
Non-vehicle, net of allowance of $63 and $35, respectively
 787  1,049 
Total receivables, net 1,416  1,840 
Due from Hertz Holdings 1  — 
Prepaid expenses and other assets 428  689 
Revenue earning vehicles:
Vehicles 11,462  17,085 
Less: accumulated depreciation (3,011) (3,296)
Total revenue earning vehicles, net 8,451  13,789 
Property and equipment, net 699  757 
Operating lease right-of-use assets 1,737  1,871 
Intangible assets, net 3,062  3,238 
Goodwill 1,081  1,083 
Total assets(a)
 $ 18,729  $ 24,627 
LIABILITIES AND STOCKHOLDER'S EQUITY
Accounts payable:
Vehicle $ 84  $ 289 
Non-vehicle 501  654 
Total accounts payable 585  943 
Accrued liabilities 812  1,032 
Accrued taxes, net 119  150 
Debt:
Vehicle 8,753  13,368 
Non-vehicle 18  3,721 
Total debt 8,771  17,089 
Operating lease liabilities 1,703  1,848 
Self-insured liabilities 481  553 
Deferred income taxes, net 862  1,128 
Total liabilities not subject to compromise 13,333  22,743 
Liabilities subject to compromise 5,066  — 
Total liabilities(a)
 18,399  22,743 
Commitments and contingencies
Stockholder's equity:
Common stock, $0.01 par value, 100 and 100 shares issued and outstanding, respectively
 —  — 
Additional paid-in capital 3,953  3,955 
Due from affiliate —  (64)
Accumulated deficit (3,466) (1,937)
Accumulated other comprehensive income (loss) (216) (189)
Stockholder's equity attributable to Hertz 271  1,765 
Noncontrolling interests 59  119 
Total stockholder's equity 330  1,884 
Total liabilities and stockholder's equity $ 18,729  $ 24,627 
(a)The Hertz Corporation's consolidated total assets as of September 30, 2020 and December 31, 2019 include total assets of variable interest entities (“VIEs”) of $705 million and $1.3 billion, respectively, which can only be used to settle obligations of the VIEs. The Hertz Corporation's consolidated total liabilities as of September 30, 2020 and December 31, 2019 include total liabilities of VIEs of $647 million and $1.1 billion, respectively, for which the creditors of the VIEs have no recourse to The Hertz Corporation. See "Special Purpose Entities" in Note 6, "Debt," and "767 Auto Leasing LLC" in Note 14, "Related Party Transactions," for further information.
The accompanying notes are an integral part of these financial statements.
8

THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In millions)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2020 2019 2020 2019
Revenues:    
Worldwide vehicle rental $ 1,119  $ 2,664  $ 3,535  $ 6,961 
All other operations 149  172  488  493 
Total revenues 1,268  2,836  4,023  7,454 
Expenses:        
Direct vehicle and operating 832  1,492  2,777  4,147 
Depreciation of revenue earning vehicles and lease charges
 347  667  1,634  1,892 
Selling, general and administrative 143  232  519  723 
Interest expense, net:
Vehicle 110  134  360  372 
Non-vehicle (excludes contractual interest of $53 million and $75 million for the three and nine months ended September 30, 2020, respectively)
 17  68  116  209 
Total interest expense, net 127  202  476  581 
Technology-related intangible and other asset impairments
 —  —  193  — 
Write-off of intercompany loan —  —  133  — 
Other (income) expense, net —  (6) (15) (37)
Reorganization items, net 78  —  101  — 
Total expenses 1,527  2,587  5,818  7,306 
Income (loss) before income taxes
 (259) 249  (1,795) 148 
Income tax (provision) benefit
 36  (75) 259  (79)
Net income (loss)
 (223) 174  (1,536) 69 
Net (income) loss attributable to noncontrolling interests
 1  (4) 7  (4)
Net income (loss) attributable to Hertz
 $ (222) $ 170  $ (1,529) $ 65 


The accompanying notes are an integral part of these financial statements.
9
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Unaudited
(In millions)
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
2020 2019 2020 2019
Net income (loss) $ (223) $ 174  $ (1,536) $ 69 
Other comprehensive income (loss):
Foreign currency translation adjustments
 (6) (13) (32) (11)
Net gain (loss) on defined benefit pension plans
 15  1  1  1 
Reclassification to other (income) expense for amortization of actuarial (gains) losses on defined benefit pension plans
 1  2  6  5 
Total other comprehensive income (loss) before income taxes
 10  (10) (25) (5)
Income tax (provision) benefit related to net gains and losses on defined benefit pension plans
 (4) —  —  — 
Income tax (provision) benefit related to reclassified amounts of net periodic costs on defined benefit pension plans
 (1) (1) (2) (1)
Total other comprehensive income (loss) 5  (11) (27) (6)
Total comprehensive income (loss)
 (218) 163  (1,563) 63 
Comprehensive (income) loss attributable to noncontrolling interests
 1  (4) 7  (4)
Comprehensive income (loss) attributable to Hertz
 $ (217) $ 159  $ (1,556) $ 59 

The accompanying notes are an integral part of these financial statements.
10
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Unaudited
(In millions, except share data)

  Common Stock Shares Common Stock Amount Additional
Paid-In Capital		 Due From Affiliate
Accumulated
Deficit(1)
 Accumulated
Other
Comprehensive
Income (Loss)		 Stockholder's Equity Attributable to Hertz
Noncontrolling Interests(1)
 Total Stockholder's Equity
Balance as of:
December 31, 2018 100  $ —  $ 3,187  $ (52) $ (1,884) $ (192) $ 1,059  $ 59  $ 1,118 
Net income (loss)
 —  —  —  —  (145) —  (145) (1) (146)
Due from Hertz Holdings
 —  —  —  (4) —  —  (4) —  (4)
Other comprehensive income (loss)
 —  —  —  —  —  7  7  —  7 
Stock-based compensation charges
 —  —  3  —  —  —  3  —  3 
Contributions from noncontrolling interests
 —  —  —  —  —  —  —  25  25 
March 31, 2019 100  —  3,190  (56) (2,029) (185) 920  83  1,003 
Net income (loss)
 —  —  —  —  39  —  39  2  41 
Due from Hertz Holdings
 —  —  —  (2) —  —  (2) —  (2)
Other comprehensive income (loss)
 —  —  —  —  —  (2) (2) —  (2)
Stock-based compensation charges
 —  —  5  —  —  —  5  —  5 
Contributions from noncontrolling interests
 —  —  —  —  —  —  —  21  21 
June 30, 2019 100  —  3,195  (58) (1,990) (187) 960  106  1,066 
Net income (loss)
 —  —  —  —  171  —  171  4  175 
Due from Hertz Holdings
 —  —  —  (4) —  —  (4) —  (4)
Other comprehensive income (loss)
 —  —  —  —  —  (11) (11) —  (11)
Stock-based compensation charges
 —  —  6  —  —  —  6  —  6 
Contributions from noncontrolling interests
 —  —  —  —  —  —  —  5  5 
Contributions from Hertz Holdings —  —  750  —  —  —  750  —  750 
September 30, 2019 100  $ —  $ 3,951  $ (62) $ (1,819) $ (198) $ 1,872  $ 115  $ 1,987 

(1)    Net income (loss) and Net income (loss) attributable to noncontrolling interests are computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to amounts in the accompanying unaudited condensed consolidated balance sheet.














THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
Unaudited
(In millions, except share data)

  Common Stock Shares Common Stock Amount Additional
Paid-In Capital		 Due From Affiliate
Accumulated
Deficit(1)
 Accumulated
Other
Comprehensive
Income (Loss)		 Stockholder's Equity Attributable to Hertz Noncontrolling Interests Total Stockholder's Equity
Balance as of:
December 31, 2019 100  $ —  $ 3,955  $ (64) $ (1,937) $ (189) $ 1,765  $ 119  $ 1,884 
Net income (loss)
 —  —  —  —  (355) —  (355) (1) (356)
Due from Hertz Holdings
 —  —  —  (3) —  —  (3) —  (3)
Other comprehensive income (loss)
 —  —  —  —  —  (39) (39) —  (39)
Contributions from noncontrolling interests
 —  —  —  —  —  —  —  1  1 
March 31, 2020 100  —  3,955  (67) (2,292) (228) 1,368  119  1,487 
Net income (loss)
 —  —  —  —  (951) —  (951) (5) (956)
Due from Hertz Holdings
 —  —  —  (1) —  —  (1) —  (1)
Liabilities subject to compromise(2)
 —  —  —  (65) —  —  (65) —  (65)
Write-off of intercompany loan(3)
 —  —  —  133  —  —  133  —  133 
Other comprehensive income (loss)
 —  —  —  —  —  7  7  —  7 
Stock-based compensation charges
 —  —  (2) —  —  —  (2) —  (2)
June 30, 2020 100  —  3,953  —  (3,243) (221) 489  114  603 
Net income (loss) —  —  —  —  (223) —  (223) (1) (224)
Other comprehensive income (loss) —  —  —  —  —  5  5  —  5 
Distributions to noncontrolling interests —  —  —  —  —  —  —  (54) (54)
September 30, 2020 100  $ —  $ 3,953  $ —  $ (3,466) $ (216) $ 271  $ 59  $ 330 

(1)    Net income (loss) is computed independently each quarter. As a result, the quarter amounts presented herein may be rounded to agree to accumulated deficit in the accompanying unaudited condensed consolidated balance sheet.
(2)     As a result of filing the Chapter 11 Cases, a Pre-petition loan due to an affiliate was classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020. See Note 16, "Liabilities Subject to Compromise."
(3)    As a result of filing the Chapter 11 Cases, the full amount outstanding under a loan due from affiliate was deemed uncollectible and written off. See Note 14, "Related Party Transactions."


The accompanying notes are an integral part of these financial statements.
11
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
  Nine Months Ended
September 30,
  2020 2019
Cash flows from operating activities:    
Net income (loss) $ (1,536) $ 69 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and reserves for revenue earning vehicles 1,809  2,056 
Depreciation and amortization, non-vehicle 168  151 
Amortization of deferred financing costs and debt discount (premium) 37  40 
Stock-based compensation charges (2) 14 
Provision for receivables allowance 66  35 
Deferred income taxes, net (271) 59 
Technology-related intangible and other asset impairments 193  — 
Write-off of intercompany loan 133  — 
(Gain) loss on marketable securities —  (26)
(Gain) loss on sale of non-vehicle capital assets (24) (15)
(Gain) loss on derivatives (3) (10)
Other 9  6 
Changes in assets and liabilities:
Non-vehicle receivables 231  (132)
Prepaid expenses and other assets 33  (44)
Operating lease right-of-use assets 277  305 
Non-vehicle accounts payable 224  72 
Accrued liabilities (47) (48)
Accrued taxes, net (4) 25 
Operating lease liabilities (287) (323)
Self-insured liabilities (75) 4 
Net cash provided by (used in) operating activities 931  2,238 
Cash flows from investing activities:
Revenue earning vehicles expenditures (5,188) (11,536)
Proceeds from disposal of revenue earning vehicles 8,770  6,193 
Non-vehicle capital asset expenditures (89) (170)
Proceeds from non-vehicle capital assets disposed of or to be disposed of 56  21 
Sales of marketable securities 74  — 
Other (1) — 
Net cash provided by (used in) investing activities 3,622  (5,492)
Cash flows from financing activities:    
Proceeds from issuance of vehicle debt 4,226  11,039 
Repayments of vehicle debt (8,931) (8,538)
Proceeds from issuance of non-vehicle debt 1,553  1,726 
Repayments of non-vehicle debt (854) (2,437)

The accompanying notes are an integral part of these financial statements.
12
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In millions)
  Nine Months Ended
September 30,
  2020 2019
Payment of financing costs (11) (33)
Advances to Hertz Holdings (5) (10)
Contributions from (distributions to) noncontrolling interests (55) 49 
Contributions from Hertz Holdings —  750 
Net cash provided by (used in) financing activities (4,077) 2,546 
Effect of foreign currency exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
 18  (7)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents during the period
 494  (715)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
 1,360  1,410 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
 $ 1,854  $ 695 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized:
Vehicle $ 275  $ 331 
Non-vehicle 78  182 
Income taxes, net of refunds (13) 12 
Supplemental disclosures of non-cash information:    
Purchases of revenue earning vehicles included in accounts payable, net of incentives
 $ 30  $ 43 
Sales of revenue earning vehicles included in vehicle receivables 575  712 
Fleet payables included in liabilities subject to compromise 11  — 
Purchases of non-vehicle capital assets included in accounts payable 7  48 
Purchases of non-vehicle capital assets included in liabilities subject to compromise
 20  — 





The accompanying notes are an integral part of these financial statements.
13
HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 1—Background

Hertz Global Holdings, Inc. (Hertz Global when including its subsidiaries and VIEs and "Hertz Holdings" when excluding its subsidiaries and VIEs) was incorporated in Delaware in 2015 to serve as the top-level holding company for Rental Car Intermediate Holdings, LLC, which wholly owns The Hertz Corporation ("Hertz" and interchangeably with Hertz Global, the "Company"), Hertz Global's primary operating company. Hertz was incorporated in Delaware in 1967 and is a successor to corporations that have been engaged in the vehicle rental and leasing business since 1918. Hertz operates its vehicle rental business globally primarily through the Hertz, Dollar and Thrifty brands from company-owned, licensee and franchisee locations in the United States ("U.S."), Africa, Asia, Australia, Canada, the Caribbean, Europe, Latin America, the Middle East and New Zealand. Through its Donlen subsidiary, Hertz provides vehicle leasing and fleet management services.

In March 2020, the World Health Organization declared a pandemic resulting from the COVID-19 viral disease ("COVID-19"). In response to COVID-19, local and national governments around the world instituted shelter-in-place and similar orders and travel restrictions, and airline travel decreased suddenly and dramatically. Despite a strong start to the year, as a result of the impact on travel demand, late in the first quarter, the Company began experiencing a high level of rental cancellations and a significant decline in forward bookings. In response, the Company began adjusting its fleet levels to reflect the reduced level of demand by leveraging its multiple used-vehicle channels and negotiating with suppliers to reduce fleet commitments.

Additionally, the Company began aggressively managing costs, including implementing employee furlough programs affecting approximately 20,000 employees worldwide to align staffing levels with the slowdown in demand. The Company (i) initiated a restructuring program affecting approximately 11,000 employees in its U.S. RAC segment and U.S. corporate operations, the majority of which were previously furloughed; (ii) actively negotiated to abate or defer its airport rent and concession payments; (iii) substantially reduced capital expenditures; (iv) eliminated discretionary marketing spend; and (v) reduced commitments to purchase vehicles by approximately $4.0 billion from original commitments in its U.S. RAC segment, the majority of which were delivered during the second quarter of 2020. See Note 8, "Restructuring" for further information regarding the restructuring program disclosed above.

Although the Company had taken aggressive action to eliminate costs, it faced significant ongoing expenses, including monthly payments under its Amended and Restated Master Motor Vehicle Operating Lease and Servicing Agreement (Series 2013-G1) (the "Operating Lease") with Hertz Vehicle Financing LLC ("HVF"), pursuant to which Hertz leases from HVF vehicles used in the Company's U.S. rental car operations. Hertz Vehicle Financing II LP ("HVF II"), a special purpose financing subsidiary, issues asset-backed notes and lends the proceeds thereof to HVF to finance the acquisition of vehicles, which are then leased to Hertz pursuant to the Operating Lease. Monthly payments under the Operating Lease are variable and significant and are subject to volatility depending upon the changes in current market value estimates of the underlying leased vehicles. During April 2020, the Company engaged in discussions with various creditors to obtain relief from its obligations to make full rent payments under its Operating Lease. While such discussions were ongoing, to preserve liquidity, on April 27, 2020, Hertz did not make certain payments, including the full rent payments, in accordance with the Operating Lease.

As a result of the failure to make the full rent payments on April 27, 2020, 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 variable funding notes (“Series 2013-A Notes”) issued by HVF II.  As a result of the amortization event, and notwithstanding the forbearance agreement described below, proceeds from the sales of vehicles that collateralize the notes issued by HVF II were to be primarily applied to the payment of principal and interest under those notes and were not available to finance new vehicle acquisitions for Hertz. A liquidation event means that, unless the affected noteholders otherwise agree, the affected noteholders can direct the liquidation of vehicles serving as collateral for their notes.

On May 4, 2020, prior to the occurrence of the liquidation event with respect to the Series 2013-A Notes, Hertz, HVF, HVF II and DTG Operations, Inc. entered into a forbearance agreement (the “Forbearance Agreement”) with
14

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
holders (the “VFN Noteholders”) of the Series 2013-A Notes representing approximately 77% in aggregate principal amount of the Series 2013-A Notes. Pursuant to the Forbearance Agreement that became effective against all VFN Noteholders, the VFN Noteholders agreed to forbear from exercising their liquidation remedies. The Forbearance Agreement with the VFN Noteholders expired on May 22, 2020.

Concurrently with entering into the Forbearance Agreement, on May 4, 2020, Hertz entered into limited waiver agreements (collectively, the “Waiver Agreements”) with certain of the lenders (the “Lenders”) under its (i) Senior RCF/senior term loan facility, (ii) letter of credit facility, (iii) alternative letter of credit facility and (iv) U.S. Vehicle RCF (collectively, the “Facilities”). Pursuant to the Waiver Agreements, the Lenders agreed to (a) waive any default or event of default that could have resulted from the above referenced missed payment under the Operating Lease, (b) waive any default or event of default that had arisen as a result of Hertz’s failure to deliver its 2020 operating budget on a timely basis in accordance with the Facilities and (c) extend the grace period to cure a default with respect to Hertz’s obligation to reimburse drawings that occurred under certain letters of credit during the waiver period. The Waiver Agreements which were effective across the Facilities expired on May 22, 2020.

In accordance with the Forbearance Agreement and the Waiver Agreements, the Company made a payment of approximately $30 million reflecting certain variable payment elements of monthly rent under the Operating Lease, including an interest component on May 5, 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 May 22, 2020 (the "Petition Date"), Hertz Global, Hertz and certain of their direct and indirect subsidiaries in the U.S. and Canada (collectively the "Debtors" and the "Debtors- in-Possession") filed voluntary petitions for relief (collectively, the "Petitions") under chapter 11 of title 11 ("Chapter 11") of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Chapter 11 cases (the "Chapter 11 Cases") are being jointly administered 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, LLC ("Prime Clerk"), a third-party bankruptcy claims and noticing agent. The information on this web site is not incorporated by reference and does not constitute part of this Form 10-Q.

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 the Company’s operations, customers and employees. The Debtors are authorized to conduct their 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 their insurance program; (vi) use certain cash collateral on an interim basis; and (vii) continue their cash management system.

On July 24, 2020, the Bankruptcy Court entered an order related to the Operating Lease (the "Interim Lease Order") which, among other things, directed the Debtors to (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, will 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 are 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 from June 1, 2020 through September 30, 2020, the Company disposed of approximately 165,000 vehicles which are associated with the Interim Lease Order.

15

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
In September 2020, the Bankruptcy Court authorized the rejection of certain unexpired leases (the "Lease Rejection Orders") comprised of 257 off airport and 15 airport locations in the Company's U.S. RAC segment. In October 2020, the Bankruptcy Court authorized the rejection of certain unexpired leases (the "October Lease Rejections Orders") comprised of 29 airport and 24 off airport locations in the Company's U.S. RAC segment. See Note 7, "Leases" for further details.

Debtors-In-Possession

The Debtors are currently operating as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. In general, as debtors-in-possession under the Bankruptcy Code, the Debtors are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.

Automatic Stay

Subject to certain specific exceptions under the Bankruptcy Code, the Petitions automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to obligations of the Debtors incurred prior to the Petition Date ("Pre-petition"). Absent an order from the Bankruptcy Court, substantially all of the Debtors’ Pre-petition liabilities are subject to settlement under the Bankruptcy Code.

Potential Claims

The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. As part of the Chapter 11 Cases, parties believing that they have claims or causes of action against the Debtors may file proofs of claim evidencing such claims. Certain holders of Pre-petition claims that are not governmental units were required to file proofs of claim by the deadline for general claims, which was on October 21, 2020 (the “Bar Date”).

The Debtors' have received approximately 13,400 proofs of claim for an amount of approximately $104.9 billion. Such amount includes duplicate claims across multiple debtor legal entities. These claims will be reconciled to amounts recorded in the Company's accounting records. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate. The Company may ask the Bankruptcy Court to disallow claims that the Company believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. As a result of this process, the Company may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise. As of the date of this Quarterly Report on Form 10-Q, the Company’s assessment of the validity of claims received has not been completed. In light of the substantial number of claims filed, and expected to be filed, the claims resolution process may take considerable time to complete and likely will continue after the Debtors emerge from bankruptcy.

Borrowing Capacity and Availability

The filing of the Chapter 11 Cases constituted defaults, termination events and/or amortization events with respect to certain of the Company's existing debt obligations. As a result of the filing of the Chapter 11 Cases, the remaining capacity under almost all of the Company's revolving credit facilities was terminated, as disclosed in Note 6, "Debt." Consequently, the proceeds of sales of vehicles which serve as collateral for such vehicle finance facilities must be applied to the payment of the related indebtedness of the Non-Debtor Financing Subsidiaries (as defined in Note 6, "Debt") and are not otherwise available to fund the Company’s operations. Additionally, the Company is precluded from accessing any of its subordinated investment in the vehicle collateral until the related defaults are waived or the third party funding under those facilities has been retired, either through the monetization of the underlying collateral or the refinancing of the related indebtedness. Additionally, proceeds from vehicle receivables, excluding
16

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
manufacturer rebates, as of September 30, 2020 and ongoing vehicle sales must be applied to vehicle debt in amortization.

The Company currently has waivers related to the filing of the Chapter 11 Cases under its European Vehicle Notes, European ABS and U.K. Fleet Financing facility that were extended to December 31, 2020, as disclosed in Note 6, "Debt."

The Company's inability to access its Senior RCF facility or retain any proceeds from the sale of vehicles under its U.S. ABS programs means that its source of liquidity is almost entirely its cash and cash equivalents on hand, cash generated from its operations and other new financing opportunities to the extent available. As of September 30, 2020, the Company had $1.1 billion of unrestricted cash and unrestricted cash equivalents which the Company believes will be sufficient to fund its operations through approximately December 31, 2020, assuming it does not experience any unforeseen liquidity needs before then, which could result in the utilization of the liquidity in advance of December 31, 2020. The Company believes, however, that if, among other things, (i) it cannot successfully extend the international vehicle debt waivers that expire on December 31, 2020, as disclosed in Note 6, "Debt," (ii) it cannot successfully implement a plan of reorganization, and (iii) there is not a significant recovery in the economic conditions in its major markets, its available cash and cash equivalents and cash generated by its operations will not be sufficient to fund operating requirements for the next twelve months. Consequently, the Debtors pursued vehicle financing for certain of their operations, either through waivers on existing facilities or entering into new arrangements to fund vehicles and vehicle leases, to supplement their sources of funding.

On October 12, 2020, the Bankruptcy Court entered an order authorizing Hertz and Donlen Corporation to enter into certain agreements in connection with a new asset-based securitization facility with a newly formed non-Debtor special purpose entity, Donlen Fleet Lease Funding LLC ("DFLF"). 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."

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 United States and Canada, in each case that are debtors in these Chapter 11 Cases, as guarantors, entered into a Senior Secured Superpriority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”). The DIP Credit Agreement provides for a superpriority secured debtor-in-possession credit facility comprised of delayed-draw term loans in an aggregate amount of up to $1.65 billion (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. See Note 6, "Debt" for further details.

On November 5, 2020, Hertz Global issued a press release announcing that it secured commitments for fleet financing totaling $4 billion and has filed a motion for approval of Hertz entering into the documentation for the financing by the Bankruptcy Court. Upon approval, and together with the up to $1 billion of the Company's debtor-in-possession financing that may be used for equity in the fleet financing subsidiary, the Company will have access to up to $5 billion in total funding to support its fleet financing needs.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s ability to continue as a going concern is contingent upon its ability to successfully implement a plan of reorganization, among other factors, and the realization of assets and the satisfaction of liabilities are subject to uncertainty. Further, any plan of reorganization could materially change the amounts of assets and liabilities reported in the accompanying condensed consolidated financial statements. The
17

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Chapter 11 Cases. As a result of the Company's financial condition, defaults under certain debt agreements as disclosed in Note 6, "Debt," and the risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that the Company will be able to continue as a going concern for one year from the issuance date of this Quarterly Report on Form 10-Q.

NYSE Delisting and Transfer to the Over-the-Counter ("OTC") Market

On May 26, 2020, the Company received a letter from the staff of NYSE Regulation, Inc. that it had determined to commence proceedings to delist the common stock of Hertz Global from the NYSE in light of the Company’s disclosure on May 22, 2020 that it had commenced voluntary petitions for reorganization under Chapter 11. The Company appealed the determination in a timely manner and requested a hearing before the NYSE. On October 15, 2020, the NYSE heard the Company’s appeal. On October 29, 2020, the NYSE informed the Company, and publicly announced its determination following such appeal, that Hertz Global common stock is no longer suitable for listing on the NYSE and that the NYSE has suspended trading in Hertz Global's common stock (NYSE ticker symbol: HTZ) after the market close on October 29, 2020. On October 30, 2020, the NYSE applied to the Securities and Exchange Commission 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.

As a result of the suspension and expected delisting, Hertz Global's common stock began trading exclusively on the OTC market on October 30, 2020 under the symbol HTZGQ.

Note 2—Basis of Presentation and Recently Issued Accounting Pronouncements

Basis of Presentation

This Quarterly Report on Form 10-Q combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 2020 of Hertz Global and Hertz. Hertz Global consolidates Hertz for financial statement purposes, therefore, disclosures that relate to activities of Hertz also apply to Hertz Global. In the sections that combine disclosure of Hertz Global and Hertz, this report refers to actions as being actions of the Company, or Hertz Global, which is appropriate because the business is one enterprise and Hertz Global operates the business through Hertz. When appropriate, Hertz Global and Hertz are named specifically for their individual disclosures and any significant differences between the operations and results of Hertz Global and Hertz are separately disclosed and explained.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

Effective on the Petition Date, the Company applied accounting standards applicable to reorganizations, Accounting Standards Codification 852 - Reorganizations, in preparing the accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020 which requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Accordingly, Pre-petition obligations of the Debtors that may be impacted by the Chapter 11 Cases have been classified as liabilities subject to compromise in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020. These liabilities are reported at the amounts the Company anticipates will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts. See Note 16, "Liabilities Subject to Compromise," for additional information. In addition, certain charges related to the Chapter 11 Cases are recorded as reorganization items, net in the accompanying unaudited condensed consolidated statements of operations for the
18

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
three and nine months ended September 30, 2020. See Note 17, "Reorganization Items, Net," for additional information.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes. Actual results could differ materially from those estimates.

The December 31, 2019 unaudited condensed consolidated balance sheet data is derived from the audited financial statements at that date but does not include all disclosures required by U.S. GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with information included in the Company's Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC") on February 25, 2020.

Certain prior period amounts have been reclassified to conform to current period presentation.

Principles of Consolidation

The unaudited condensed consolidated financial statements of Hertz Global include the accounts of Hertz Global, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The unaudited condensed consolidated financial statements of Hertz include the accounts of Hertz, its wholly owned and majority owned U.S. and international subsidiaries and its VIEs, as applicable. The Company consolidates a VIE when it is deemed the primary beneficiary of the VIE. The Company accounts for its investment in joint ventures using the equity method when it has significant influence but not control and is not the primary beneficiary of the joint venture. All significant intercompany transactions have been eliminated in consolidation.

Recently Issued Accounting Pronouncements

Adopted

Measurement of Credit Losses on Financial Instruments

In June 2016, the Financial Accounting Standards Board (the "FASB") issued guidance that sets forth a current expected credit loss impairment model for financial assets, which replaces the current incurred loss model, and issued amendments and updates to the new standard in 2018 and 2019. This model requires a financial asset (or group of financial assets), including trade receivables, measured at amortized cost to be presented at the net amount expected to be collected with an allowance for credit losses deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The Company adopted this guidance when effective, on January 1, 2020, using a modified retrospective transition method. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows.

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement

In August 2018, the FASB issued guidance on a customer's accounting for implementation fees paid in a cloud computing service contract arrangement that addresses which implementation costs to capitalize as an asset and which costs to expense. Capitalized implementation fees are to be expensed over the term of the cloud computing arrangement, and the expense is required to be recognized in the same line item in the income statement as the associated hosting service expenses. The entity is also required to present the capitalized implementation fees on the balance sheet in the same line item as the prepayment for hosting service fees associated with the cloud computing arrangement. The Company adopted this guidance when effective, on January 1, 2020, using a prospective transition method. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
The Company has hosting arrangements in connection with its Enterprise Resource Planning systems. Prior to the adoption of this guidance, the Company capitalized certain implementation costs for its hosting arrangements in intangible assets, net, in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2019. Subsequent to the adoption of this guidance on January 1, 2020, the Company records implementation fees incurred in connection with its hosting arrangements in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheet as of September 30, 2020.

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by removing certain exceptions in existing guidance and improves consistency in application by clarifying and amending existing guidance. This guidance is effective for annual periods beginning after December 15, 2020, and interim periods within those annual periods. On July 1, 2020, the Company adopted this guidance early, as permitted, on a prospective basis, where adjustments as of January 1, 2020 were not material; therefore adoption of this guidance had no material impact on the Company's financial position, results of operations or cash flows.

Not Yet Adopted

Facilitation of the Effects of Reference Rate Reform

In March 2020, the FASB issued guidance that provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform initiatives. This guidance is effective beginning March 12, 2020 through December 31, 2022 where the transition method varies depending upon the specific expedient or exception. The Company is in the process of assessing the available expedients and exceptions and, if applicable, the method and timing of adoption.

Note 3—Divestitures

Sale of Non-vehicle Capital Assets

During the first quarter of 2020, the Company received additional cash from the sale of certain non-vehicle capital assets in its U.S. Rental Car segment, which was completed in the fourth quarter of 2019, and recognized an additional $20 million pre-tax gain on the sale, which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statement of operations for the nine months ended September 30, 2020.

Sale of Marketable Securities

During the first quarter of 2020, the Company sold marketable securities for $74 million and recognized an immaterial gain on the sale in its corporate operations, which is included in other (income) expense, net in the accompanying unaudited condensed consolidated statement of operations for the nine months ended September 30, 2020.

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HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
THE HERTZ CORPORATION AND SUBSIDIARIES
(DEBTORS-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Unaudited
Note 4—Revenue Earning Vehicles

The components of revenue earning vehicles, net are as follows: