(NYSE: HTZ)

Richard Hunt '14 (RHunt14@gsb.columbia.edu)

Stephen Lieu '14 (SLieu14@gsb.columbia.edu)
Rahul Raymoulik '14 (RRaymoulik14@gsb.columbia.edu)
Investment Thesis – Multiple Drivers of Value
 We recommend investors buy Hertz (HTZ) stock with a As of 4/19/13; in USD m except per share data
target share price of $36.00, which represents ~52% upside
Current Capitalization
from the current share price
Stock Price $23.72
Diluted Shares Outstanding (M) 462.0
Four Main Points to Investment Thesis Market Cap $10,959
 The market significantly underestimates the impact of Corporate Debt 6,545
Hertz's recent merger with Dollar Thrifty, which marks the Cash (1,105)
completion of a ten-year consolidation that dramatically Unfunded Pension Liability 227
improves the competitive dynamics of the industry Enterprise Value $16,626

 The market underestimates the levers Hertz can pull to Trading Statistics
counter the negative impact of falling used car prices 52-Week Range $10.22-$24.28
Dividend Yield 0.0%
 Hertz has strong revenue growth opportunities in the U.S. Avg. Daily Volume (M) 7.7
and will realize significant revenue and cost synergies Short Interest as % of Float 11.0%
through its acquisition of Dollar Thrifty
Summary Valuation
 Divestiture of non-core Equipment Rental business would 2013e 2014e
unlock substantial value by deleveraging the balance sheet EV / Revenue 1.5x 1.4x
EV / EBITDA 7.4x 6.4x
P/E 12.5x 9.9x

2
Business Overview
Business Description Rental Locations
 Car Rental (2012 rev: $7.6bn): Operates through the  With the acquisition of Dollar Thrifty, the Company has
Hertz, Dollar and Thrifty brands. Rents cars that the over 10,000 locations across the United States and 17
company owns or leases. Maintains a substantial network of other countries
car rental locations both in the United States and
internationally, and the largest number of airport car rental U.S. Intl Total
locations in the world Staffed rental locations 3,210 1,215 4,425
 Equipment Rental (2012 rev: $1.4bn): Operates through Airport 642 304 946
HERC brand. Rents a broad range of industrial, construction Off-airport 2,568 911 3,479
and material handling equipment. Also sells new equipment Non-staffed locations 1,360 150 1,510
and consumables. One of the largest equipment rental Total Corporate 4,570 1,365 5,935
companies in North America
Franchised / Licensee 4,335
Revenue Breakdown Total Locations 10,270
Equip
Segment Geography
ment International Countries
Rental
15% Intl Puerto Rico France Slovakia
30% U.S. Virgin Islands Germany United Kingdom
Car Canada Italy China
Rental United Brazil Luxembourg Australia
85% States Belgium Netherlands New Zealand
70%
Czech Republic Spain

3
Consolidation Improves Industry Competitive Dynamics
Industry Consolidation Focus Shifted to Profitability
100%  Hertz's acquisition of Dollar Thrifty marks the
90% completion of an industry consolidation that,
over the past ten years, has gone from six
80% separate rental car companies to only three
70% today
60%
 The three remaining players now have incentive
50% to focus on profitability instead of market share
40%
30% Pricing Environment Already Improving
20% $65
10%
$55
0%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

2011
$45
2012
Enterprise Hertz $35 2013
Avis Dollar / Thrifty
National / Alamo Budget $25

Sept
Mar
Jan
Feb

Apr

Jun
Jul

Oct
Aug

Dec
Nov
May
Other

4
Market Underestimates Improved Pricing Environment
Overly Conservative Pricing Guidance
 Management's revenue and EPS guidance assumes no
pricing growth
 Sell-side analyst consensus estimates assume a 1% increase
in pricing
“On pricing, it's very conservative assumptions where we
really don't try to assume any price increases in our
models.”
– Hertz CEO in April 2013
Strong Pricing Environment w/ Price Signaling
“One of the headlines I'd like to make is we don't want to
gain share by reducing price. We want to gain share by
increasing value, and that's how we're doing it.”
– Hertz CEO in April 2013
“We're seeing our competitors move for profitability, rather
than share, and that has a positive impact on all of us.”
– Avis CFO in February 2013

Impact of Pricing on Valuation
 1% increase in U.S. RPD results in a 6% increase in share
price
Sensitivity to U.S. RPD Growth Y/Y
0.0% 1.0% 2.0% 3.0% 4.0%
2014e EBITDA $2,610 $2,734 $2,859 $2,985 $3,112
2014e EPS $2.44 $2.62 $2.79 $2.96 $3.14
Price Target $30.80 $32.88 $34.97 $37.08 $39.20
PT % Increase 6.8% 6.4% 6.0% 5.7%
“We've been very aggressive in initiating price increases
over the last 4 months or so and I think that's had a
positive impact. And we've seen a fairly good matching of
increases by both Hertz and the Enterprise.”
– Avis CFO in March 2013
5.0%
$3,239
“We made a strategic decision to minimize our
$3.31
participation with less profitable commercial accounts.”
$41.34
5.4% – Hertz CEO in February 2013

5
Misunderstood Impact of Used Car Prices
Hertz Does Not Track Manheim Index Non-Program Car Purchases Reduce Fleet Costs
Manheim Index Hertz Residual Values  Sharp Decline in Program Car Purchases: Since 2006,
145 the percentage of program cars purchased fell from 61%
+10% to just 19% today. Program cars are repurchased by car
Manheim Used Car Value Index

140
manufacturers for a specific price
135
 Save 1% on auto purchase price
130
 Allow for more profitable resale channels
125
 Significant Shift Away from Auctions: Since 2009,
120 auction sales fell from 88% of non-program car sales to
115 -3% just 33% today
110  Only Halfway Through this Successful Transition:
105
Depreciation per month should be flat (even if used car
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12

Jul-12
Aug-12
Sep-12
Jun-12

prices fall) as fewer program cars are purchased and

more profitable channels are utilized

6
Strong Growth Opportunities in U.S.
Off-Airport Locations – 14% yoy Growth
 12% share in a three-player market: Since 2006,
Hertz has increased its off-airport locations by more
than 60% and expects a 9.6% increase in 2013. It has a
significant opportunity to capture more share from the
insurance replacement market
 Significant opportunity to expand Dollar Thrifty to
off-airport locations
24/7 Video Kiosks Increase Efficiency
 Expands Hours to 24/7: Self-serve kiosks allows 24/7
rentals, which increases fleet utilization in a cost-effective
manner
 Allows for Rapid Expansion of Off-Airport Network:
Asset-light model will increase returns on capital. Kiosks
make it significantly easier to move into body shops, auto
dealerships, and hotels
 Significantly Reduces Labor Costs: Live agents
maintain a high-quality, personal experience for customers
in a cost-effective manner
Value Segment – 25% yoy Growth
 Dollar Thrifty will capitalize on value trend: The value
segment is the fastest growing on-airport rental car market
with over 25% growth in 2012. We expect the Dollar
Thrifty brands to continue double-digit growth in 2013-
2014
Hourly Rentals – 30% yoy growth
 Hertz On Demand (hourly rentals) will expand to 3,500
locations by Q3 2013: We expect little to no
cannibalization from the continued expansion of this
business
 All of Hertz's ~500,000 U.S. vehicles will have On
Demand technology by the end of FY2014
7
Significant Synergies from Dollar Thrifty Acquisition
Revenue Synergies ~$300 million
 Leverage Global Partners: Hertz's travel partners such as
airlines, hotels, and AAA currently represent 30% of Hertz
revenue. These partners have strong interest in adding the
Dollar Thrifty brands. Lufthansa and AAA have already
started to offer all three brands
 Europe Corporate Expansion: Dollar Thrifty currently
has no corporate locations in Europe. Hertz is adding Dollar
Thrifty to its European locations
 Expand Off Airport: Hertz is adding the Dollar Thrifty
brands to the majority of its off-airport locations
Revenue Synergies $300M
Other, 6%
Expand Off
Airport, 17% Leverage
Global
Partners, 40%
Europe
Corporate
Expansion,
37%
Cost Synergies ~$300 million
 Fleet: With the combined company, Hertz will see
savings from more efficient buying, selling, and
optimizing vehicle usage during ownership
 IT: Savings driven by the roll-out of advanced
technology to Dollar Thrifty
 Procurement: The combined company will see savings
from more efficient non-fleet purchasing
 Financing, Other: DTG’s blended fleet interest rate is
4.9% while Hertz's is 4.0%. The combined company
will be able to command lower financing rates
Cost Synergies $300M
Financing,
Other, 14%
Procurement, Fleet, 40%
15%
IT, 31%
8
HERC Divestiture – 20% Incremental Upside
 HERC operates in an extremely cyclical and fragmented industry, follows an acquisitive growth strategy, and has caused a
chronic drag on Hertz's consolidated ROIC relative to the car rental business
 We believe divesting HERC would be most prudent for the company as it would:
 Significantly deleverage Hertz's balance sheet and help the company reach investment grade corporate debt rating sooner

 Lower interest expense and unlock value by causing an immediate EPS accretion in the range of $0.14-$0.19 plus
additional value of $2.90 per share
 Allow deployment of FCF towards a share buyback and/or dividend program

 Allow Hertz management to focus solely on the core and higher-return car rental business, Dollar Thrifty integration, and
new growth areas
 Allow HERC management to focus on growing the business organically and through acquisitions

 Potential buyers of HERC include United Rentals, Sunbelt Rentals, and private equity firms
Proceeds from Sale of HERC Before Divestiture Sale Spinoff
HERC EBITDA (2014e) $675 After-Tax Proceeds $0 $3,820 $2,836 “We've always maintained
x EV/EBITDA 6.2x Long-term debt (2013e) 6,184 2,363 3,348
the position that if there
Pre-tax proceeds $4,187 Total Debt / EBITDA 2.6x 1.2x 1.7x
Cost Basis 3,140 Interest Expense 340 83 117 was a reason to divest it
Gain on Sale 1,047 Blended Cost of Debt 5.5% 3.5% 3.5% that was shareholder
Tax on Gain 366 Fleet Interest 343 300 300 friendly, we're not resistant
After-Tax Proceeds $3,820 Fleet Interest Rate 4.0% 3.5% 3.5% to looking at other things
Decrease in Interest Expense 300 266
Proceeds from Monetizing Spin-off ∆ Net Income less income from HERC 87 65
and other variables in
HERC EBITDA (2014e) $675 ∆ EPS $0.19 $0.14 terms of the equipment
x Debt / EBITDA 4.2x Forward P / E 12.5x 12.5x rental business.”
After-tax proceeds $2,836 Increase in Value per Share from ∆ EPS $2.35 $1.75
Remaining Value to Shareholders 1,350
– Hertz CEO in
Remaining Value per Share 2.90 February 2013
Total Value to Shareholders $2.35 $4.65

9
Valuation Analysis
Methodology Target Price
 Hertz currently trades at 7.4x forward ($ millions except per share) Base Bear Bull Street

EV/EBITDA versus its pre-crisis average FY2014 Estimates

Car Rental EBITDA $2,413 $1,828 $2,727 $2,143
of 8.5x
Equipment Rental EBITDA 509 432 539 453
 On a forward P/E basis, Hertz currently Consolidated EBITDA $2,922 $2,261 $3,266 $2,596
EPS $2.87 $1.90 $3.39 $2.38
trades at 12.5x
Target Forward Multiples
 This is a significant discount relative P/E 12.5x 11.0x 13.0x 12.5x
EV/EBITDA 7.4x 6.0x 8.0x 7.4x
to its historical average forward P/E of
SOTP: Car Rental 7.4x 6.0x 8.0x 7.4x
14.0x and pre-crisis average of 15.4x SOTP: Equipment Rental 6.2x 5.0x 6.5x 6.2x

 Based on an average of P/E, EV/EBITDA Price per Share

P/E x EPS $35.93 $20.91 $44.06 $29.80
and SOTP analysis, we arrive at a target
EV/EBITDA x EBITDA $36.73 $18.87 $46.90 $31.53
share price of $36 or +52% upside to SOTP $35.41 $17.89 $45.16 $30.36
today's share price Target Price $36.00 $19.00 $45.00 $30.56
Upside (Downside) 52% (20%) 90% 29%
 Divestiture of HERC would lead to
incremental 20% upside Key Assumptions
RPD CAGR (FY'12-'14) 2.5% (1.0%) 3.5% 0%-1%
Manheim Index CAGR (FY'12-'14) (3.0%) (5.0%) (2.0%) (2%)-(4%)
Chg. in Residual Value due to Channel Mix Shift $256 $0 $383 $125-$175
Cost Synergies (FY2014) $250 $150 $300 $300

10
Strong Management Team & Cash Returns
Key Management Cash Return to Shareholders
 Strong management team with  Strong FCF generation would allow Hertz to pay down
laser focus on costs, returns, corporate debt and achieve target Net Debt/EBITDA ratio
and customer satisfaction of 1.6x by 2014
 Sales per employee +6% and  Management has repeatedly asserted that Hertz will return
operating margin +520bps cash to shareholders once it meets its target leverage ratio
Mark P. Frissora from 2008 to 2012  We expect Net Debt/EBITDA to fall below 1.6x in 2014,
Chairman & CEO
 Management incentives are which should be followed by significant dividend and/or
aligned with shareholders share repurchase programs
 Changing incentives: increased  Payout of 35% of FCF as share repurchase could
weighting of EVA reflects accelerate EPS growth by an incremental +6%
structurally healthier company
and industry
Elyse Douglas  Consistently conservative
Chief Financial Officer guidance: Frissora has beaten
the high end of his guidance
every year except 2008

“There was one time when we had a customer complain to

corporate. Frissora happened to be in town that week and
showed up here unannounced in jeans and a sweater to
figure out with us a way we could resolve the issue.”
–Manager, Hertz Off-Airport Manhattan Location

11
Risks and Mitigants
 A drop in global GDP or enplanements could materially impact Hertz's profitability
 Hertz has been profitable through cycles. During phases of weak demand, Hertz sells down its fleet to cut
capacity and maintain stable pricing. In 2008 and 2009, Hertz reduced its fleet size by 1% and 10% and
earned $237 and $199 (EBT) respectively
 We believe that Hertz's shift to off-airport locations, especially the non-cyclical insurance market, mitigates
this risk

 Our expectations of a cooperative oligopoly could be incorrect

 We believe that there is a high probability that Hertz, Avis, and Enterprise will avoid destructive price wars,
especially given the changing incentives and price signaling seen from Hertz

 Given Hertz's high financial leverage, rising interest rates may adversely impact profitability and FCF conversion
 The option to sell HERC and use the sale proceeds to pay down debt mitigates this risk

12
Investment Recommendation: Buy Hertz at $23

Multiple drivers to realize Hertz's intrinsic value of $36 per share

1 Industry consolidation dramatically improves pricing environment

2 Used car market risk is misunderstood

3 Strong revenue growth opportunities in the U.S. and significant revenue and cost
synergies from Dollar Thrifty acquisition

4 Divestiture of Equipment Rental segment would unlock substantial value

13
Primary Research Source List
Current and Former Employees Current Shareholders
 Mark Frissora Chairman & CEO  Oscar Schafer Rivulet Capital
 Elyse Douglas Senior Exec. VP & CFO  Michael Smeets** Fir Tree Partners
 Scott Sider President RAC Americas  Dan Monaco Fidelity Investments
 Lois Boyd President Hertz Equipment Rental  Dennis Hong Altimeter Capital
 Tom Callahan President Donlen  Steve Bischoff 40 North Industries
 Bob Stuart Exec. VP Global Sales & Marketing
 Rob Moore Sr. VP, IT Services Other Investment Funds
 Scott Massengill Sr. VP & Treasurer
 Michael Karsch Karsch Capital Management
 Jatindar Kapur Sr. VP & Corporate Controller Anna Baghdasaryan**
 Cannot disclose Tech Initiative Project Manager  Ethan Binder Slate Path Capital
 Cannot disclose Former Sr. Director of Remarketing  Danilo Santiago Rational Asset Management
 Cannot disclose Dealer Direct Salesman  Jon Luft Eagle Capital Partners
 Cannot disclose Former Hertz Franchisee  Cristiano Amoruso** Starboard Value
 Pallav Gupta MSD Capital
Industry Sources  Jason Perri Apollo Global Management
 Luke Froeb Former Chief Economist of the FTC  Investment team Roystone Capital
 Tom Webb Chief Economist of Manheim
 Neil Abrams Leading Industry Source for Pricing Sell-Side Analysts
 Scott White Former Head of Bus Dev at Budget  David Lim Wells Fargo
 John Hunt Hunt Ford Chrysler Dealer Principal  Chris Agnew MKM Partners

** Former Pershing Square Challenge Winner

14
Supplementary Materials

15
Table of Contents
Appendix A: Thesis 17 Appendix D: Ownership 66
Industry Consolidation 18 Private Equity Ownership 67
Used Car Market 27 Current Shareholder Base 68
Growth Opportunities 38
Dollar Thrifty Acquisition 42 Appendix E: Additional Analysis 69
Equipment Rental Business 44 Industry’s Improved Pricing Sustainable? 70
Rental Car Pricing Sources 71
Appendix B: Base Case Financials and Valuation 46 Why Hertz Over Avis? 72
Financial Summary 47 European Car Rental Market 73
EPS Bridge 53 Economic Downturn 74
EBITDA Bridge 54 Debunking Myths About Hertz 75
Model Sensitivities 55 Stock Price History 76
Equity Trading Comps 56 Competitor Overview - Avis 77
Sum-of-the-Parts Valuation 58 Fit with Pershing Square Criteria 78
Unit Economics 59
Appendix F: Downside Case Financials 79
Appendix C: Management 61
Key Management Biographies 62 Appendix G: Upside Case Financials 85
Track Record 63
Compensation Incentives 65 Appendix H: Team Member Bios 91

16
Appendix A: Thesis

17
Industry Consolidation – Timeline
A Series of Acquisitions have Consolidated the Car Rental Market

November 2002: March 2009: November 2012:

Avis acquires Hertz acquires Hertz acquires
Budget Advantage Dollar Thrifty

2002… …2007 2008 2009 2010 2011 2012 2013

August 2007: October 2011: March 2013:

Enterprise acquires Avis acquires Avis acquires
National / Alamo Avis Europe ZipCar

18
Industry Consolidation – Current Snapshot
Today, Three Players Comprise >90% of the U.S. Rental Car Industry

Hertz Corporation Avis Budget Corp Enterprise Holdings

19
U.S. Market Share Over Time
100%

90%

80%

70%
Other
60% Budget
National / Alamo
50%
Dollar / Thrifty
40% Avis
Hertz
30% Enterprise

20%

10%

0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Auto Rental News

20
U.S. Market Share: On-Airport and Off-Airport
On-Airport Market in U.S. Off-Airport Market in U.S.

Other 2%

Other 9%
Hertz 12%

Avis
Avis Budget
Hertz 39% Budget 10%
26%

Enterprise
Enterprise
69%
33%

~$12.5 billion market ~$11.0 billion market

21
U.S. Car Rental RPD – Hertz
 Since Hertz's IPO in late 2006, Hertz's U.S. rental car rates (RPD) have decreased 19 out of the past 24
quarters, including the last nine quarters
 Following the close of the Dollar Thrifty acquisition in November 2012, Hertz's management noted that
U.S. pricing improved during the latter portion of the fourth quarter, culminating in December airport
RPD increasing 1.6% and January airport RPD increasing 6.0%

8% Hertz U.S. RPD Growth (y/y)

6%

4%
RPD Growth (y/y)

2%

0%

(2%)

(4%)

(6%)

(8%)

Hertz has seen pricing improve since the Dollar Thrifty acquisition

22
U.S. Car Rental RPD – Avis
 Since Q1 2007, Avis' U.S. rental car rates (RPD) have decreased 17 out of the past 24 quarters,
including the last 11 quarters
 Following the close of the Dollar Thrifty acquisition in November 2012, Avis' management noted that
U.S. pricing improved in December, January, February and March

Avis U.S. RPD Growth (y/y)

10%

8%
RPD Growth (y/y)

6%

4%

2%

0%

(2%)

(4%)

Avis has seen pricing improve since the Dollar Thrifty acquisition

23
Post-Consolidation Pricing Environment
With respect to pricing, we are seeing a pretty healthy
environment toward the end of the fourth quarter and into
the first quarter. And I think there are a few things that are
probably driving it. The first is that we've redoubled our
own efforts to push for pricing wherever we can. And I think
those are having an impact. I think we have an industry that
is generally right-fleeted. And then on top of that, I think
we're seeing our competitors move for profitability, rather
than share or other potential objectives, and that has a
positive impact on all of us.
- Avis CFO in March 2013
Unprecedented RAC pricing is converting skeptics to
believers. U.S. RAC pricing turned positive just after HTZ-
DTG, fuelling the bull case for a new era of pricing power
(top 3 players control 98% of U.S. on-airport). U.S. pricing
was +5% in Jan and also strong in Feb/Mar. Avis initiated
another price increase effective for Apr 8, which was
quickly followed by Enterprise.
- Morgan Stanley in March 2013
We made a strategic decision to minimize our participation
with less profitable commercial accounts. In January
commercial revenue per day was actually positive compared
with the prior year.
– Hertz CEO in February 2013
One of the headlines I'd like to make is we don't want to
gain share by reducing price. We want to gain share by
increasing value, and that's how we're doing it.
– Hertz CEO in April 2013
We've been very aggressive in initiating price increases
over the last 4 months or so (post the Dollar Thrifty
acquisition), and I think that's had a positive impact. What
we watch for is the extent to which our competitors react to
that with increases. And we've seen a fairly good matching
of increases by both Hertz and the Enterprise.
– Avis CFO in March 2013
24
Post-Consolidation Pricing Environment (cont.)
The real issue becomes whether anyone is taking a very
different view on pricing and not moving pricing up when
the rest of the industry is, because that clearly can have an
impact. I think in an environment where there are three
competitors rather than four, there's obviously a little bit
less risk of that happening.
- Avis CFO in March 2013
Enterprise says rates at some of the top 200 airports their
brands serve were up to 4% higher in February than
during that month last year.
- USA Today, February 2013
In (car rental) markets with four brands, each separately
owned, the merger of two brand-owners increases average
prices 4%.
- Former Chief Economist of the FTC

Average Pricing of Six Major Airports, May 2011 to February 2013

$65

$55

2011
$45
2012
2013
$35

$25
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Source: Rate-Highway

25
Structural Shift in Rental Car Pricing Environment
 Historically, the major auto manufacturers (GM, Chrysler, Ford) overproduced cars and used the rental
car market as a means to unload excess production
 This resulted in consistent over-fleeting and under-utilization in the car rental market
 In order to increase utilization, car rental companies were incentivized to lower prices, ultimately
resulting in a highly competitive pricing environment marked by low returns

 As a result of the major restructurings of GM, Chrysler, and Ford, auto manufacturers have become
much more rational with their production
 This has significantly mitigated over-fleeting in the car rental market and increased utilization
– Car rental utilization rates across the industry are at their all-time high
– High utilization dis-incentivizes car rental companies from competing on price
– Renewed focus on returns and profitability

Restructuring in the Auto Manufacturing Industry marks a

Structural Shift in Rental Car Pricing Environment

26
 Manheim Used Car Value Index

90
95
100
105
110
115
120
125
130
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Used Car Market Analysis

Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Used car prices must fall by 5.7% to return to pre-crisis levels
Manheim Used Car Value Index is within 5% of All-Time High

Apr-12
Jul-12
Oct-12
Jan-13
27
Used Car Market Analysis (cont.)
 Competing supply of off-lease vehicles expected to Supply Increase is Around the Corner
significantly rise in 2013-2014
Off-Lease Volume New Lease Originations
 Off-lease volumes are set to increase 55% by 2014.
3.0
Off-lease vehicles directly compete with Hertz's
supply of used cars, which put downward pressure
2.5
on residuals

Cars (in millions)

 Ford, GM, and Chrysler drastically reduced vehicle 2.0
leases during the financial crisis. Off-lease volumes
today, which lag lease originations by 33 months, 1.5
are close to an all-time low. We expect them to
increase 6% in 2013 and 27% in 2014 1.0
Competing
Supply
 By 2014, we expect an increase of 550,000 off-lease 0.5 +55%
vehicles, which represents 42% of 2012 car rental
sales 0.0
'05 '06 '07 '08 '09 '10 '11 '12 '13E '14E
 Despite the significant increase, we expect off-lease
volume in 2014 to be less than that in 2008
“Supply is definitely going to increase. The off-retail
lease volume is a competitive impact.”
– Tom Webb, Manheim's Chief Economist

The widely expected supply increase is around the corner

28
Used Car Market Analysis (cont.)
Upcoming Increase in Supply – It's Different This Time
Healthier OEMS = Healthier Residuals
 Restructured OEMs have abandoned destructive
practices
 Rationalized capacity at Big 3 automakers means
that practices that destroyed residual values will be
gone: big incentives, high dealer inventories,
excessive lease subsidies, and short rental cycles
 Rental car companies now have rational relationships
with OEMs
 The shift to a risk model means that OEM excess
capacity is no longer pushed through to rental car
companies, which leads to a more rational supply
and protects residual values
We are in a new era of structurally higher used car residual values
Shift to Online Purchases = Healthier Residuals
 Online buying makes retail and direct-to-dealer
channels much easier to operate and more likely to
succeed
 Rapid changes in technology has changed the way
dealers and individuals buy cars
 58% of used car buyers say the Internet was the
most influential element in their vehicle search
 Online buying transforms local markets to national
markets
 Fewer national used car market inefficiencies leads
to structurally higher residual values
 The average distance between buyers and sellers is
190 miles for local auction purchases vs. 439 miles
for online purchases
29
Used Car Market Analysis (cont.)
If Prices Fall, Hertz has Many Levers to Pull
Increase Direct-to-Dealer Mix Increase Retail Mix
 Hertz can increase its Dealer Direct mix to mitigate  Hertz can increase its Retail/Rent2Buy mix to mitigate
falling prices falling prices
 Increasing the Dealer Direct channel by 10%  Increasing the Retail/Rent2Buy channel by 10%
decreases depreciation/unit/month by 1.1% decreases depreciation/unit/month by 3.1%

Increase Holding Period in a Downside Scenario Increase Prices in a Downside Scenario

 Hertz can increase its rental holding period to mitigate
falling prices
 Increasing average fleet holding period by three
months decreases depreciation/unit/month by 0.6%
 Falling residuals affect all rental car companies
 In the past, pricing has increased after significant
declines in used car residual values (72% R-squared)

Hertz has many ways to mitigate declines in used car prices

30
Used Car Market Analysis (cont.)
Hertz has significantly outperformed the Manheim Index since Jan 2011
“While people are forecasting this headwind
Manheim Index Hertz Residual Values
from a drop in the Manheim Index, we are not
145 experiencing it. It's due to the shift in channels,
where we're selling the cars and how we're
140 +10% selling them, and that's improving our fleet
Manheim Used Car Value Index

costs.”
135
“Is [lower depreciation] sustainable? We
130 believe it is sustainable in our business model.
We believe that used cars are probably the most
125 liquid currency out there, and that if you look
at over the last 40 years used cars have always
120 held their value. I mean, after 9/11 they
bounced back in four months. After 2008, 2009
115 -3% they bounced back in six months to higher
levels than they were before.”
110
“We feel really good about fleet costs
105 continuing to go down, based on only being
Jan-11

Jan-12
Mar-11

Aug-11

Nov-11

Mar-12

Aug-12
Jul-11

Dec-11
Apr-11

Apr-12

Jul-12
Feb-11

May-11

Sep-11
Oct-11

Feb-12

May-12

Sep-12
Jun-11

Jun-12
about 50% of the way deployed on the car
channel shift.”
-- CEO Mark Frissora

Hertz's remarketing strategy is working

31
Remarketing Channel Mix – Overview
% ofPct
Fleet SoldSold
of Fleet through Auction
- Auction % of Pct
Fleet Sold Sold
of Fleet through Retail/Rent2Buy
- Retail/Rent2Buy
100% 88% 100%
75%
80% 65% 80%
60% 60%
40% 33% 40% 33% 33%
23% 23%
20% 13% 13% 20% 8% 9% 13%
7%
0% 0%
2009 2010 2011 2012 2013E 2014E 2015E 2009 2010 2011 2012 2013E 2014E 2015E

% ofPct
Fleet SoldSold
of Fleet through Dealer
- Dealer DirectDirect % of Pct
Fleet Sold Sold
of Fleet through Other
- Other Channels
Channels
100% 100%
80% 80%
60% 47% 47% 48% 48% 60%

40% 40%
19%
20% 11% 20% 6% 7% 7% 7% 7% 7%
5%
0%
0% 0%
2009 2010 2011 2012 2013E 2014E 2015E 2009 2010 2011 2012 2013E 2014E 2015E

The shift away from auctions into more profitable resale

channels mitigates the expected drop in used car prices

32
Remarketing Channel Mix – Overview (cont.)
Dealer Direct - $500 Premium over Auction Retail/Rent2Buy - $1,300 Premium over Auction
$1,400 $1,400

$1,200 $1,200

$1,000 Extra Interest and $1,000

Depreciation Price Differential
$800 Price Differential $800 $1,035
Transportation to
Transportation to Auction
$600 Auction $600 Auction
Auction Reconditioning Fees
$400 $160 Reconditioning Fees $400 Auction Sales Fee
Auction Sales Fee
$75
$200 $75 $200 $75
$90 $90
$100 $100
$0 $0
Premium Over Auction - Dealer Premium Over Auction -
Direct Retail/Rent2Buy

Retail/Rent2Buy and Dealer Direct offer

significant premiums over the auction channel

33
Remarketing Channel Overview – Retail/Rent2Buy
1. Retail Sales Cut Out the Middleman
 Hertz cuts out the cost of the auction for the buyer
and seller, which enables it to charge the lowest retail
prices
 Average retail price is 20% below Blue Book Value
2. Innovative Sales Process Provides Advantage
 Instead of 30-minute test drives, Hertz offers
refundable 3-day test drives, which customers love
and traditional car dealerships cannot offer
 Prices are non-negotiable (no-haggle price)

3. Retail Sales Growth Obscured by Accounting 4. Strong Reviews from Customers

 With the steady supply of used cars and an attractive  “Better price, recent model years, the ability to 'try
value proposition to retail customers, we believe before you buy,' hassle-free buying, a warranty, and
Rent2Buy will ultimately become an effective buying the cream of the crop”
competitor to CarMax  “The prices are VERY good”
 Retail stores have grown from nine in 2011 to over 30
today
 Continued growth in retail sales is only reflected in a
lower depreciation cost, a much less visible metric
than sales growth

We expect the shift to retail/Rent2Buy to

continue to offset the decline in residuals

34
Remarketing Channel Overview – Dealer Direct
 Hertz has significantly built up its Direct-to-Dealer sales
infrastructure
 Direct-to-Dealer sales force increased from 15 in 2011

to over 120 today

 Dealer Direct increases fleet utilization by advertising
active rentals
 Attractive value proposition for dealers
 $45 buyer fee compared to $300-$500 from Manheim,

the largest used car auction

 No change in dealer behavior required. Enterprise has a

long history of selling direct to dealers

 Strong growth despite relatively infant infrastructure
 This channel didn't exist in 2009, but now represents

40% of remarketing. The channel more than doubled

from 2011-2012
 Only 6% of vehicles have condition reports and pictures

– Vehicles with condition reports and pictures are

eight times more likely to sell, according to
Manheim
– Management has indicated that most Dealer Direct
vehicles will have electronic condition reports by
2014
We expect the shift to Dealer Direct sales to increase utilization and decrease fleet cost

35
Capitalization Costs
 Hertz has moved to a significantly more diverse fleet Hertz is Less Reliant on Ford and GM
 Reduced reliance on Ford and GM:
% of Vehicles Purchased by Manufacturer
– Since the spin-off from Ford in 2005, Hertz has 100%
reduced its reliance on Ford and General Motors
80% 43% 33% Others
from 57% of purchases to just 38% today
60% 16% Nissan
– More suppliers = more bargaining power 17% 13% Toyota
40%
 Shift from program cars saves 1% on capitalization 20% 40% 25% General Motors
costs 13% Ford
0%
 Consolidation concentrates vehicle purchasing and 2006 2012
increases buyer power
Consolidation Increases Purchasing Scale
 Deep analytics on trim packages minimizes
depreciation/unit/month 700,000
600,000
 New software packages ensure that vehicles have the Donlen

Avg # of Cars
500,000
trim packages that balance customer satisfaction,
capitalization costs, and residual values 400,000
International (Hertz
300,000 and Dollar Thrifty)
 This analysis significantly reduced purchases of exotic 200,000 Domestic (Hertz and
trim packages on cars for leisure customers Dollar Thrifty)
100,000
-
2010 2011 2012

36
Fleet Efficiency
 Increases in fleet efficiency can significantly reduce costs Fleet Efficiency is Improving
 Fleet efficiency explains 86% of the variation in DOE 81.0% 80.5%
80.3%
+ SGA margin 80.0%
80.0% 79.3%
 Three main factors are leading to increased utilization 78.5% 78.3% 78.6%
79.0%
77.9%
 Synergies from Dollar Thrifty – opposite demand 78.0%
schedules means that Hertz's excess supply of weekend 77.1%
cars get used at Dollar Thrifty 77.0%

76.0%
 Technological Changes – kiosks, Hertz On Demand,
and mobile apps, reduce the need for staffed locations 75.0%
and expand hours to 24/7 '07 '08 '09 '10 '11 '12 '13E '14E '15E

 The Shift to the Dealer Direct Remarketing Channel – Improved Fleet Efficiency Reduces Costs
reduces the time cars spend grounded by up to 16 days, R² = 86%
78.0%
which saves approximately $10 per day in depreciation

DOE + SG&A margin

and interest expense 76.0%
 We expect these factors to increase utilization by
74.0%
130bps to 80.5% by 2015
72.0%

70.0%
77.5% 78.0% 78.5% 79.0% 79.5% 80.0% 80.5%
U.S. RAC Fleet Efficiency

37
Growth Initiative – U.S. Off-Airport Market
 12% share in $11bn off-airport market = significant Growth is Accelerating
growth opportunity
 While off-airport revenue per day is lower than that in Off-Airport Locations
airport markets, rental periods are longer, leading to 3,000 2009-2012:
higher utilization and lower costs +14.0% CAGR
2,500
 The insurance replacement market is particularly 2004-2008:
2,000 +5.5% CAGR
attractive, with long rental periods and stable revenues
and profits, even in economic downturns 1,500

 Changes in technology (Hertz On Demand, kiosks) 1,000

reduce the up-front investment costs, making this 2005 2006 2007 2008 2009 2010 2011 2012
market expansion particularly attractive
Off-Airport Revenue Mix
 We expect off-airport locations to grow by >10% per
year through 2015

Off-Airport vs. On-Airport Cost Differentials 19%

Off-Airport Location On-Airport Location Difference Retail

43%
Labor Costs $4.09 $4.47 9% lower Replacement
DOE $18.54 $28.00 34% lower Business
SG&A $1.63 $3.12 48% lower 38%
Utilization 80.3% 78.3% 2% higher
Source: Hertz investor presentation

38
Growth Initiative – ExpressRent Kiosks / iPhone App
 A parking space is the only requirement ExpressRent Kiosk iPhone App
 Hertz can use technology to leapfrog Enterprise on off-
airport markets
 Opens up body shops, car dealerships, and hotels to
Hertz rental cars. Requires a modest $6000 kiosk
investment
 Increasing consumer preference towards mobile
applications reduces costs
 70% of Hertz On Demand customers used mobile apps
 Mobile check-in increases labor productivity and
customer satisfaction
 How it works
“Investors underestimate the impact of these volume-
 iPhone App: Text message after plane lands notifies enhancing product and service improvements.”
customer where their car is located. Eliminates the – Buyside Investment Analyst
need to stop by the counter
 24/7 kiosk: Videophone connects to agent in
Oklahoma, City who guides customer through the
process. Customer scans driver's license at kiosk

39
Growth Initiative – Hertz On Demand (Hourly Rentals)
 Significant Advantages Over ZipCar Hertz On Demand is Self Serve
 Scale: approximately 500,000 U.S. rental cars by
2014 vs. 9,700 for ZipCar
 No membership required and free to join, compared
to Zipcar's $25 application fee and $60/year
 Second-mover advantage
– Cheaper and better technology
– Does not have to educate the public about car
sharing

 Increases Fleet Utilization

 Car-sharing customers and traditional rent-a-car
customers do not overlap
 24/7, short-term car sharing minimizes idle time

 Reduces Costs
 On Demand technology is completely self-serve

40
Growth Initiative – Donlen Fleet Management
 Donlen gives Hertz an end-to-end solution for its Donlen Fleet Management Solutions
customers. No other rental car company offers this
solution
 Significant revenue synergies continue to be realized
 E.g. Hertz Value Lease expands Donlen's product
offering to large companies by leveraging Hertz's
rental car network
 Revenue growth is accelerating. We expect 2012
revenues of ~$460 million to grow by 16% to $534
million
 Donlen's expertise in remarketing is an
underappreciated asset
 Our primary research discovered that Donlen has
significant expertise in sourcing and remarketing
that will be a substantial benefit to Hertz as it
continues to move away from program cars
“Donlen is the best “Our Donlen acquisition has turned
remarketer I've ever seen.” out to be a much better acquisition
– Former Hertz Licensee than we anticipated. The revenue
synergies that we're getting out of
this acquisition are large.”
– CEO Mark Frissora

41
Dollar Thrifty Acquisition Terms
Hertz completed its acquisition of Dollar Thrifty in November 2012

 $87.50 per share purchase price

 Equity Value of $2.6 billion
Purchase Price  Corporate Enterprise Value of $2.3 billion
 2012E EV/Corp EBITDA multiple of 7.8x (based on mid-point of DTG
2012E Corp. EBITDA guidance of $285 million to $310 million )

 100% cash consideration

Deal Structure  Antitrust clearance required Hertz to divest its Advantage brand
 Advantage divestiture (~$30 million of Corp. EBITDA)

 Highly attractive transaction for HTZ owners – EPS accretion & positive EVA
 Including impact of Advantage divestiture (~$30 million of Corp.
Transaction Benefits EBITDA)
 Estimated $600 million in synergies
 Acquisition multiple of 2.6x EV/EBITDA (including synergies)

42
Synergies from Dollar Thrifty Acquisition
 Hertz operated primarily in the premium segment of the car rental market
 The Dollar Thrifty acquisition gives them a leading brand in the faster growing mid-tier and value market or the
“leisure” segment
 Revenue synergies of $300M per year and cost synergies of $300M per year. Revenue synergies have incremental
margins of 20-30%
 By 2015, these synergies would contribute $0.57 in incremental EPS. $1.5B NPV of incremental operating profits

43
Equipment Rental (HERC) Business Overview
Business HERC Revenue Mix by Markets
 HERC offers a broad range of equipment for rental in the U.S., Canada, France,
Spain, China and Saudi Arabia. Ancillary to its rental business, it is also a
dealer of certain brands of new equipment in the U.S. and Canada
 Customers range from local contractors to large industrial plants. As of
December 31, 2012, no customer accounted for more than 1.5% of HERC’s
global sales
 HERC revenues and margins are cyclical due to high exposure to the
construction and industrial markets
 U.S. represents approximately 70% of worldwide revenues
Fleet HERC Fleet by Equipment Type

 HERC acquires its equipment from a variety of manufacturers. The equipment

is typically new at the time of purchase and is not subject to any repurchase
program
 The per-unit acquisition cost of rental equipment varies from over $200,000 to
under $100. As of December 31, 2012, the average per-unit acquisition cost
(excluding small equipment purchased for less than $5,000 per unit) for rental
fleet was approximately $38,000
 Average age of worldwide rental fleet is 43 months

44
Equipment Rental Divestiture to Unlock Value
 HERC operates in an extremely fragmented industry, with the top 10 North
America rental companies making up only 30% of revenue United
Rentals
 United Rentals (NYSE:URI) is the market leader with 13% share 13% Sunbelt
 Sunbelt Rentals (LSE:AHT) is 2nd with 5% market share 5%
HERC
 HERC is 3rd with 4% market share 4%
 Management has previously discussed the possibility of divesting HERC
 Potential buyers include United Rentals, Sunbelt Rentals, and private equity
firms Other
78%
 We spoke with an analyst who asked the CEO if he foresees any FTC
issues with regards to an acquisition of HERC by United Rentals or
Sunbelt Rentals. He replied that has already looked into it and there would
not be any issues
 We believe a monetizing spinoff would maximize shareholder value. Hertz “We've always maintained the
position that if there was a reason
should:
to divest it that was shareholder
 Issue debt at HERC level, transfer the proceeds of debt issuance to parent friendly, we're not resistant to
(Hertz Global Holdings), and then spin-off HERC looking at other things and other
 Sell HERC after six months to qualify for tax-free treatment under IRS variables in terms of the equipment
Section 355(e) “Safe Harbor” rule rental business.”
– Hertz CEO in February 2013
 An outright sale of HERC could also be pursued based on the cost-basis
(undisclosed) of HERC’s historical acquisitions

45
Appendix B: Base Case Financials
and Valuation

46
Model Summary – Base Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Income Statement Metrics
Total Revenue $8,525 $7,102 $7,563 $8,298 $9,021 $11,163 $11,952 $12,670 $13,055 $13,465
Total Revenue Growth (1.8%) (16.7%) 6.5% 9.7% 8.7% 23.8% 7.1% 6.0% 3.0% 3.1%
Car Rental 0.8% (12.8%) 8.5% 9.2% 7.8% 26.7% 7.1% 6.1% 3.1% 3.2%
Equipment Rental (5.5%) (33.0%) (3.7%) 13.0% 14.5% 7.6% 6.6% 5.6% 2.8% 2.8%
EBITDA 1,240 998 1,089 1,356 1,607 2,420 2,922 3,258 3,407 3,568
EBITDA Margin 14.5% 14.1% 14.4% 16.3% 17.8% 21.7% 24.4% 25.7% 26.1% 26.5%
Net Interest Expense 429 404 436 279 274 386 365 336 308 253
EBT 238 199 347 681 901 1,571 2,062 2,398 2,561 2,761
EBT Margin 2.8% 2.8% 4.6% 8.2% 10.0% 14.1% 17.3% 18.9% 19.6% 20.5%
Car Rental 4.2% 7.8% 9.9% 12.0% 13.4% 19.2% 22.3% 23.6% 24.0% 24.4%
Equipment Rental 16.4% 6.9% 7.3% 13.3% 16.4% 16.3% 17.7% 18.8% 19.4% 20.0%
Cash Tax Expense 83 70 121 238 315 550 722 839 896 966
Net Income on Operating Basis 134 115 208 423 586 1,021 1,341 1,559 1,665 1,795
EPS $0.41 $0.31 $0.51 $0.95 $1.31 $2.20 $2.87 $3.33 $3.53 $3.79
EPS Growth nm (25.5%) 63.7% 88.1% 37.5% 68.4% 30.6% 15.7% 6.2% 7.3%
Balance Sheet Metrics
Net Debt 3,260 3,339 3,249 3,465 5,440 4,355 2,804 1,044 (898) (3,011)
Total Debt to Equity 3.12x 2.25x 2.77x 2.11x 2.61x 1.68x 1.15x 0.80x 0.53x 0.30x
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 1.80x 0.96x 0.32x (0.26x) (0.84x)
Return on Equity 9.1% 5.5% 9.9% 18.9% 23.4% 27.7% 27.0% 24.2% 20.8% 18.5%
Return on Invested Capital 7.2% 5.8% 6.4% 9.0% 8.4% 12.9% 14.8% 15.3% 15.2% 15.5%
Return on Assets 2.6% 2.5% 2.9% 3.5% 3.3% 5.3% 6.3% 6.9% 7.1% 7.4%
Cash Flow Metrics
Cash Flow - Operating 2,096 1,775 2,209 2,233 2,718 3,714 4,359 4,762 5,003 5,235
Capex 1,317 1,579 1,063 1,832 2,663 2,629 2,808 3,001 3,061 3,122
FCF 779 196 1,146 402 55 1,085 1,551 1,761 1,942 2,113

47
Income Statement – Base Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Sales $8,525 $7,102 $7,563 $8,298 $9,021 $11,163 $11,952 $12,670 $13,055 $13,465
Bloomberg Consensus: $10,911 $11,695 $12,548
Expenses:
Direct Operating 4,930 4,084 4,283 4,566 4,796 5,464 5,651 5,882 6,004 6,132
Deprec. of revenue earning equip, leases 2,194 1,931 1,868 1,906 2,148 2,640 2,808 2,979 3,082 3,191
SG&A 769 641 665 745 946 1,309 1,491 1,615 1,655 1,697
Interest Expense 870 680 773 700 650 710 683 649 614 551
Interest Income 25 65 12 6 5 6 6 7 7 7
Impairments, Others 1,169 0 0 63 36 0 0 0 0 0
Total Expense 9,907 7,272 7,577 7,974 8,570 9,816 10,126 10,519 10,747 10,964
GAAP Pre-Tax Income (1,382) (171) (15) 324 451 1,348 1,826 2,151 2,307 2,501
Adjustments for non-cash and non-recurring items:
Purchase Accounting 101 90 90 88 110 129 138 146 150 155
Non-Cash Debt Charges 100 172 183 130 84 94 98 101 103 105
Other charges 1,419 108 89 138 258 0 0 0 0 0
(Restructuring Charges, Derivative Loss, Pension Adjustment, Acquisition Charges, Other)
Total Adjustments 1,620 370 362 356 451 224 236 247 254 260
Adjusted Pre-Tax Income 238 199 347 681 901 1,571 2,062 2,398 2,561 2,761
Cash Tax 83 70 121 238 315 550 722 839 896 966
Less: Noncontrolling interest 21 15 17 20 0 0 0 0 0 0
Net Income to Hertz 134 115 208 423 586 1,021 1,341 1,559 1,665 1,795
Diluted EPS $0.41 $0.31 $0.51 $0.95 $1.31 $2.20 $2.87 $3.33 $3.53 $3.79
Bloomberg Consensus: $1.90 $2.38 $2.68
Fully Diluted Share 323 372 412 445 448 464 466 469 471 473

48
EBITDA Reconciliation – Base Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Car Rental Segment:
GAAP Pre-tax income (385) 190 442 756 784 1,733 2,172 2,452 2,571 2,701
+ D&A and other purchase accounting 2,107 1,785 1,724 1,774 2,007 2,509 2,669 2,834 2,932 3,038
+ Interest, net of interest income 445 302 390 329 312 298 292 286 279 271
+ Impairment charges 443 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 2,610 2,276 2,556 2,858 3,103 4,539 5,133 5,572 5,783 6,010
- Car rental fleet interest 425 316 377 313 297 285 280 275 268 261
- Car rental fleet depreciation 1,844 1,614 1,595 1,651 1,876 2,347 2,495 2,650 2,743 2,842
+ Non-cash expenses & charges 83 130 135 33 41 51 54 58 59 61
+ Extraordinary, unusual charges 108 105 30 24 136 0 0 0 0 0
RAC Segment EBITDA 532 582 749 950 1,107 1,958 2,413 2,705 2,831 2,968
Equipment Rental Segment:
GAAP Pre-tax income (629) (20) (15) 69 152 190 225 256 274 292
+ D&A and other purchase accounting 417 383 338 324 356 380 405 428 440 453
+ Interest, net of interest income 111 53 39 45 52 47 46 45 43 42
+ Impairment charges 111 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 624 416 363 439 561 617 675 729 757 787
+ Non-cash, extraordinary, unusual charges 106 39 35 42 25 0 0 0 0 0
HERC Segment EBITDA 731 455 398 481 586 617 675 729 758 787
Other reconciling items:
GAAP Pre-tax income (368) (340) (442) (501) (486) (575) (571) (557) (537) (492)
+ D&A and other purchase accounting 6 8 10 11 13 17 18 19 19 20
+ Interest, net of interest income 307 311 333 321 282 360 340 313 285 232
+ Noncontrolling interest (21) (15) (17) (20) 0 0 0 0 0 0
GAAP EBITDA before adjustments (76) (36) (117) (188) (191) (199) (213) (226) (233) (240)
+ Non-cash expenses & charges 30 37 37 28 27 44 47 50 51 53
+ Extraordinary, unusual charges 24 (39) 21 85 78 0 0 0 0 0
Corporate Segment EBITDA (23) (38) (59) (74) (86) (155) (166) (176) (181) (187)
Total Adjusted EBITDA 1,240 998 1,089 1,356 1,607 2,420 2,922 3,258 3,407 3,568

49
Balance Sheet – Base Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Assets:
Cash & ST investments 1,326 1,351 2,582 1,240 1,105 1,828 2,879 4,140 5,111 5,956
Receivables 1,911 1,325 1,357 1,616 1,887 2,335 2,500 2,650 2,730 2,816
Inventory 96 93 87 84 106 131 140 148 153 158
Revenue Earning Equipment 8,692 8,852 8,924 10,105 12,908 12,675 12,436 12,205 11,923 11,585
Other Property & Equipment 1,255 1,188 1,164 1,252 1,436 1,457 1,253 1,071 852 594
Goodwill & Intangibles 2,886 2,893 2,879 2,954 5,374 5,287 5,194 5,096 4,994 4,889
Other 287 300 353 422 470 470 470 470 470 470
Total Assets 16,451 16,002 17,345 17,674 23,286 24,183 24,872 25,779 26,234 26,469
Liabilities & S.E.:
Payables 931 659 954 897 999 1,236 1,324 1,403 1,446 1,491
Fleet Debt 6,387 5,675 5,476 6,612 8,903 8,742 8,578 8,418 8,224 7,991
Corporate Debt, Leases 4,586 4,689 5,831 4,705 6,545 6,184 5,684 5,184 4,213 2,945
Deferred Income Taxes 1,482 1,471 1,508 1,688 2,700 2,700 2,700 2,700 2,700 2,700
Other 1,577 1,410 1,457 1,535 1,631 1,631 1,631 1,631 1,631 1,631
Total Liabilities 14,963 13,905 15,226 15,439 20,779 20,493 19,916 19,336 18,213 16,758
Shareholders' Equity 1,488 2,097 2,118 2,235 2,507 3,690 4,956 6,443 8,021 9,710
Total Liabilities & S.E. 16,451 16,002 17,345 17,674 23,286 24,183 24,872 25,779 26,234 26,469
Key Statistics:
Net Debt 3,260 3,339 3,249 3,465 5,440 4,355 2,804 1,044 (898) (3,011)
Net Debt / Equity 2.19x 1.59x 1.53x 1.55x 2.17x 1.18x 0.57x 0.16x (0.11x) (0.31x)
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 1.80x 0.96x 0.32x (0.26x) (0.84x)
Total Debt / Equity 3.08x 2.24x 2.75x 2.11x 2.61x 1.68x 1.15x 0.80x 0.53x 0.30x
Receivables Turnover 4.46x 5.36x 5.57x 5.13x 4.78x 4.78x 4.78x 4.78x 4.78x 4.78x
Receivables Days 80.7 67.2 64.6 70.1 75.3 75.3 75.3 75.3 75.3 75.3

50
Cash Flow Statement – Base Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Operating Activities:
Net Income 134 115 208 423 586 1,021 1,341 1,559 1,665 1,795
Revenue Earning Equip. D&A 2,194 1,931 1,868 1,906 2,148 2,640 2,808 2,979 3,082 3,191
Other PPE D&A 239 226 219 228 257 289 298 303 299 295
Changes in Working Capital (331) 316 270 (313) (190) (236) (87) (79) (42) (45)
Others (141) (813) (357) (10) (82) - - - - -
Cash Flow from Operating Act. 2,096 1,775 2,209 2,233 2,718 3,714 4,359 4,762 5,003 5,235

Investing Activities:
Fleet Equip. Capex, net disposals (1,178) (1,502) (922) (1,604) (2,488) (2,406) (2,569) (2,748) (2,800) (2,853)
Other PPE Capex, net (139) (77) (140) (228) (175) (223) (239) (253) (261) (269)
Acquisitions, net cash acquired (71) (76) (48) (227) (1,905) - - - - -
Others (79) 35 (1) (30) 90 - - - - -
Cash Flow from Investing Act. (1,466) (1,621) (1,111) (2,089) (4,477) (2,629) (2,808) (3,001) (3,061) (3,122)

Financing Activities:
Proceeds from Debt Issuance, net (816) 523 (799) (1,320) 443 (112) (250) (250) (971) (1,268)
Proceeds from Rev. Line of Credit 199 (1,126) 1,026 57 1,273 (250) (250) (250) - -
Proceeds from Equity Issuance - 529 - - - - - - - -
Dividends Paid - - - - - - - - - -
Others (78) (54) (93) (224) (92) - - - - -
Cash Flow from Financing Act. (695) (129) 134 (1,487) 1,625 (362) (500) (500) (971) (1,268)

Cash Flow for Year (66) 25 1,231 (1,342) (135) 723 1,051 1,261 971 845
Cash at Beginning of Year 1,391 1,326 1,351 2,582 1,240 1,105 1,828 2,879 4,140 5,111
Cash at End of Year 1,326 1,351 2,582 1,240 1,105 1,828 2,879 4,140 5,111 5,956

CFO less Capex (FCF) 779 196 1,146 402 55 1,085 1,551 1,761 1,942 2,113

51
 Key Model Assumptions
Actual Base Bear Bull
2012a 2013e 2014e 2015e 2013e 2014e 2015e 2013e 2014e 2015e
Sales $ 9,021 $ 11,163 $ 11,952 $ 12,670 $ 10,828 $ 11,222 $ 11,715 $ 11,168 $ 12,048 $ 12,812
EBITDA 1,607 2,420 2,922 3,258 2,042 2,280 2,458 2,585 3,250 3,481
EPS 1.31 2.20 2.87 3.33 1.60 1.92 2.27 2.44 3.37 3.85
Critical revenue drivers:
U.S. RPD - growth Y/Y (3.1%) 2.5% 2.5% 0.0% (1.0%) (1.0%) (1.0%) 3.5% 3.5% 0.0%
U.S. Enplanements - growth Y/Y 4.0% 3.5% 3.5% 3.0% 2.0% 2.0% 2.0% 4.0% 4.0% 3.0%
International RPD - growth Y/Y (2.9%) 0.0% 0.0% 0.0% (2.0%) (2.0%) (2.0%) 0.0% 0.0% 0.0%
International Enplanements - growth Y/Y (2.9%) 1.0% 1.0% 1.0% 0.0% 0.0% 0.0% 1.5% 1.5% 1.5%
Critical cost drivers:
Manheim Index (Used Car Prices) - growth Y/Y (1.0%) (4.0%) (2.0%) 0.0% (6.0%) (4.0%) 0.0% (3.0%) (1.0%) 0.0%
Fleet utilization 79.3% 80.0% 80.3% 80.5% 79.5% 79.5% 79.6% 80.5% 81.0% 81.5%
+ Y-Y gain from DTG integration nm 0.50% 0.00% 0.00% 0.25% 0.00% 0.00% 0.75% 0.00% 0.00%
+ Y-Y gain from technology improvements nm 0.25% 0.25% 0.25% 0.00% 0.00% 0.00% 0.50% 0.50% 0.50%
+ Y-Y gain from incremental 1% share of off-airport sales nm 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%
Channel mix
Dealer direct 47.0% 47.3% 47.5% 47.5% 47.0% 47.0% 47.0% 48.5% 50.0% 50.0%
Retail & R2B 13.0% 22.8% 32.5% 32.5% 13.0% 13.0% 13.0% 25.3% 37.5% 37.5%
Auction, other 40.0% 30.0% 20.0% 20.0% 40.0% 40.0% 40.0% 26.3% 12.5% 12.5%
Average resale value rel. auctions
Dealer direct $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500 $ 500
Retail & R2B 1,300 1,300 1,300 1,300 1,100 1,100 1,100 1,500 1,500 1,500
Final impact on Depreciation per Car per Month Y/Y * 5.2% 0.6% 0.5% - 7.1% 1.0% 5.6% (2.7%) (2.8%) -
* (determined by Manheim Index, fleet utilization, channel mix,
and average premium of resale price over auction channel)
DTG cost synergies ($mn) $ - $ 150 $ 250 $ 300 $ 100 $ 200 $ 300 $ 200 $ 300 $ 300

52
EPS Bridge – Base Case

53
EBITDA Margin Bridge – Base Case

54
Model Sensitivities
Sensitivity to U.S. RPD Growth Y/Y Sensitivity to Fleet Utilization
-2.5% 0.0% 2.5% 5.0% 7.5% 78.3% 79.3% 80.3% 81.3% 82.3%
2014e EBITDA $2,445 $2,610 $2,922 $3,239 $3,562 2014e EBITDA $2,872 $2,897 $2,922 $2,946 $2,970
2014e EPS $2.22 $2.44 $2.87 $3.31 $3.76 2014e EPS $2.80 $2.84 $2.87 $2.91 $2.94
Price Target $28.06 $30.80 $36.02 $41.34 $46.74 Price Target $35.19 $35.61 $36.02 $36.42 $36.81

Sensitivity to U.S. Enplanements Y/Y Sensitivity to Manheim Index Y/Y

0.0% 1.8% 3.5% 5.3% 7.0% -8.0% -6.0% -4.0% -2.0% 0.0%
2014e EBITDA $2,852 $2,887 $2,922 $2,957 $2,992 2014e EBITDA $2,755 $2,838 $2,922 $3,006 $3,089
2014e EPS $2.78 $2.83 $2.87 $2.92 $2.97 2014e EPS $2.65 $2.76 $2.87 $2.99 $3.10
Price Target $34.86 $35.44 $36.02 $36.60 $37.18 Price Target $33.38 $34.70 $36.02 $37.35 $38.67

Impact of Used Car Prices and Resale Channel Mix

2012 2014e Scenarios
Actual Base Down Up
Channel used car resale price relative to Auction channel
Dealer Direct $500 $500 $500 $500
Retail & R2B $1,300 $1,300 $1,100 $1,500
Share of Vehicles Sold via Channel
Dealer Direct 47% 48% 47% 50%
Retail & R2B 13% 33% 13% 38%
Auction, other 40% 20% 40% 13%
EBITDA $1,607 $2,922 $2,280 $3,250
EPS $1.31 $2.87 $1.92 $3.37
Price per Share Estm. $36.02 $19.37 $45.14

55
Equity Trading Comps
Share Market Enterprise CAGR '12a-'14e EV / EBITDA Price / Earnings Net Debt/
Company Price Cap Value Sales EBITDA EPS 2013e 2014e 2013e 2014e EBITDA

Car Rental
Hertz Global Holdings $23.72 10,959 16,626 14% 26% 34% 7.4x 6.4x 12.5x 9.9x 3.4x
Avis Budget Group $28.00 3,083 5,382 6% 6% 10% 6.6x 5.8x 12.0x 9.6x 2.7x
Average 10% 16% 22% 7.0x 6.1x 12.3x 9.8x 3.1x

Equipment Rental
United Rentals $51.69 4,871 11,888 15% 23% 26% 5.3x 4.8x 10.7x 8.5x 4.2x
Ashtead Group (Sunbelt) $9.31 4,658 6,301 13% 22% 42% 7.0x 6.6x 20.1x 16.5x 2.2x
Average 14% 22% 34% 6.2x 5.7x 15.4x 12.5x 3.2x

56
Historical Comps

57
Sum-of-the-Parts Valuation
 We use a forward EV/EBITDA range of 6.0x-8.0x ($ in millions except per share) Base Bear Bull
for the Car Rental segment
Revenue (2014e) Car Rental 10,361 9,630 10,457
 Our base case multiple is Hertz's current NTM
Equipment Rental 1,589 1,560 1,619
EV/EBITDA of 7.4x
Total $11,952 $11,192 $12,078
 However, we believe Hertz's valuation could EBITDA (2014e) Car Rental 2,413 1,828 2,727
re-rate to its historic average EV/EBITDA of Equipment Rental 509 432 539
8.5x given industry dynamics, improving Total $2,922 $2,261 $3,266
pricing, strong execution by management team Forward EV / EBITDA Car Rental 7.4x 6.0x 8.0x
especially on integration of Dollar Thrifty, and Equipment Rental 6.2x 5.0x 6.5x
efficient capital allocation with potential for
cash returns in the next 18 months Enterprise Value Car Rental 17,854 10,970 21,814
Equipment Rental 3,158 2,139 3,505
 We use a forward EV/EBITDA range of 5.0x-6.5x Total $21,012 $13,109 $25,320
for the Equipment Rental segment
 The Equipment Rental companies currently Less: Debt (2013e) (6,184) (6,259) (5,894)
trade at an average 6.2x forward EV/EBITDA Plus: Cash (2013e) 1,828 1,677 1,756
Less: Unfunded Pension Obligation (2013e) (227) (227) (227)
and historically traded in the 2.4x-7.5x range
Excess Value $16,430 $8,301 $20,954
Price per Share $35.41 $17.89 $45.16

Upside to Current Price 49% (25%) 90%

58
Unit Economics
Per Car in US$ units
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Average Rate per Day $44.31 $43.68 $43.14 $41.33 $40.01 $40.69 $41.40 $41.40 $41.40 $41.40
Growth Y/Y nm -1.4% -1.2% -4.2% -3.2% 1.7% 1.7% 0.0% 0.0% 0.0%
Number of Transaction Days 281 286 286 287 289 292 293 294 294 294
Utilization 77.1% 78.5% 78.3% 78.6% 79.3% 80.0% 80.3% 80.5% 80.6% 80.6%

Rental Rate Sales $12,461 $12,513 $12,323 $11,858 $11,577 $11,880 $12,128 $12,169 $12,171 $12,173
Fleet Interest Expense $989 $764 $901 $696 $615 $458 $430 $401 $386 $369
% of Sales 7.9% 6.1% 7.3% 5.9% 5.3% 3.9% 3.5% 3.3% 3.2% 3.0%
Fleet Depreciation Expense $4,029 $3,904 $3,582 $2,683 $2,821 $2,837 $2,852 $2,852 $2,852 $2,852
% of Sales 32.3% 31.2% 29.1% 22.6% 24.4% 23.9% 23.5% 23.4% 23.4% 23.4%
Operating Profit before DOE $7,444 $7,845 $7,840 $8,479 $8,140 $8,585 $8,847 $8,916 $8,934 $8,952
% of Sales 59.7% 62.7% 63.6% 71.5% 70.3% 72.3% 72.9% 73.3% 73.4% 73.5%
Direct Operating Expense $4,272 $4,337 $4,227 $3,988 $3,719 $3,488 $3,420 $3,363 $3,328 $3,293
% of Sales 34.3% 34.7% 34.3% 33.6% 32.1% 29.4% 28.2% 27.6% 27.3% 27.0%
SG&A $1,106 $1,100 $1,036 $1,021 $1,153 $1,183 $1,208 $1,212 $1,212 $1,212
% of Sales 8.9% 8.8% 8.4% 8.6% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Operating Profit $2,065 $2,408 $2,577 $3,470 $3,269 $3,913 $4,219 $4,341 $4,393 $4,447
% of Sales 16.6% 19.2% 20.9% 29.3% 28.2% 32.9% 34.8% 35.7% 36.1% 36.5%
NOPAT $1,342 $1,565 $1,675 $2,256 $2,125 $2,544 $2,742 $2,822 $2,856 $2,891
% of Sales 10.8% 12.5% 13.6% 19.0% 18.4% 21.4% 22.6% 23.2% 23.5% 23.7%

ROIC 21.7% 25.2% 27.0% 36.4% 34.3% 41.0% 44.2% 45.5% 46.1% 46.6%

59
Debt Maturity

Corporate Debt Maturity Schedule ($ mn)

(Weighted Average Interest Rate 5.51%)
$3,000

$2,500

$2,000
$2,081
$1,500

$1,000

$1,250
$500
$700 $700
$475 $500 $500
$195
$0
'13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '28
Fixed Floating

60
Appendix C: Management

61
Key Management Biographies
Name Biography

 Joined Hertz as CEO and Director in July 2006; elected as Chairman in January 2007
 Prior to joining Hertz, served as Chairman and CEO of Tenneco Inc. (NYSE:TEN) from 2000 and
as President of the automotive operations of Tenneco Inc. from 1999 to 2006. From 1996 to 1999,
held various positions within Tenneco Inc.'s automotive operations
 Previously worked at Aeroquip Vickers, General Electric, and Philips Lighting Company
Mark P. Frissora
Chairman & CEO  Currently serves as a Director of Walgreen Co. and Delphi Automotive PLC

 Joined Hertz as Treasurer in July 2006 and became CFO in October 2007
 Prior to joining Hertz, served as Treasurer of Coty Inc. from 1999 until 2006
 Previously served as an Assistant Treasurer of Nabisco from 1995 to 1999. Also served in various
financial services capacities for 12 years at Chase Manhattan Bank (now JPMorgan Chase)
 CPA and has three years experience in public accounting
Elyse Douglas
Chief Financial Officer  Currently serves as a Director of Assurant Inc.

 Joined Hertz in 1983 and currently serves as President, Car Rental and Leasing, the Americas
 Also oversees the fleet planning and re-marketing functions for the Americas
 Has held several senior management positions in the U.S. car rental business since 1983, including
Manhattan Area Manager, Vice President of the New England, West Central and Western Regions
and, since 2008, Vice President and President, Off-Airport Operations for North America
Scott Sider
President, Vehicle Rental

62
Track Record vs. Management Guidance
 Management has proven to be very conservative in its financial guidance. Since CEO Mark Frissora
joined Hertz in July 2006, management has beat the high end of its guidance every year, except in 2008
Guidance
2007 2008 2009 2010 2011 2012
Revenue $8,500-$8,600 $8,900-$9,000 no guidance $7,400-$7,600 $7,950-$8,100 $8,850-$8,950
Corporate EBITDA $1,540-$1,570 $1,575-$1,615 no guidance $1,045-$1,060 $1,265-$1,305 $1,520-$1,590
Adjusted EPS $1.15-1.22 $1.38-1.44 no guidance $0.37-0.39 $0.75-$0.81 $1.16-$1.26

Actual
2007 2008 2009 2010 2011 2012
Revenue $8,686 $8,525 $7,102 $7,563 $8,298 $9,021
Corporate EBITDA $1,542 $1,100 $980 $1,101 $1,390 $1,636
Adjusted EPS $1.26 $0.42 $0.29 $0.52 $0.97 $1.33

 We believe management's 2013 estimates are extremely conservative

2013
Management's Consensus
Guidance Estimates
Revenue $10,850-$10,950 $10,898
Corporate EBITDA $2,210-$2,270 $2,212
Adjusted EPS $1.82-1.92 $1.89

63
Track Record vs. Consensus Estimates
 Since CEO Mark Frissora took office in July 2006, Hertz has beat consensus estimates 21 of the past 25
quarters, including the last 15 quarters in a row
Actual Consensus Beat Beat / Actual Consensus Beat Beat /
Period Result Estimate Consensus Miss % Period Result Estimate Consensus Miss %
Q4 12 $0.33 $0.31 yes 5% Q3 09 $0.31 $0.22 yes 41%
Q3 12 $0.63 $0.61 yes 4% Q2 09 $0.12 $0.11 yes 12%
Q2 12 $0.35 $0.32 yes 9% Q1 09 ($0.25) ($0.22) no (14%)
Q1 12 $0.05 $0.00 yes 2,400% Q4 08 ($0.22) $0.07 no nm
Q4 11 $0.24 $0.20 yes 20% Q3 08 $0.33 $0.53 no (38%)
Q3 11 $0.51 $0.50 yes 3% Q2 08 $0.30 $0.31 no (4%)
Q2 11 $0.26 $0.21 yes 22% Q1 08 $0.02 $0.01 yes 300%
Q1 11 ($0.03) ($0.04) yes 27% Q4 07 $0.29 $0.26 yes 12%
Q4 10 $0.10 $0.07 yes 37% Q3 07 $0.65 $0.57 yes 15%
Q3 10 $0.40 $0.37 yes 7% Q2 07 $0.30 $0.26 yes 14%
Q2 10 $0.14 $0.12 yes 18% Q1 07 $0.02 ($0.05) yes nm
Q1 10 ($0.12) ($0.13) yes 8% Q4 06 $0.14 $0.13 yes 12%
Q4 09 $0.06 $0.01 yes 500%

Given management's impressive track record, we believe they

are extremely conservative in nature and the $600 million
Dollar Thrifty synergies estimates is very achievable

64
Management's Incentives Aligned with Shareholders
Compensation Incentives EVA Weighting in Incentive Comp Increasing
 Cash Incentives Aligned with Shareholders 50%
40% 40%
 Based 40% on Economic Value Added (“EVA”). 40%

EVA Weighting
This incentive was introduced in 2010 and increased 30%
in 2011 30%

– Increases in EVA are highly correlated with 20%

shareholder returns
10%
– The increased weighting reflects management's 0%
confidence in generating returns on capital 0%
above its cost of capital over the long term 2009 2010 2011 2012

– $300 million of incremental EVA has been

generated since 2009 “I think the competitors have all
settled on the market share
– Hertz's top 400 managers are paid based on numbers that they're at right now.
EVA I don't think anyone in the
 Based 40% on adjusted pre-tax income industry is looking to cut price.
The fleets right now are
 Based 20% on revenue adequate, so we feel pretty good
 Stock Incentives Aligned with Shareholders about the fact that the industry is
very rational.”
 CEO Mark Frissora owns 1.4% of the company
– CEO Mark Frissora
“We have a very EVA/asset-light
strategy focus in the company
today.”
“We have a very positive
movement in economic value
added, 40% of my bonus and the
top 400 managers in the
Company is tied to EVA.”
– CEO Mark Frissora

New focus on EVA reflects structurally healthier industry and company

65
Appendix D: Ownership

66
Private Equity Ownership
 In December 2005, Clayton, Dubilier & Rice (CDR), The
Sponsors Ownership %
Carlyle Group (Carlyle), and Merrill Lynch (collectively, the
80%
“Sponsors”) acquired Hertz from Ford Holdings for $5.6 72%
billion ($2.3 billion in equity) 55% 55%
60% 51% 51%
 Over the past three years, the company's Private Equity 38%
40%
Sponsors have been gradually divesting their stakes 26%
20% 13%
 In the past six months, the Sponsors sold 110 million,
reducing their stake from 38% to 13%
0%
2006 2007 2008 2009 2010 2011 2012 2013

Sponsors Investment History

 The Sponsors have been invested in Hertz since 2005 and have generated a strong return on its investment

Dec-05 Jun-06 Nov-06 Jun-07 May-09 Mar-11 Dec-12 Mar-13 Apr-13

Investment ($2,300) ($200)
Special Dividend $991 $260 Sponsors' IRR 33%
Shares Sold $1,111 $782 $789 $1,209 Cash-on-Cash Return 2.6x
Remaining Shares $1,316
Total Cash Flows ($2,300) $991 $260 $1,111 ($200) $782 $789 $1,209 $1,316

67
 Current Shareholder Base
Market % of Market % of
Investor Shares Value CSO Investor Shares Value CSO
Wellington Management 44.4 $1,053 11.1% SRS Investment Management 6.0 $142 1.5%
Clayton, Dubilier & Rice 22.8 542 5.7% BNP Paribas Investment Partners 5.9 140 1.5%
Carlyle Group 20.3 482 5.1% S.A.C. Capital 5.7 136 1.4%
The Vanguard Group 17.6 418 4.4% Merrill Lynch 5.5 131 1.4%
Wells Capital Management 15.9 378 4.0% Senator Investment Group 5.3 126 1.3%
BlackRock 15.5 369 3.9% State Street Global Advisors 4.7 112 1.2%
T. Rowe Price 14.4 342 3.6% Systematic Financial Management 4.5 108 1.1%
Highbridge Capital Management 14.1 334 3.5% Fir Tree Partners 3.9 92 1.0%
York Capital Management 11.7 276 2.9% Valinor Management 3.5 82 0.9%
Lord, Abbett & Co. 10.5 250 2.6% The Roosevelt Investment Group 3.4 82 0.9%
UBS Global Asset Management 9.6 229 2.4% Norges Bank Investment Management 3.4 81 0.9%
Columbia Wanger Asset Management 9.1 217 2.3% Fidelity Investments 3.4 81 0.9%
Discovery Capital Management 7.5 178 1.9% Goldman Sachs 3.3 79 0.8%
Owl Creek Asset Management 7.3 174 1.8% Westchester Capital Management 3.3 78 0.8%
Columbus Circle Investors 6.6 157 1.7% Columbia Management 3.1 73 0.8%

Key Shareholders Summary

Market % of
Investor Shares Value CSO
PE Owners (CD&R, Carlyle, Merrill Lynch) 48.7 1,155 12.2%
CEO Mark Frissora 2.2 53 0.5%
Other Insiders 1.7 39 0.4%

68
Appendix E: Additional Analysis

69
Industry’s Improved Pricing Sustainable?
 Today, the U.S. car rental industry has three players that make up 95% of the market: Hertz, Avis, and Enterprise. From
the blatant price signaling in earnings call and conference call transcripts, it is clear that Hertz and Avis are focused on
profitability and keeping the industry’s car rental rates high. The main question is whether or not privately-held
Enterprise will follow.

 There are four main reasons why we believe Enterprise will cooperate with Hertz and Avis’ pricing increases:

1  The industry’s price spoiler has historically been Dollar Thrifty, who is now owned by Hertz

2  Since the Dollar Thrifty acquisition closed in November 2012, Enterprise has matched the price increases by Avis
and Hertz

3  It no longer makes sense to lower prices because none of the three remaining players have dominant market share.
If Enterprise lowers prices, Hertz and Avis will follow and no one will gain market share. Lower pricing would
only result in lower profitability for all three players

4  Due to auto OEM restructurings and more rational car production, car rental companies finally have right-sized
fleets. With utilization rates at all time highs, there is no longer incentive to lower prices to raise utilization rates

70
Rental Car Pricing Sources
Auto Rental News Hertz and Avis Earnings Calls
 Auto Rental News publishes monthly auto rental rate Avis Hertz
surveys for six major airports: BOS, MIA, ORD, HOU, North Hertz Dollar Thrifty
SEA and LAX. The rates are based on weekly surveys America US Airport Total
and are published monthly Dec 2012 > +1.0% +1.6% +4.6%
May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Jan 2013 > +5.0% +6.0% +2.6%
Pre-DTG Acquisition (5%) (22%) (19%) (11%) (6%) (4%) Feb 2013 > +3.0%
Mar 2013 ~ +4.0%
Nov-12 Dec-12 Jan-13 Feb-13 Mar-13
Post-DTG Acquisition 18% 48% 15% 12% 8%
“We instituted 2 price increases for January, 2 for February
and 2 effective for March rentals. January pricing was up year-
Sell-Side Analysts over-year, more in fact than December was, and our existing
reservations give us a measure of confidence that pricing could
“Our research suggests rental car pricing in 1Q13 continued to end the quarter being positive.”
firm, and was likely up year-over-year throughout the quarter. – Avis CEO, February 2013
In regards to monthly performance, improvements in March
were the strongest of the quarter.”
– Northcoast Research, April 2013 USA Today

“Enterprise says rates at some of the top 200 airports their

“Avis initiated another price increase effective for Apr 8, which
brands serve were up to 4% higher in February than during
was quickly followed by Enterprise.”
that month last year.”
– Morgan Stanley, March 2013
– USA Today, February 2013

71
Why Hertz Over Avis?
 Because of the improved pricing environment, we believe both Hertz and Avis are attractive investment opportunities.
However, we favor Hertz over Avis for the following reasons:

1  Management: Hertz’s CEO Mark Frissora is extremely well-regarded in the industry. Since Frissora joined in July
2006, Hertz has beaten management’s guidance every year except for in 2008 and the company has beaten
consensus estimates for the past 15 quarters in a row. Prior to joining Hertz in July 2006, Frissora had a
phenomenal track record at Tenneco

– During Frissora’s tenure as CEO of Tenneco (1999-2006), the company dramatically improved its operating
efficiency and financial performance, which translated into significant increases in Tenneco’s market
capitalization. In 2004, Tenneco earned the industry’s top award for auto supply companies, which recognized
the company for delivering the highest shareholder returns – 158% in one year and 745% in three years – of
any global automotive supplier

2  Dollar Thrifty Acquisition: After taking into account synergies, Hertz paid less than 3.0x EBITDA to acquire
Dollar Thrifty, which we believe was a very prudent deal for management

3  Zipcar Acquisition: In March 2013, Avis acquired Zipcar for $500 million to enter the Hourly Rentals segment.
Hertz acquired technology to implement hourly rental capabilities in its fleet and will have its entire fleet upgraded
with hourly rental technology by 2014 for a fraction of the cost

72
European Car Rental Market
European Car Rental Market Share
Sixt 10%
 Highly fragmented market, with large percentage of
independent and small car-rental companies. Analysts
expect industry to consolidate over the next five years
 Plans to implement three brand offering across Europe
 Hertz: premium

 Dollar Thrifty: mid-tier

National
Alamo 5%  Firefly (formerly Advantage): value

Other 29%  Dollar Thrifty opportunity

Size of European in Europe
Car Rental Market (millions) $13,000

Hertz 16% Low Base High

Size of Market $13,000 $13,000 $13,000
Dollar Thrifty Market Share 1% 2% 3%
Dollar Thrifty Revenue $130 $260 $390
Avis
Budget Pre-Tax Margin 20.0% 22.5% 25.0%
Europcar 18% Pre-Tax Income $26 $59 $98
21%
Taxes @ 35% $9 $20 $34
Net Income $17 $38 $63

Shares Outstanding 427 427 427

~$13.0 billion market EPS Impact $0.04 $0.09 $0.15

73
Economic Downturn
 The rental car industry is not as cyclical as intuition would suggest.
 During phases of weak demand, car rental companies cut down their fleet size by selling cars
 This reduces capacity, balancing supply-demand and keeping pricing stable
 Hertz has been profitable through business cycles
 During 2008 and 2009, Hertz generated pre-tax income of $237 and $199 respectively by reducing fleet size by
1% and 10% respectively to maintain supply-demand balance
 Furthermore, Hertz's mix shift to off-airport locations, especially the non-cyclical insurance market, mitigates risk
of cyclical earnings and cash flows

74
Debunking Myths About Hertz

 More than 70% of Hertz's fleet is acquired using fleet debt, which is non-recourse to the
Myth #1 company. Fleet interest expense is akin to cost of goods sold. Acquiring fleet does not tie up
significant capital.
Car rental is too
 Non-fleet capex is relatively small, especially given technological changes that allow Hertz to
capital intensive expand its network without major infrastructure investments.

 Car rental is a good business, as evidenced by a long history of relatively stable market share
among competitors and a recent history of >10% ROICs.
Myth #2  Hertz's subpar profitability from 2005-2009 was the result of inefficient operations, excess
capacity in U.S. auto makers, and poor fleet management. These issues are now fixed.
Car rental is a
 Over 37% of transactions were made by Hertz Gold Club Members. Gold Club Members are
commodity business 3x more likely to rent from Hertz over other companies.
 The company has a 99.3% retention rate on corporate contracts.

 Over 40.5 million used cars were sold in the U.S. in 2012 – the used car market is extremely
Myth #3 large, efficient, and liquid. After 9/11, used car prices rebounded in four months. After the
financial crisis, prices bounced back in six months.
Used car prices are  All rental car companies are equally affected by changes in used car prices. If prices fall more
a big unknown than expected, rental car companies can raise prices to maintain profitability (72% R-squared).
 Lower used car prices are correlated with lower new car prices (81% R-squared).

75
Stock Price History – IPO to Today
March 2007: Enterprise
announces Alamo /
$30 National acquisition June 2011: Avis November 2012:
announces Avis Hertz closes Dollar
2008-2009 Recession Europe acquisition Thrifty acquisition
$25
April 2010: Hertz
announces bid for
$20 Dollar Thrifty
March 2009: Hertz
announces Advantage
$15 acquisition

$10
February 2013:
Hertz increases
synergies estimate
$5 from $160 million to
$600 million

$0

76
Competitor Overview – Avis
Business Description Rental Locations
 Car Rental (2012 rev: $7.0bn): Operates through the  With the acquisition of Dollar Thrifty, the Company has
Avis, Budget, and ZipCar brands. Rents cars that the over 10,000 locations across the United States and 17
company owns or leases. Maintains a substantial network other countries
of car rental locations both in the United States and
internationally. Rental fleet of 496,000 vehicles. The North
company completed more than 29 million vehicle rental America Intl Total
transactions worldwide. 71% of revenue generated on- Avis
airport, 29% generated off-airport Company-operated 1,350 1,300 2,650
 Truck Rental (2012 rev: $0.4bn): Operates through the Licensee 300 2,800 3,100
Budget brand. Total Avis 1,650 4,100 5,750

Budget
Revenue Breakdown Company-operated 1,000 550 1,550
Segment Geography Licensee 400 1,200 1,600
Truck
Rental Total Budget 1,400 1,750 3,150
5%
Intl NA Intl
Car Combined 3,050 5,850 8,900
Car 32%
Rental Rental
32% 63%
NA
68%

77
 Fit with Pershing Square Criteria

Criteria Ideal Acceptable Hertz

Expected Profit ($MM) $300+ $150+ $300+
Expected Return (IRR) 40%+ 25%+ 50%+
Upside/Downside 4 to 1 3 to 1 2.6 to 1
Realization Horizon 1 year 2 years 1 year
Target TEV $5bn+ $2bn+ $16bn
Buy Liquidity 2 months < 3 months 1.5 months
Sell Liquidity 2 months < 3 months 1.5 months
Domicle Domestic (English) Foreign (English) Domestic (English)
Strategy Value/Large MoS Value/Free Growth Value/Free Growth
Corporate Resilence Intrinsic Extrinsic/Deep Value Intrinsic
Governance Uncontrolled Rational Large Shareholder Uncontrolled
Stance Passive Active Passive
Value Ascertainability High Moderate High

78
Appendix F: Downside Case
Financials

79
Model Summary – Downside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Income Statement Metrics
Total Revenue $8,525 $7,102 $7,563 $8,298 $9,021 $10,814 $11,192 $11,668 $11,985 $12,325
Total Revenue Growth (1.8%) (16.7%) 6.5% 9.7% 8.7% 19.9% 3.5% 4.3% 2.7% 2.8%
Car Rental 0.8% (12.8%) 8.5% 9.2% 7.8% 22.3% 3.2% 4.2% 2.8% 2.9%
Equipment Rental (5.5%) (33.0%) (3.7%) 13.0% 14.5% 6.6% 5.6% 4.6% 2.3% 2.3%
EBITDA 1,240 998 1,089 1,356 1,607 2,033 2,261 2,429 2,516 2,613
EBITDA Margin 14.5% 14.1% 14.4% 16.3% 17.8% 18.8% 20.2% 20.8% 21.0% 21.2%
Net Interest Expense 429 404 436 279 274 442 423 319 290 242
EBT 238 199 347 681 901 1,118 1,343 1,593 1,696 1,828
EBT Margin 2.8% 2.8% 4.6% 8.2% 10.0% 10.3% 12.0% 13.7% 14.2% 14.8%
Car Rental 4.2% 7.8% 9.9% 12.0% 13.4% 15.5% 16.8% 17.5% 17.7% 17.9%
Equipment Rental 16.4% 6.9% 7.3% 13.3% 16.4% 15.4% 17.1% 18.9% 19.6% 20.2%
Cash Tax Expense 81 68 118 231 306 380 457 542 577 622
Net Income on Operating Basis 136 117 212 430 595 738 886 1,051 1,120 1,207
EPS $0.42 $0.31 $0.51 $0.97 $1.33 $1.59 $1.90 $2.24 $2.38 $2.55
EPS Growth nm (25.5%) 63.6% 88.0% 37.4% 19.8% 19.5% 18.0% 6.0% 7.2%
Balance Sheet Metrics
Net Debt 3,260 3,339 3,249 3,465 5,440 4,582 3,253 1,619 (156) (2,075)
Total Debt to Equity 3.12x 2.25x 2.77x 2.11x 2.61x 1.78x 1.36x 1.03x 0.73x 0.49x
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 2.25x 1.44x 0.67x (0.06x) (0.79x)
Return on Equity 9.3% 5.6% 10.1% 19.2% 23.7% 21.0% 20.8% 20.4% 18.5% 17.1%
Return on Invested Capital 7.3% 5.9% 6.5% 9.1% 8.6% 10.5% 11.6% 12.1% 12.5% 13.0%
Return on Assets 2.7% 2.5% 3.0% 3.6% 3.3% 4.3% 4.9% 5.3% 5.5% 5.9%
Cash Flow Metrics
Cash Flow - Operating 2,096 1,775 2,209 2,233 2,718 3,463 4,069 4,539 4,752 4,970
Capex 1,317 1,579 1,063 1,832 2,663 2,604 2,740 2,905 2,977 3,051
FCF 779 196 1,146 402 55 859 1,329 1,634 1,775 1,919

80
Income Statement – Downside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Sales $8,525 $7,102 $7,563 $8,298 $9,021 $10,814 $11,192 $11,668 $11,985 $12,325
Bloomberg Consensus: $10,911 $11,695 $12,548
Expenses:
Direct Operating 4,930 4,084 4,283 4,566 4,796 5,249 5,345 5,501 5,602 5,710
Deprec. of revenue earning equip, leases 2,194 1,931 1,868 1,906 2,148 2,776 2,934 3,250 3,379 3,516
SG&A 769 641 665 745 946 1,223 1,362 1,512 1,545 1,580
Interest Expense 870 680 773 700 650 873 840 653 608 541
Interest Income 25 65 12 6 5 6 6 6 6 7
Impairments, Others 1,169 0 0 63 36 0 0 0 0 0
Total Expense 9,907 7,272 7,577 7,974 8,570 9,915 10,075 10,309 10,527 10,741
GAAP Pre-Tax Income (1,382) (171) (15) 324 451 899 1,117 1,360 1,458 1,585
Adjustments for non-cash and non-recurring items:
Purchase Accounting 101 90 90 88 110 126 131 137 140 144
Non-Cash Debt Charges 100 172 183 130 84 92 94 96 98 100
Other charges 1,419 108 89 138 258 0 0 0 0 0
(Restructuring Charges, Derivative Loss, Pension Adjustment, Acquisition Charges, Other)
Total Adjustments 1,620 370 362 356 451 219 225 233 238 244
Adjusted Pre-Tax Income 238 199 347 681 901 1,118 1,343 1,593 1,696 1,828
Cash Tax 81 68 118 231 306 380 457 542 577 622
Less: Noncontrolling interest 21 15 17 20 0 0 0 0 0 0
Net Income to Hertz 136 117 212 430 595 738 886 1,051 1,120 1,207
Diluted EPS $0.42 $0.31 $0.51 $0.97 $1.33 $1.59 $1.90 $2.24 $2.38 $2.55
Bloomberg Consensus: $1.90 $2.38 $2.68
Fully Diluted Share 323 372 412 445 448 464 466 469 471 473

81
EBITDA Reconciliation – Downside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Car Rental Segment:
GAAP Pre-tax income (385) 190 442 756 784 1,324 1,496 1,624 1,687 1,759
+ D&A and other purchase accounting 2,107 1,785 1,724 1,774 2,007 2,643 2,790 3,099 3,225 3,360
+ Interest, net of interest income 445 302 390 329 312 410 395 307 289 270
+ Impairment charges 443 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 2,610 2,276 2,556 2,858 3,103 4,377 4,681 5,030 5,202 5,389
- Car rental fleet interest 425 316 377 313 297 390 376 294 278 260
- Car rental fleet depreciation 1,844 1,614 1,595 1,651 1,876 2,486 2,627 2,929 3,051 3,181
+ Non-cash expenses & charges 83 130 135 33 41 49 51 53 55 56
+ Extraordinary, unusual charges 108 105 30 24 136 0 0 0 0 0
RAC Segment EBITDA 532 582 749 950 1,107 1,550 1,728 1,860 1,928 2,005
Equipment Rental Segment:
GAAP Pre-tax income (629) (20) (15) 69 152 175 212 251 267 284
+ D&A and other purchase accounting 417 383 338 324 356 391 411 429 439 450
+ Interest, net of interest income 111 53 39 45 52 66 65 51 48 44
+ Impairment charges 111 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 624 416 363 439 561 632 687 731 754 779
+ Non-cash, extraordinary, unusual charges 106 39 35 42 25 0 0 0 0 0
HERC Segment EBITDA 731 455 398 481 586 632 687 731 754 779
Other reconciling items:
GAAP Pre-tax income (368) (340) (442) (501) (486) (600) (590) (515) (496) (459)
+ D&A and other purchase accounting 6 8 10 11 13 16 17 17 18 18
+ Interest, net of interest income 307 311 333 321 282 392 375 290 265 221
+ Noncontrolling interest (21) (15) (17) (20) 0 0 0 0 0 0
GAAP EBITDA before adjustments (76) (36) (117) (188) (191) (192) (199) (208) (213) (220)
+ Non-cash expenses & charges 30 37 37 28 27 43 44 46 47 49
+ Extraordinary, unusual charges 24 (39) 21 85 78 0 0 0 0 0
Corporate Segment EBITDA (23) (38) (59) (74) (86) (150) (155) (162) (166) (171)
Total Adjusted EBITDA 1,240 998 1,089 1,356 1,607 2,033 2,261 2,429 2,516 2,613

82
Balance Sheet – Downside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Assets:
Cash & ST investments 1,326 1,351 2,582 1,240 1,105 1,677 2,564 3,697 4,585 5,544
Receivables 1,911 1,325 1,357 1,616 1,887 2,412 2,496 2,602 2,673 2,749
Inventory 96 93 87 84 106 127 131 137 140 144
Revenue Earning Equipment 8,692 8,852 8,924 10,105 12,908 12,520 12,103 11,525 10,884 10,172
Other Property & Equipment 1,255 1,188 1,164 1,252 1,436 1,457 1,071 539 (44) (684)
Goodwill & Intangibles 2,886 2,893 2,879 2,954 5,374 5,273 5,169 5,060 4,948 4,833
Other 287 300 353 422 470 470 470 470 470 470
Total Assets 16,451 16,002 17,345 17,674 23,286 23,936 24,004 24,031 23,656 23,229
Liabilities & S.E.:
Payables 931 659 954 897 999 1,198 1,240 1,292 1,327 1,365
Fleet Debt 6,387 5,675 5,476 6,612 8,903 8,636 8,348 7,949 7,507 7,016
Corporate Debt, Leases 4,586 4,689 5,831 4,705 6,545 6,259 5,816 5,316 4,428 3,469
Deferred Income Taxes 1,482 1,471 1,508 1,688 2,700 2,700 2,700 2,700 2,700 2,700
Other 1,577 1,410 1,457 1,535 1,631 1,631 1,631 1,631 1,631 1,631
Total Liabilities 14,963 13,905 15,226 15,439 20,779 20,423 19,734 18,889 17,594 16,181
Shareholders' Equity 1,488 2,097 2,118 2,235 2,507 3,513 4,270 5,142 6,062 7,048
Total Liabilities & S.E. 16,451 16,002 17,345 17,674 23,286 23,936 24,004 24,031 23,656 23,229
Key Statistics:
Net Debt 3,260 3,339 3,249 3,465 5,440 4,582 3,253 1,619 (156) (2,075)
Net Debt / Equity 2.19x 1.59x 1.53x 1.55x 2.17x 1.30x 0.76x 0.31x (0.03x) (0.29x)
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 2.25x 1.44x 0.67x (0.06x) (0.79x)
Total Debt / Equity 3.08x 2.24x 2.75x 2.11x 2.61x 1.78x 1.36x 1.03x 0.73x 0.49x
Receivables Turnover 4.46x 5.36x 5.57x 5.13x 4.78x 4.48x 4.48x 4.48x 4.48x 4.48x
Receivables Days 80.7 67.2 64.6 70.1 75.3 80.3 80.3 80.3 80.3 80.3

83
Cash Flow Statement – Downside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Operating Activities:
Net Income 136 117 212 430 595 738 886 1,051 1,120 1,207
Revenue Earning Equip. D&A 2,194 1,931 1,868 1,906 2,148 2,776 2,934 3,250 3,379 3,516
Other PPE D&A 239 226 219 228 257 297 296 297 293 289
Changes in Working Capital (331) 316 270 (313) (190) (348) (47) (59) (39) (42)
Others (143) (815) (360) (17) (91) - - - - -
Cash Flow from Operating Act. 2,096 1,775 2,209 2,233 2,718 3,463 4,069 4,539 4,752 4,970

Investing Activities:
Fleet Equip. Capex, net disposals (1,178) (1,502) (922) (1,604) (2,488) (2,388) (2,516) (2,672) (2,737) (2,804)
Other PPE Capex, net (139) (77) (140) (228) (175) (216) (224) (233) (240) (247)
Acquisitions, net cash acquired (71) (76) (48) (227) (1,905) - - - - -
Others (79) 35 (1) (30) 90 - - - - -
Cash Flow from Investing Act. (1,466) (1,621) (1,111) (2,089) (4,477) (2,604) (2,740) (2,905) (2,977) (3,051)

Financing Activities:
Proceeds from Debt Issuance, net (816) 523 (799) (1,320) 443 (36) (193) (250) (888) (959)
Proceeds from Rev. Line of Credit 199 (1,126) 1,026 57 1,273 (250) (250) (250)
Proceeds from Equity Issuance - 529 - - - - - - - -
Dividends Paid - - - - - - - - - -
Others (78) (54) (93) (224) (92) - - - - -
Cash Flow from Financing Act. (695) (129) 134 (1,487) 1,625 (286) (443) (500) (888) (959)

Cash Flow for Year (66) 25 1,231 (1,342) (135) 573 886 1,134 888 959
Cash at Beginning of Year 1,391 1,326 1,351 2,582 1,240 1,105 1,677 2,564 3,697 4,585
Cash at End of Year 1,326 1,351 2,582 1,240 1,105 1,677 2,564 3,697 4,585 5,544

CFO less Capex (FCF) 779 196 1,146 402 55 859 1,329 1,634 1,775 1,919

84
Appendix G: Upside Case Financials

85
Model Summary – Upside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Income Statement Metrics
Total Revenue $8,525 $7,102 $7,563 $8,298 $9,021 $11,182 $12,078 $12,860 $13,341 $13,863
Total Revenue Growth (1.8%) (16.7%) 6.5% 9.7% 8.7% 24.0% 8.0% 6.5% 3.7% 3.9%
Car Rental 0.8% (12.8%) 8.5% 9.2% 7.8% 26.8% 8.1% 6.5% 3.8% 4.0%
Equipment Rental (5.5%) (33.0%) (3.7%) 13.0% 14.5% 8.6% 7.6% 6.6% 3.3% 3.3%
EBITDA 1,240 998 1,089 1,356 1,607 2,593 3,266 3,505 3,656 3,823
EBITDA Margin 14.5% 14.1% 14.4% 16.3% 17.8% 23.2% 27.0% 27.3% 27.4% 27.6%
Net Interest Expense 429 404 436 279 274 386 350 203 170 134
EBT 238 199 347 681 901 1,723 2,394 2,746 2,911 3,094
EBT Margin 2.8% 2.8% 4.6% 8.2% 10.0% 15.4% 19.8% 21.4% 21.8% 22.3%
Car Rental 4.2% 7.8% 9.9% 12.0% 13.4% 20.8% 25.1% 25.3% 25.5% 25.7%
Equipment Rental 16.4% 6.9% 7.3% 13.3% 16.4% 16.3% 17.7% 18.1% 18.3% 18.5%
Cash Tax Expense 81 68 118 231 306 586 814 934 990 1,052
Net Income on Operating Basis 136 117 212 430 595 1,137 1,580 1,812 1,921 2,042
EPS $0.42 $0.31 $0.51 $0.97 $1.33 $2.45 $3.39 $3.87 $4.08 $4.31
EPS Growth nm (25.5%) 63.6% 88.0% 37.4% 84.6% 38.3% 14.1% 5.5% 5.7%
Balance Sheet Metrics
Net Debt 3,260 3,339 3,249 3,465 5,440 4,139 2,487 618 (1,423) (3,617)
Total Debt to Equity 3.12x 2.25x 2.77x 2.11x 2.61x 1.57x 0.95x 0.58x 0.35x 0.16x
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 1.60x 0.76x 0.18x (0.39x) (0.95x)
Return on Equity 9.3% 5.6% 10.1% 19.2% 23.7% 30.3% 29.8% 25.5% 21.4% 18.6%
Return on Invested Capital 7.3% 5.9% 6.5% 9.1% 8.6% 14.4% 17.5% 17.3% 16.8% 16.7%
Return on Assets 2.7% 2.5% 3.0% 3.6% 3.3% 5.8% 7.3% 7.6% 7.7% 7.8%
Cash Flow Metrics
Cash Flow - Operating 2,096 1,775 2,209 2,233 2,718 3,910 4,440 4,852 5,084 5,301
Capex 1,317 1,579 1,063 1,832 2,663 2,608 2,788 2,982 3,043 3,107
FCF 779 196 1,146 402 55 1,302 1,652 1,869 2,040 2,195

86
Income Statement – Upside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Net Sales $8,525 $7,102 $7,563 $8,298 $9,021 $11,182 $12,078 $12,860 $13,341 $13,863
Bloomberg Consensus: $10,911 $11,695 $12,548
Expenses:
Direct Operating 4,930 4,084 4,283 4,566 4,796 5,474 5,675 6,025 6,239 6,470
Deprec. of revenue earning equip, leases 2,194 1,931 1,868 1,906 2,148 2,543 2,626 2,787 2,882 2,984
SG&A 769 641 665 745 946 1,361 1,554 1,635 1,685 1,739
Interest Expense 870 680 773 700 650 712 674 525 490 450
Interest Income 25 65 12 6 5 6 7 7 7 8
Impairments, Others 1,169 0 0 63 36 0 0 0 0 0
Total Expense 9,907 7,272 7,577 7,974 8,570 9,683 9,922 10,365 10,688 11,036
GAAP Pre-Tax Income (1,382) (171) (15) 324 451 1,499 2,156 2,495 2,652 2,827
Adjustments for non-cash and non-recurring items:
Purchase Accounting 101 90 90 88 110 130 140 149 154 160
Non-Cash Debt Charges 100 172 183 130 84 94 99 102 105 107
Other charges 1,419 108 89 138 258 0 0 0 0 0
(Restructuring Charges, Derivative Loss, Pension Adjustment, Acquisition Charges, Other)
Total Adjustments 1,620 370 362 356 451 224 238 251 259 267
Adjusted Pre-Tax Income 238 199 347 681 901 1,723 2,394 2,746 2,911 3,094
Cash Tax 81 68 118 231 306 586 814 934 990 1,052
Less: Noncontrolling interest 21 15 17 20 0 0 0 0 0 0
Net Income to Hertz 136 117 212 430 595 1,137 1,580 1,812 1,921 2,042
Diluted EPS $0.42 $0.31 $0.51 $0.97 $1.33 $2.45 $3.39 $3.87 $4.08 $4.31
Bloomberg Consensus: $1.90 $2.38 $2.68
Fully Diluted Share 323 372 412 445 448 464 466 469 471 473

87
EBITDA Reconciliation – Upside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Car Rental Segment:
GAAP Pre-tax income (385) 190 442 756 784 1,882 2,484 2,670 2,792 2,929
+ D&A and other purchase accounting 2,107 1,785 1,724 1,774 2,007 2,410 2,483 2,635 2,726 2,824
+ Interest, net of interest income 445 302 390 329 312 299 297 295 292 289
+ Impairment charges 443 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 2,610 2,276 2,556 2,858 3,103 4,591 5,264 5,600 5,811 6,042
- Car rental fleet interest 425 316 377 313 297 286 285 283 281 278
- Car rental fleet depreciation 1,844 1,614 1,595 1,651 1,876 2,247 2,308 2,448 2,532 2,623
+ Non-cash expenses & charges 83 130 135 33 41 51 55 59 61 63
+ Extraordinary, unusual charges 108 105 30 24 136 0 0 0 0 0
RAC Segment EBITDA 532 582 749 950 1,107 2,108 2,727 2,928 3,059 3,204
Equipment Rental Segment:
GAAP Pre-tax income (629) (20) (15) 69 152 192 229 251 263 275
+ D&A and other purchase accounting 417 383 338 324 356 400 431 459 475 491
+ Interest, net of interest income 111 53 39 45 52 47 47 47 46 45
+ Impairment charges 111 0 0 0 0 0 0 0 0 0
GAAP EBITDA before adjustments 624 416 363 439 561 639 707 756 783 811
+ Non-cash, extraordinary, unusual charges 106 39 35 42 25 0 0 0 0 0
HERC Segment EBITDA 731 455 398 481 586 639 707 756 783 811
Other reconciling items:
GAAP Pre-tax income (368) (340) (442) (501) (486) (576) (557) (426) (402) (377)
+ D&A and other purchase accounting 6 8 10 11 13 17 18 19 20 21
+ Interest, net of interest income 307 311 333 321 282 360 324 177 145 109
+ Noncontrolling interest (21) (15) (17) (20) 0 0 0 0 0 0
GAAP EBITDA before adjustments (76) (36) (117) (188) (191) (199) (215) (229) (238) (247)
+ Non-cash expenses & charges 30 37 37 28 27 44 48 51 53 55
+ Extraordinary, unusual charges 24 (39) 21 85 78 0 0 0 0 0
Corporate Segment EBITDA (23) (38) (59) (74) (86) (155) (168) (179) (185) (193)
Total Adjusted EBITDA 1,240 998 1,089 1,356 1,607 2,593 3,266 3,505 3,656 3,823

88
Balance Sheet – Upside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Assets:
Cash & ST investments 1,326 1,351 2,582 1,240 1,105 1,756 2,581 3,516 4,536 5,414
Receivables 1,911 1,325 1,357 1,616 1,887 2,178 2,353 2,505 2,599 2,700
Inventory 96 93 87 84 106 131 142 151 156 162
Revenue Earning Equipment 8,692 8,852 8,924 10,105 12,908 12,750 12,671 12,609 12,503 12,348
Other Property & Equipment 1,255 1,188 1,164 1,252 1,436 1,457 1,413 1,401 1,360 1,286
Goodwill & Intangibles 2,886 2,893 2,879 2,954 5,374 5,270 5,157 5,037 4,913 4,784
Other 287 300 353 422 470 470 470 470 470 470
Total Assets 16,451 16,002 17,345 17,674 23,286 24,012 24,786 25,689 26,538 27,165
Liabilities & S.E.:
Payables 931 659 954 897 999 1,238 1,338 1,424 1,478 1,535
Fleet Debt 6,387 5,675 5,476 6,612 8,903 8,794 8,739 8,697 8,624 8,517
Corporate Debt, Leases 4,586 4,689 5,831 4,705 6,545 5,894 5,069 4,134 3,114 1,797
Deferred Income Taxes 1,482 1,471 1,508 1,688 2,700 2,700 2,700 2,700 2,700 2,700
Other 1,577 1,410 1,457 1,535 1,631 1,631 1,631 1,631 1,631 1,631
Total Liabilities 14,963 13,905 15,226 15,439 20,779 20,258 19,477 18,586 17,546 16,180
Shareholders' Equity 1,488 2,097 2,118 2,235 2,507 3,754 5,310 7,103 8,991 10,985
Total Liabilities & S.E. 16,451 16,002 17,345 17,674 23,286 24,012 24,786 25,689 26,538 27,165
Key Statistics:
Net Debt 3,260 3,339 3,249 3,465 5,440 4,139 2,487 618 (1,423) (3,617)
Net Debt / Equity 2.19x 1.59x 1.53x 1.55x 2.17x 1.10x 0.47x 0.09x (0.16x) (0.33x)
Net Debt / EBITDA 2.63x 3.34x 2.98x 2.55x 3.38x 1.60x 0.76x 0.18x (0.39x) (0.95x)
Total Debt / Equity 3.08x 2.24x 2.75x 2.11x 2.61x 1.57x 0.95x 0.58x 0.35x 0.16x
Receivables Turnover 4.46x 5.36x 5.57x 5.13x 4.78x 5.13x 5.13x 5.13x 5.13x 5.13x
Receivables Days 80.7 67.2 64.6 70.1 75.3 70.1 70.1 70.1 70.1 70.1

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Cash Flow Statement – Upside Case
($ in millions, except per share data) Fiscal Year Ending December
2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e
Operating Activities:
Net Income 136 117 212 430 595 1,137 1,580 1,812 1,921 2,042
Revenue Earning Equip. D&A 2,194 1,931 1,868 1,906 2,148 2,543 2,626 2,787 2,882 2,984
Other PPE D&A 239 226 219 228 257 307 320 327 326 325
Changes in Working Capital (331) 316 270 (313) (190) (77) (86) (75) (46) (50)
Others (143) (815) (360) (17) (91) - - - - -
Cash Flow from Operating Act. 2,096 1,775 2,209 2,233 2,718 3,910 4,440 4,852 5,084 5,301

Investing Activities:
Fleet Equip. Capex, net disposals (1,178) (1,502) (922) (1,604) (2,488) (2,384) (2,547) (2,725) (2,777) (2,829)
Other PPE Capex, net (139) (77) (140) (228) (175) (224) (242) (257) (267) (277)
Acquisitions, net cash acquired (71) (76) (48) (227) (1,905) - - - - -
Others (79) 35 (1) (30) 90 - - - - -
Cash Flow from Investing Act. (1,466) (1,621) (1,111) (2,089) (4,477) (2,608) (2,788) (2,982) (3,043) (3,107)

Financing Activities:
Proceeds from Debt Issuance, net (816) 523 (799) (1,320) 443 (401) (576) (685) (1,020) (1,317)
Proceeds from Rev. Line of Credit 199 (1,126) 1,026 57 1,273 (250) (250) (250)
Proceeds from Equity Issuance - 529 - - - - - - - -
Dividends Paid - - - - - - - - - -
Others (78) (54) (93) (224) (92) - - - - -
Cash Flow from Financing Act. (695) (129) 134 (1,487) 1,625 (651) (826) (935) (1,020) (1,317)

Cash Flow for Year (66) 25 1,231 (1,342) (135) 651 826 935 1,020 878
Cash at Beginning of Year 1,391 1,326 1,351 2,582 1,240 1,105 1,756 2,581 3,516 4,536
Cash at End of Year 1,326 1,351 2,582 1,240 1,105 1,756 2,581 3,516 4,536 5,414

CFO less Capex (FCF) 779 196 1,146 402 55 1,302 1,652 1,869 2,040 2,195

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Appendix H: Team Member Bios

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Team Member Bios
Richard Hunt (RHunt14@gsb.columbia.edu)
Richard is a first-year student at Columbia Business School. Richard is Co-President of the
Columbia Student Investment Management Association. Prior to CBS, Richard was a Senior
Financial Analyst at New Constructs.
Richard received a B.B.A. in Economics and Finance from University of Kentucky.

Stephen Lieu (SLieu14@gsb.columbia.edu)

Stephen is a first-year student at Columbia Business School. Stephen is Co-President of the
Columbia Student Investment Management Association. Prior to CBS, Stephen worked for four
years in investment banking and private equity.
Stephen received a B.S. in Economics from the Wharton School, University of Pennsylvania.

Rahul Raymoulik (RRaymoulik14@gsb.columbia.edu)

Rahul is a first-year student at Columbia Business School. Prior to business school, Rahul was a
Sector Specialist at Fidelity Investments, initially in Boston and later in Tokyo. Rahul focused
on the media and telecom industries in the U.S. and the technology industry in Asia.
Rahul received a B.S. in Information Science from Northeastern University and an M.S. in
Finance from Boston College.

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Thank you for your time!

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