10-Q

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-7541

THE HERTZ CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	13-1938568
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

225 Brae Boulevard, Park Ridge, New Jersey 07656-0713

(Address of principal executive offices)

(Zip Code)

(201) 307-2000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year,

if changed since last report.)

The Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format as permitted.

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

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x .

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of September 30, 2004: Common Stock, $0.01 par value - 100 shares.

Page 1 of 24 pages

THE HERTZ CORPORATION AND SUBSIDIARIES
INDEX

		Page
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			3
Consolidated Balance Sheet as of September 30, 2004 and December 31, 2003			4
Consolidated Statement of Operations for the three months ended September 30, 2004 and 2003			5
Consolidated Statement of Operations for the nine months ended September 30, 2004 and 2003			6
Consolidated Statement of Cash Flows for the nine months ended September 30, 2004 and 2003			7
Notes to Condensed Consolidated Financial Statements	8 – 15
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 – 22
ITEM 4. Controls and Procedures			22
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings			23
ITEM 6. Exhibits and Reports on Form 8-K			23
SIGNATURES			24
EXHIBIT INDEX			24
EX-10.A FORD/HERTZ FRAMEWORK SUPPLY AGREEMENT
EX-10.B AMENDED AND RESTATED ADVERTISING AGREEMENT
EX-12 CONSOLIDATED COMPUTATION OF RATIO OF EARNINGS
EX-15 LETTER OF PRICEWATERHOUSECOOPERS LLP
EX-31.1 CERTIFICATION
EX-31.2 CERTIFICATION
EX-32.1 CERTIFICATION
EX-32.2 CERTIFICATION

2

PART I - FINANCIAL INFORMATION

ITEM l. Condensed Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Hertz Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of The Hertz Corporation and its subsidiaries (the “Company”) as of September 30, 2004, and the related condensed consolidated statements of operations for each of the three-month and nine-month periods ended September 30, 2004 and 2003 and the condensed consolidated statement of cash flows for the nine-month periods ended September 30, 2004 and 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2003, and the related consolidated statements of operations, of stockholder’s equity and of cash flows for the year then ended (not presented herein), and in our report dated January 14, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
November 4, 2004

3

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In Thousands of Dollars)

Unaudited

	September 30,			December 31,
	2004			2003
ASSETS
Cash and equivalents (Notes 3 and 7)	$	536,284		$	609,986
Short-term investments (Note 3)		654,644			500,108
Receivables, less allowance for doubtful accounts of $30,943 and $35,758 (Note 7)		1,355,139			1,238,853
Due from affiliates		441,280			520,842
Inventories, at lower of cost or market		83,337			73,354
Prepaid expenses and other assets (Note 7)		161,142			135,922
Revenue earning equipment, at cost (Notes 6 and 7):
Cars		8,697,935			7,168,688
Less accumulated depreciation		(745,705	)		(706,719	)
Other equipment		2,430,132			2,214,901
Less accumulated depreciation		(868,441	)		(883,623	)
Total revenue earning equipment		9,513,921			7,793,247
Property and equipment, at cost:
Land, buildings and leasehold improvements		1,275,804			1,221,423
Service equipment		1,189,736			1,114,875
		2,465,540			2,336,298
Less accumulated depreciation		(1,261,095	)		(1,166,529	)
Total property and equipment		1,204,445			1,169,769
Goodwill and other intangible assets (Note 4)		535,766			536,929
Total assets	$	14,485,958		$	12,579,010
LIABILITIES AND STOCKHOLDER’S EQUITY
Accounts payable	$	846,481		$	757,869
Accrued liabilities (Note 7)		892,304			736,366
Accrued taxes		158,695			111,432
Debt (Note 7)		8,879,087			7,627,930
Public liability and property damage		381,406			398,822
Deferred taxes on income		830,200			721,200
Minority interest (Note 1)		6,634			—
Stockholder’s equity:
Common Stock, $0.01 par value, 3,000 shares authorized, 100 shares issued		—			—
Additional capital paid-in		983,132			983,132
Retained earnings		1,390,369			1,113,746
Accumulated other comprehensive income (Note 10)		117,650			128,513
Total stockholder’s equity		2,491,151			2,225,391
Total liabilities and stockholder’s equity	$	14,485,958		$	12,579,010

The accompanying notes are an integral part of this statement.

4

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In Thousands of Dollars)

Unaudited

	Three Months
	Ended September 30,
	2004			2003
Revenues:
Car rental	$	1,363,814		$	1,225,400
Industrial and construction equipment rental		277,047			245,966
Other		20,239			18,178
Total revenues		1,661,100			1,489,544
Expenses:
Direct operating		778,384			690,701
Depreciation of revenue earning equipment (Note 6)		370,738			396,808
Selling, general and administrative		158,742			125,486
Interest, net of interest income of $6,741 and $4,279		102,372			88,966
Total expenses		1,410,236			1,301,961
Income before income taxes and minority interest		250,864			187,583
Provision for taxes on income (Note 5)		(64,968	)		(60,888	)
Minority interest (Note 1)		(1,456	)		—
Net income	$	184,440		$	126,695

The accompanying notes are an integral part of this statement.

5

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In Thousands of Dollars)

Unaudited

	Nine Months
	Ended September 30,
	2004			2003
Revenues:
Car rental	$	3,604,214		$	3,197,918
Industrial and construction equipment rental		730,470			660,763
Other		52,100			48,332
Total revenues		4,386,784			3,907,013
Expenses:
Direct operating		2,176,727			1,937,592
Depreciation of revenue earning equipment (Note 6)		1,084,480			1,132,871
Selling, general and administrative		447,915			378,903
Interest, net of interest income of $15,751 and $13,101		285,078			267,276
Total expenses		3,994,200			3,716,642
Income before income taxes and minority interest		392,584			190,371
Provision for taxes on income (Note 5)		(114,505	)		(61,778	)
Minority interest (Note 1)		(1,456	)		—
Net income	$	276,623		$	128,593

The accompanying notes are an integral part of this statement.

6

THE HERTZ CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In Thousands of Dollars)

Unaudited

	Nine Months
	Ended September 30,
	2004			2003
Cash flows from operating activities:
Net income	$	276,623		$	128,593
Adjustments to reconcile net income to net cash (used in) provided by operating activities		(1,262,128	)		(56,500	)
Net cash (used in) provided by operating activities		(985,505	)		72,093
Cash flows from investing activities:
Purchases of short-term investments, net		(154,536	)		(850,479	)
Property and equipment expenditures		(218,668	)		(162,314	)
Proceeds from sales of property and equipment		51,984			45,769
Available-for-sale securities:
Purchases		(9,461	)		(8,589	)
Sales		9,220			7,889
Changes in investment in joint venture		2,000			2,600
Net cash used in investing activities		(319,461	)		(965,124	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		1,958,691			507,821
Repayment of long-term debt		(909,913	)		(708,788	)
Short-term borrowings:
Proceeds		1,212,299			839,496
Repayments		(593,568	)		(356,488	)
Ninety day term or less, net		(428,187	)		667,257
Net cash provided by financing activities		1,239,322			949,298
Effect of foreign exchange rate changes on cash		(8,058	)		22,883
Net (decrease) increase in cash and equivalents during the period		(73,702	)		79,150
Cash and equivalents at beginning of year		609,986			601,263
Cash and equivalents at end of period	$	536,284		$	680,413
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Interest (net of amounts capitalized)	$	272,069		$	268,451
Income taxes		(3,952	)		22,715

The accompanying notes are an integral part of this statement.

7

THE HERTZ CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

Note 1 - Basis of Presentation

     The Hertz Corporation (together with its subsidiaries, referred to herein as “Hertz” or the “Company”) is an indirect wholly owned subsidiary of Ford Motor Company (“Ford”).

     The summary of accounting policies set forth in Note 1 to the consolidated financial statements contained in the Form 10-K for the fiscal year ended December 31, 2003, filed by the Company with the Securities and Exchange Commission on March 15, 2004, has been followed in preparing the accompanying condensed consolidated financial statements.

     On July 1, 2004, the Company increased its joint venture ownership interest in Navigation Solutions LLC (“Navigation Solutions”) from 40% to 65%. This change resulted from an equity distribution by the joint venture to the Company’s joint venture partner, effectively reducing their ownership interest to 35%. Based upon this ownership change, the Company began consolidating 100% of Navigation Solution’s balance sheet and results of operations into its financial statements and deducting the minority interest share relating to the 35% shareholder. For those periods prior to July 1, 2004, the results of operations and investment in this joint venture had been reported using the equity method of accounting.

     The condensed consolidated financial statements for interim periods included herein have been reviewed, but not audited, by the Company’s independent registered public accounting firm. In the Company’s opinion, all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of operations for the interim periods have been made. Results for interim periods are not necessarily indicative of results for a full year.

Note 2 - Recently Adopted Pronouncements

     In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46 (“FIN 46”) “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51,” which expands upon and strengthens existing accounting guidance concerning when a company should include in its financial statements the assets, liabilities and activities of another entity. Prior to the issuance of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a Variable Interest Entity (“VIE”), as defined in FIN 46, to be consolidated by a company if that company is the primary beneficiary. The primary beneficiary is the entity subject to a majority of the risk of loss from the VIE’s activities or is entitled to receive a majority of the VIE’s residual returns, or both. FIN 46 also requires disclosures about VIEs that a company is not required to consolidate but in which it has a significant variable interest. The Company adopted FIN 46 as of July 1, 2003 and the Revised Interpretation (“FIN 46-R”) as of December 15, 2003. The adoption of FIN 46 and FIN 46-R did not affect the Company’s financial position, results of operations or cash flows.

     In December 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” SFAS No. 132, as revised, improves financial statement disclosures for defined benefit plans. The change replaces existing SFAS No. 132 disclosure requirements for pensions and other postretirement benefits and revised employers’ disclosures about pension plans and other postretirement benefit plans. SFAS No. 132, as revised, does not change the measurement or recognition of those plans required by SFAS No. 87, “Employers’ Accounting for Pensions” and SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits.” SFAS No. 132, as revised, retains the disclosure requirements contained in the original SFAS No. 132, but requires additional disclosures about the plan assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined postretirement plans. SFAS No. 132, as revised, is effective for annual and interim periods with fiscal years ending after December 15, 2003. See Note 8 – Employee Retirement Benefits.

8

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 3 - Cash and Equivalents and Short-term Investments

     Cash and equivalents includes marketable securities and other investments that are readily convertible into cash and have original maturities of three months or less. At September 30, 2004 and December 31, 2003, the Company’s short-term investments of $655 million and $500 million, respectively, consisted of investments with a related party investment fund that pools and invests excess cash balances of Ford and certain Ford subsidiaries to maximize returns.

Note 4 - Goodwill and Other Intangible Assets

     The Company accounts for goodwill under SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill is no longer amortized, but instead must be tested for impairment at least annually. The Company conducted the required annual goodwill impairment test in the second quarter of 2004, and determined that there was no impairment. Other intangible assets are amortized over their useful lives.

     The following summarizes the changes in the Company’s goodwill, by segment, and other intangible assets (in thousands of dollars):

	December 31, 2003		Change(1)			September 30, 2004
Goodwill
Car rental	$	364,160	$	(387	)	$	363,773
Industrial and construction equipment rental		170,966		(535	)		170,431
Total Goodwill		535,126		(922	)		534,204
Other intangible assets		1,803		(241	)		1,562
Total	$	536,929	$	(1,163	)	$	535,766

(1) Consists of changes resulting primarily from the translation of foreign currencies at different exchange rates on December 31, 2003 and September 30, 2004 and amortization of certain intangible assets.

Note 5 - Income Taxes

     The provision for taxes on income is based upon the expected effective tax rate applicable to the full year. The effective tax rate for the nine months ended September 30, 2004 of 29.2% is lower than the U.S. federal statutory rate of 35% primarily due to favorable foreign income tax adjustments of $23.3 million recorded in the third quarter of 2004.

9

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 6 -  Depreciation of Revenue Earning Equipment

     Depreciation of revenue earning equipment includes the following (in thousands of dollars):

	Three Months Ended
	September 30,
	2004			2003
Depreciation of revenue earning equipment	$	390,051		$	400,221
Adjustment of depreciation upon disposal of the equipment		(22,016	)		(7,659	)
Rents paid for vehicles leased		2,703			4,246
Total	$	370,738		$	396,808

	Nine Months Ended
	September 30,
	2004			2003
Depreciation of revenue earning equipment	$	1,122,248		$	1,126,025
Adjustment of depreciation upon disposal of the equipment		(47,440	)		(7,464	)
Rents paid for vehicles leased		9,672			14,310
Total	$	1,084,480		$	1,132,871

     The adjustment of depreciation upon disposal of revenue earning equipment for the three months ended September 30, 2004 and 2003 included net gains of $6.7 million and $2.1 million, respectively, on the sale of equipment in the Company’s industrial and construction equipment rental operations and a net gain of $15.3 million and $5.6 million, respectively, in the Company’s car rental operations.

     The adjustment of depreciation upon disposal of revenue earning equipment for the nine months ended September 30, 2004 and 2003 included net gains of $19.6 million and $8.3 million, respectively, on the sale of equipment in the Company’s industrial and construction equipment rental operations and a net gain of $27.8 million and a net loss of $0.8 million, respectively, in the Company’s car rental operations.

     During the nine months ended September 30, 2004, the Company purchased Ford vehicles at a cost of approximately $3.5 billion, and sold Ford vehicles to Ford or its affiliates under various repurchase programs for approximately $2.5 billion.

     The Company and Ford have signed an amended Vehicle Supply Agreement and an amended Joint Advertising Agreement, effective September 1, 2004 for a period of three years covering the 2005 through 2007 vehicle model years, which amend the existing agreements that expire August 31, 2007.

     The terms of the amended Vehicle Supply Agreement only apply to the Company’s fleet requirements in the United States and to “Ford,” “Lincoln” or “Mercury” brand vehicles (herein referred to as “Ford Vehicles”). The original Vehicle Supply Agreement was global in scope. As a result of the changes that were made, on a per model year basis, the Company may purchase fewer vehicles than it has under the original Vehicle Supply Agreement.

     The terms of the amended Joint Advertising Agreement provide that the payments by Ford for the Company’s advertising costs shall only apply to advertising in the United States, and further provide for the Company’s advertising to meet certain conditions, including the condition that the advertising only indicate that the Company features Ford Vehicles in a manner and with a prominence that is reasonably satisfactory to Ford.

     Based on the changes that were made, the Company anticipates that the advertising contributions payable by Ford during the 2005 vehicle model year will be less than the advertising contributions the Company received from Ford for the 2004 vehicle model year.

10

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

     Under the terms of the amended agreements, the Company will be able to enter into vehicle supply and advertising agreements with other automobile manufacturers in the United States and in other countries, and the Company intends to explore those opportunities. However, there can be no assurance that the Company will be able to obtain advertising contributions from other vehicle manufacturers that will mitigate the reduction in Ford’s advertising contributions.

Note 7 - Debt

     Debt at September 30, 2004 and December 31, 2003 consisted of the following (in thousands of dollars):

	September 30,		December 31,
	2004		2003
Notes payable, including commercial paper, average interest rate: 2004, 1.9%; 2003, 1.3%	$	955,993	$	1,187,142
Promissory notes, average interest rate: 2004, 5.9%; 2003, 6.2% (effective average interest rate: 2004, 6.0%; 2003, 6.2%); net of unamortized discount: 2004, $11,530; 2003, $11,676; due 2005 to 2028		5,708,397		4,895,180
Subsidiaries’ debt, in dollars and foreign currencies, including commercial paper: in millions (2004, $1,203.0; 2003, $1,034.9); and other borrowings; average interest rate: 2004, 2.8%; 2003, 3.0%		2,214,697		1,545,608
Total	$	8,879,087	$	7,627,930

     The aggregate amounts of maturities of debt for each of the twelve-month periods ending September 30, are as follows (in millions): 2005, $3,419.6 (including $2,909.3 of commercial paper and short-term borrowings); 2006, $351.0; 2007, $1,514.5; 2008, $616.1; 2009, $469.3; after 2009, $2,508.6.

     On September 30, 2003, the Company issued $500 million of 4.7% Senior Promissory Notes (the “4.7% Notes”) due on October 2, 2006. On June 3, 2004, the Company issued $600 million of 6.35% Senior Promissory Notes (the “6.35% Notes”) due on June 15, 2010. Effective September 30, 2003 and June 3, 2004, the Company entered into interest rate swap agreements relating to the 4.7% Notes and 6.35% Notes, respectively. Under these agreements, the Company pays interest at a variable rate in exchange for fixed rate receipts, effectively transforming the 4.7% Notes and the 6.35% Notes to floating rate obligations with effective interest rates at September 30, 2004 of 3.74% and 3.71%, respectively. The swaps are designated as fair value hedges with no ineffectiveness, as defined by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The carrying amounts of the interest rate swaps must be adjusted to their fair value for changes in market interest rates, with an offsetting adjustment to the fixed rate debt. As of September 30, 2004, the fair value adjustments relating to the interest rate swaps on the 4.7% Notes and the 6.35% Notes were $3.9 million and $17.0 million, respectively. The fair value adjustment relating to the interest rate swap on the 4.7% Notes was reflected in the consolidated balance sheet in Accrued liabilities with an offsetting decrease in Debt. The adjustment related to the interest rate swap on the 6.35% Notes was reflected in Prepaid expenses and other assets with a corresponding increase in Debt.

     At September 30, 2004, approximately $1,108 million of the Company’s consolidated stockholder’s equity was free of dividend limitations pursuant to its existing debt agreements.

     During 2002, the Company established an Asset Backed Securitization (“ABS”) program to reduce its borrowing costs and enhance financing resources for its domestic car rental fleet. The ABS program provided for the initial issuance of up to $1 billion of asset backed commercial paper and subsequent issuance of asset backed medium-term notes. These notes are issued by wholly owned and consolidated special purpose entities and are included in Debt in the consolidated balance sheet. All debt issued under the ABS program is collateralized by the assets of the special purpose entities consisting of revenue earning vehicles used by the Company in its daily rental business, restricted cash and certain receivables related to revenue earning vehicles.

11

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

     On March 31, 2004, the Company issued $600 million of asset backed medium-term notes (“the Medium-Term Notes”) under the ABS program. Of the $600 million of the Medium-Term Notes, $500 million has fixed interest rates ranging from 2.4% to 3.2% and maturities ranging from 2007 to 2009 and the remaining $100 million of Medium-Term Notes has a variable interest rate based on the one-month LIBOR rate plus nine basis points and mature in 2007. Payments of principal and interest relating to the Medium-Term Notes are insured to the extent provided in a note guaranty insurance policy issued by MBIA Insurance Corporation.

     At September 30, 2004, $460.9 million of asset backed commercial paper was outstanding under the ABS program. The average interest rate as of September 30, 2004 was 1.7%. The collateralized commercial paper has a maximum term of 58 days when issued. At September 30, 2004, $600 million of asset backed Medium-Term Notes was outstanding. The average interest rate as of September 30, 2004 was 2.6%. At September 30, 2004, the outstanding commercial paper and Medium-Term Notes were collateralized by $1,037.2 million net book value of revenue earning vehicles, $38.3 million of receivables and $3.0 million of restricted cash. The restricted cash is to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under the ABS program. Restricted cash is included in Cash and equivalents in the consolidated balance sheet.

     On July 2, 2004, the Company established a Euro Medium-Term Note Program under which the Company and/or Hertz Finance Centre plc (“HFC”), a wholly owned subsidiary of the Company, can issue up to Euro 650 million in Medium-Term Notes (“Notes”). On July 16, 2004, HFC issued Euro 200 million of Notes under this program. The Notes are fully guaranteed by the Company, mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points. As of September 30, 2004, the interest rate on the Notes was 3.22%.

     On August 5, 2004, the Company issued $500 million of Promissory Notes comprised of $250 million of floating rate notes which have an interest rate based on the three-month LIBOR rate plus 120 basis points due on August 5, 2008, and $250 million of 6.90% fixed rate notes due on August 15, 2014. As of September 30, 2004, the interest rate on the $250 million floating rate notes was 2.90%.

12

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 8 - Employee Retirement Benefits

     The following table sets forth net periodic pension and postretirement health care and life insurance expense (in millions of dollars):

	Three Months Ended September 30,
													Health Care & Life
	Pension Benefits												Insurance (U.S.)
	2004						2003						2004		2003
	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of Net Periodic Benefit Cost:
Service cost	$	6.6		$	1.1		$	4.0		$	0.8		$	0.1	$	0.1
Interest cost		5.3			1.2			3.7			1.0			0.3		0.2
Expected return on plan assets		(5.5	)		(0.9	)		(3.8	)		(0.6	)		—		—
Amortization:
Transition		—			—			—			0.1			—		—
Amendments		0.3			—			0.2			—			—		—
Losses and other		1.0			0.5			0.6			0.3			0.1		—
Net pension/post retirement expense	$	7.7		$	1.9		$	4.7		$	1.6		$	0.5	$	0.3

	Nine Months Ended September 30,
													Health Care & Life
	Pension Benefits												Insurance (U.S.)
	2004						2003						2004		2003
	U.S.			Non-U.S.			U.S.			Non-U.S.
Components of Net Periodic Benefit Cost:
Service cost	$	16.1		$	3.9		$	16.9		$	3.0		$	0.3	$	0.3
Interest cost		13.5			4.1			15.3			3.7			0.7		0.6
Expected return on plan assets		(13.7	)		(3.3	)		(15.6	)		(2.5	)		—		—
Amortization:
Transition		—			—			—			0.6			—		—
Amendments		0.5			—			0.5			—			—		—
Losses and other		1.4			1.2			2.1			1.1			0.2		0.1
Net pension/post retirement expense	$	17.8		$	5.9		$	19.2		$	5.9		$	1.2	$	1.0

     The Company’s policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations, and union agreements. For the nine months ended September 30, 2004, the Company contributed to its worldwide pension plans $4.3 million, including benefit payments made through unfunded plans. On October 4, 2004, the Company made a $48.0 million discretionary contribution to the U.S. Retirement Plan.

13

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 9 - Segment Information

     The Company’s business principally consists of two significant segments: rental of cars and light trucks (“car rental”); and rental of industrial, construction and material handling equipment (“industrial and construction equipment rental”). The contributions of these segments, as well as “corporate and other,” to revenues and income (loss) before income taxes and minority interest for the three and nine months ended September 30, 2004 and 2003 are summarized below (in millions of dollars). Corporate and other includes general corporate expenses, and certain interest expense, as well as other business activities such as claim management services.

	Three Months Ended September 30,
					Income (Loss) Before Income
	Revenues				Taxes and Minority Interest
	2004		2003		2004			2003
Car rental	$	1,382.6	$	1,241.5	$	207.4		$	175.0
Industrial and construction equipment rental		277.1		246.0		48.4			15.8
Corporate and other		1.4		2.0		(4.9	)		(3.2	)
Consolidated total	$	1,661.1	$	1,489.5	$	250.9		$	187.6

	Nine Months Ended September 30,
					Income (Loss) Before Income
	Revenues				Taxes and Minority Interest
	2004		2003		2004			2003
Car rental	$	3,651.6	$	3,240.3	$	354.7	(a)	$	225.2	(b)(c)
Industrial and construction equipment rental		730.7		661.0		54.4			(20.6	)
Corporate and other		4.5		5.7		(16.5	)		(14.2	)
Consolidated total	$	4,386.8	$	3,907.0	$	392.6		$	190.4

(a)	Includes $7.0 million received from business interruption claims made by the Company relating to the terrorist attacks of September 11, 2001.
(b)	Includes a gain of $8.0 million from the condemnation of a car rental and support facility in Florida.
(c)	Includes a one-time refund of $7.8 million which resulted from a special transitional credit for rental car companies instituted by the Australian Taxation Office for Goods and Services Tax.

     The increase in total assets from December 31, 2003 to September 30, 2004 in the consolidated balance sheet was primarily due to an increase in revenue earning vehicles in the car rental segment.

14

THE HERTZ CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited

Note 10 - Comprehensive Income (Loss)

     Accumulated other comprehensive income (loss) at September 30, 2004 and December 31, 2003 includes an accumulated translation gain (in thousands of dollars) of $128,826 and $139,598, respectively. Comprehensive income for the three and nine months ended September 30, 2004 and 2003 was as follows (in thousands of dollars):

	Three Months
	Ended September 30,
	2004		2003
Net income	$	184,440	$	126,695
Other comprehensive income, net of tax:
Foreign currency translation adjustments		21,113		12,750
Unrealized gain (loss) on available-for-sale securities		227		(306	)
Total other comprehensive income		21,340		12,444
Comprehensive income	$	205,780	$	139,139

	Nine Months
	Ended September 30,
	2004			2003
Net income	$	276,623		$	128,593
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments		(10,772	)		75,311
Unrealized loss on available-for-sale securities		(91	)		(481	)
Total other comprehensive (loss) income		(10,863	)		74,830
Comprehensive income	$	265,760		$	203,423

15

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements appearing below, including, without limitation, those concerning the Company’s outlook and the Company’s liquidity and capital expenditures, contain forward-looking statements concerning the Company’s operations, economic performance and financial condition. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause such differences include, but are not limited to, economic downturn; competition; the Company’s dependence on air travel; terrorist attacks, acts of war, epidemic diseases, or measures taken by governments in response thereto that negatively affect the travel industry; limitations upon the Company’s liquidity and capital raising ability; increases in the cost of cars and limitations on the supply of competitively priced cars; seasonality in the Company’s businesses; and Ford’s continued control of the Company.

Three Months ended September 30, 2004 Compared with Three Months ended September 30, 2003

Summary

     The following table sets forth for the three months ended September 30, 2004 and 2003 the percentage of operating revenues represented by certain items in the Company’s consolidated statement of operations:

	Percentage of Revenues
	Three Months Ended
	September 30,
	2004			2003
Revenues:
Car rental		82.1	%		82.3	%
Industrial and construction equipment rental		16.7			16.5
Other		1.2			1.2
		100.0			100.0
Expenses:
Direct operating		46.8			46.4
Depreciation of revenue earning equipment		22.3			26.6
Selling, general and administrative		9.6			8.4
Interest, net of interest income		6.2			6.0
		84.9			87.4
Income before income taxes and minority interest		15.1			12.6
Provision for taxes on income		(3.9	)		(4.1	)
Minority interest		(0.1	)		—
Net income		11.1	%		8.5	%

Revenues

     Total revenues in the third quarter of 2004 of $1,661.1 million increased by 11.5% from $1,489.5 million in the third quarter of 2003. Revenues from car rental operations of $1,363.8 million in the third quarter of 2004 increased by $138.4 million, or 11.3%, from $1,225.4 million in the third quarter of 2003. The increase was primarily the result of higher worldwide transaction volume of 9.4%, and the effects of foreign currency translation of approximately $31.3 million, partly offset by a 2.2% decrease in pricing worldwide.

     Revenues from industrial and construction equipment rental operations of $277.0 million in the third quarter of 2004 increased by $31.1 million, or 12.6%, from $246.0 million in the third quarter of 2003. The increase was due to improved pricing in the U.S., higher worldwide rental volume, and the effects of foreign currency translation of approximately $3.7 million.

     Revenues from all other sources of $20.2 million in the third quarter of 2004 increased by $2.0 million, or 11.3%, from $18.2 million in the third quarter of 2003, primarily due to the increase in car rental licensee revenue and foreign currency translation.

16

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Expenses

     Total expenses of $1,410.2 million in 2004 increased by 8.3% from $1,302.0 million in 2003, and total expenses as a percentage of revenues decreased to 84.9% in the third quarter of 2004 compared with 87.4% in 2003.

     Direct operating expenses of $778.4 million in 2004 increased by 12.7% from $690.7 million in 2003. The increase was primarily the result of the effects of foreign currency translation, increases in wages and benefits, concession fees, commissions, facility expenses, vehicle damage and gasoline costs in car rental operations. The increase was partly offset by favorable credit and collection and self-insurance claims experience.

     Depreciation of revenue earning equipment for car rental operations of $311.7 million in 2004 decreased by 6.6% from $333.8 million in 2003. The decrease was primarily due to the decrease in the U.S. average cost per vehicle and higher net proceeds received in excess of book value on the disposal of used vehicles worldwide, partly offset by the effects of foreign currency translation and an increase in the average number of vehicles operated worldwide. Depreciation of revenue earning equipment for industrial and construction equipment rental operations of $59.0 million in 2004 decreased by 6.4% from $63.0 million in 2003 due to higher net proceeds received in excess of book value on the disposal of used equipment in the U.S.

     Selling, general and administrative expenses of $158.7 million in 2004 increased by 26.5% from $125.5 million in 2003. The increase was primarily due to the effects of foreign currency translation and increases in advertising and administrative expenses.

     Interest expense, net of interest income, of $102.4 million in 2004 increased by 15.1% from $89.0 million in 2003, primarily due to an increase in the weighted average debt outstanding and foreign currency translation, partly offset by a decrease in the weighted average interest rate.

     The provision for taxes on income of $65.0 million in 2004 increased by 6.7% from $60.9 million in 2003, primarily due to an increase in pre-tax income in 2004, partly offset by favorable foreign tax adjustments of $23.3 million recorded in the third quarter of 2004 causing a decrease in the effective tax rate. The effective tax rate in the third quarter of 2004 was 25.9% as compared to 32.5% in 2003. See Note 5 to the Notes to the Company’s condensed consolidated financial statements.

     Minority interest of $1.5 million in 2004 represents the minority interest share (35%) of Navigation Solutions LLC’s (“Navigation Solutions”) net income for the period July 1, 2004 through September 30, 2004. See Note 1 to the Notes to the Company’s condensed consolidated financial statements.

Net Income

     The Company had net income of $184.4 million in 2004, representing an increase of 45.6% from $126.7 million in 2003. The increase in the net income was primarily due to higher rental volume in the Company’s worldwide car rental business, lower fleet costs and improved results in North America industrial and construction equipment rental operations, partly offset by lower pricing in the Company’s worldwide car rental business, as well as the net effect of other contributing factors noted above.

17

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Nine Months ended September 30, 2004 Compared with Nine Months ended September 30, 2003

Summary

     The following table sets forth for the nine months ended September 30, 2004 and 2003 the percentage of operating revenues represented by certain items in the Company’s consolidated statement of operations:

	Percentage of Revenues
	Nine Months Ended
	September 30,
	2004			2003
Revenues:
Car rental		82.1	%		81.9	%
Industrial and construction equipment rental		16.7			16.9
Other		1.2			1.2
		100.0			100.0
Expenses:
Direct operating		49.7			49.6
Depreciation of revenue earning equipment		24.7			29.0
Selling, general and administrative		10.2			9.7
Interest, net of interest income		6.5			6.8
		91.1			95.1
Income before income taxes and minority interest		8.9			4.9
Provision for taxes on income		(2.6	)		(1.6	)
Minority interest		—			—
Net income		6.3	%		3.3	%

Revenues

     Total revenues in the first nine months of 2004 of $4,386.8 million increased by 12.3% from $3,907.0 million in the first nine months of 2003. Revenues from car rental operations of $3,604.2 million in the first nine months of 2004 increased by $406.3 million, or 12.7%, from $3,197.9 million in the first nine months of 2003. The increase was primarily the result of higher worldwide transaction volume of 10.7%, and the effects of foreign currency translation of approximately $94.6 million, partly offset by a 2.1% decrease in pricing worldwide.

     Revenues from industrial and construction equipment rental operations of $730.5 million in the first nine months of 2004 increased by $69.7 million, or 10.5%, from $660.8 million in the first nine months of 2003. The increase was due to improved pricing in the U.S., higher worldwide rental volume, and the effects of foreign currency translation of approximately $13.6 million.

     Revenues from all other sources of $52.1 million in the first nine months of 2004 increased by $3.8 million, or 7.8%, from $48.3 million in the first nine months of 2003, primarily due to the increase in car rental licensee revenue and foreign currency translation.

Expenses

     Total expenses of $3,994.2 million in 2004 increased by 7.5% from $3,716.6 million in 2003, and total expenses as a percentage of revenues decreased to 91.1% in the first nine months of 2004 as compared to 95.1% in 2003.

     Direct operating expenses of $2,176.7 million in 2004 increased by 12.3% from $1,937.6 million in 2003. The increase was primarily the result of the effects of foreign currency translation, increases in wages and benefits, concession fees, commissions, facility expenses and vehicle damage costs in car rental operations. The increase was partly offset by favorable credit and collection and self-insurance claims experience. Current period expenses were further reduced by $7.0 million received in 2004 regarding claims made by the Company on its insurance policies for business interruption losses resulting from the terrorist attacks of September 11, 2001, offset by a gain of $8.0 million in 2003 from the condemnation of a car rental and support facility in Florida.

18

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

     Depreciation of revenue earning equipment for car rental operations of $915.2 million in 2004 decreased by 3.1%, from $944.5 million in 2003. The decrease was primarily due to the decrease in the U.S. average cost per vehicle and higher net proceeds received in excess of book value on the disposal of used vehicles worldwide, partly offset by the effects of foreign currency translation, an increase in the average number of vehicles operated worldwide and a one-time refund of $7.8 million in 2003 which resulted from a special transitional credit for rental car companies instituted by the Australian Taxation Office for Goods and Services Tax. Depreciation of revenue earning equipment for industrial and construction equipment rental operations of $169.3 million in 2004 decreased by 10.1% from $188.4 million in 2003 due to a decrease in the size of the equipment rental fleet and higher net proceeds received in excess of book value on the disposal of used equipment in the U.S.

     Selling, general and administrative expenses of $447.9 million in 2004 increased by 18.2% from $378.9 million in 2003. The increase was primarily due to the effects of foreign currency translation and increases in advertising and administrative expenses.

     Interest expense, net of interest income, of $285.1 million in 2004 increased by 6.7% from $267.3 million in 2003, primarily due to an increase in the weighted average debt outstanding and foreign currency translation, partly offset by a decrease in the weighted average interest rate.

     The provision for taxes on income of $114.5 million in 2004 increased by $52.7 million from $61.8 million in 2003, primarily due to an increase in pre-tax income in 2004, partly offset by favorable foreign tax adjustments of $23.3 million recorded in the third quarter of 2004 causing a decrease in the effective tax rate. The effective tax rate in 2004 was 29.2% as compared to 32.5% in 2003. The final effective tax rate for 2003 was 33.2%. See Note 5 to the Notes to the Company’s condensed consolidated financial statements.

     Minority interest of $1.5 million in 2004 represents the minority interest share (35%) of Navigation Solutions’ net income for the period July 1, 2004 through September 30, 2004. See Note 1 to the Notes to the Company’s condensed consolidated financial statements.

Net Income

     The Company had net income of $276.6 million in 2004, representing an increase of $148.0 million from $128.6 million in 2003. The increase in net income was primarily due to higher rental volume in the Company’s worldwide car rental business, lower fleet costs and improved results in North America industrial and construction equipment rental operations, partly offset by lower pricing in the Company’s worldwide car rental business, as well as the net effect of other contributing factors noted above.

Outlook

     The Company expects continued strong demand in both the car and industrial and construction equipment rental businesses during the remainder of 2004. Full year 2004 income before income taxes and minority interest is anticipated to improve significantly over 2003 levels.

Liquidity and Capital Resources

     At September 30, 2004, the Company had cash and cash equivalents of $536.3 million, a decrease of $73.7 million from December 31, 2003, which includes $3.0 million of restricted cash to be used for the purchase of revenue earning vehicles or for the repayment of outstanding indebtedness under the ABS program. In addition, the Company has made short-term investments with a related party investment fund that pools and invests excess cash balances of certain Ford subsidiaries to maximize returns. These short-term investments totaled $654.6 million as of September 30, 2004. The cash equivalents and short-term investments are being held until the funds are required for operating purposes or to reduce indebtedness.

     The Company’s domestic and foreign operations are funded by cash provided by operating activities and by extensive financing arrangements maintained by the Company in the United States, Europe, Australia, New Zealand, Canada and Brazil. The Company’s primary use of funds is for the acquisition of revenue earning equipment, which consists of cars and industrial and construction equipment. Net cash used in operating activities during the first nine months of 2004 increased approximately $1,057.6 million from the first nine months of 2003

19

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

primarily due to an increase in expenditures for revenue earning vehicles. For the nine months ended September 30, 2004, the Company’s expenditures for revenue earning equipment were $8.9 billion (partially offset by proceeds from the sale of such equipment of $6.1 billion). These assets are purchased by the Company in accordance with the terms of programs negotiated with automobile and equipment manufacturers. For the nine months ended September 30, 2004, the Company’s capital expenditures for property and non-revenue earning equipment were $218.7 million.

     To finance its domestic operations, the Company maintains active unsecured and asset backed commercial paper programs. The Company is also active in the domestic unsecured and asset backed medium-term and long-term debt markets.

     During the third quarter of 2002, the Company established an Asset Backed Securitization (“ABS”) program for its domestic car rental fleet to reduce its borrowing costs and enhance its financing resources. The ABS program provided for the initial issuance of up to $1 billion of asset backed commercial paper and subsequent issuance of asset backed medium-term notes. These notes are issued by wholly owned and consolidated special purpose entities and are classified as debt on the Company’s consolidated balance sheet. The commercial paper notes have ratings of A-1 by Standard & Poors Rating Services, Prime-1 by Moody’s Investors Service, Inc. and F1 by Fitch Ratings. Under certain conditions, the commercial paper notes may be repaid by draws under a related bank liquidity facility ($814 million), which expires in June 2005, or a related letter of credit issued under a letter of credit facility ($215 million), which expires in July 2007. The Company expects to renew these facilities prior to their expiration. All debt issued under the ABS program is collateralized by the assets of the special purpose entities, consisting of revenue earning vehicles used by the Company in its car rental business, restricted cash and investments, and certain receivables related to the revenue earning vehicles. As of September 30, 2004, $460.9 million of asset backed commercial paper and $600.0 million of asset backed medium-term notes were outstanding.

     On September 30, 2003, the Company issued $500 million of 4.7% Senior Promissory Notes (the “4.7% Notes”) due on October 2, 2006. On June 3, 2004, the Company issued $600 million of 6.35% Senior Promissory Notes (the “6.35% Notes”) due on June 15, 2010. Effective September 30, 2003 and June 3, 2004, the Company entered into interest rate swap agreements relating to the 4.7% Notes and 6.35% Notes, respectively. Under these agreements, the Company pays interest at a variable rate in exchange for fixed rate receipts, effectively transforming the 4.7% Notes and 6.35% Notes to floating rate obligations with effective interest rates at September 30, 2004 of 3.74% and 3.71%, respectively. See Note 7 to the Notes to the Company’s condensed consolidated financial statements.

     On July 2, 2004, the Company established a Euro Medium-Term Note Program under which the Company and/or Hertz Finance Centre plc (“HFC”), a wholly owned subsidiary of the Company, can issue up to Euro 650 million in Medium-Term Notes (“Notes”). On July 16, 2004, HFC issued Euro 200 million of Notes under this program. The Notes are fully guaranteed by the Company, mature in July 2007, and have a variable interest rate based on the three-month EURIBOR rate plus 110 basis points.

     On August 5, 2004, the Company issued $500 million of Promissory Notes comprised of $250 million of floating rate notes which have an interest rate based on the three-month LIBOR rate plus 120 basis points, which are due on August 5, 2008, and $250 million of 6.90% fixed rate notes, which are due on August 15, 2014.

     As the need arises, it is the Company’s intention to issue either unsecured senior, senior subordinated, junior subordinated or asset backed securities on terms to be determined at the time the securities are offered for sale. The total amount of unsecured and asset backed medium-term and long-term debt outstanding as of September 30, 2004 was $6.0 billion with maturities ranging from 2005 to 2028.

     Borrowing for the Company’s international operations consists mainly of loans obtained from local and international banks, commercial paper programs established in Australia, Belgium, Canada, Ireland and the Netherlands and Euro Medium-Term Notes issued by HFC. The Company guarantees only the borrowings under these commercial paper programs, the Euro Medium-Term Notes and certain credit facilities extended by local banks to the Company’s subsidiaries in Canada and Australia. All borrowings by international operations are either in the international operation’s local currency or, if in non-local currency, hedged to minimize foreign exchange exposure. At September 30, 2004, the total debt for the foreign operations was $2,213 million, of which $1,958 million was short-term (original maturity of less than one year)

20

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

and $255 million was long-term. At September 30, 2004, the total amounts outstanding (in millions of U.S. dollars) under the commercial paper programs in Ireland, Canada, Belgium and the Netherlands were $626, $497, $30 and $50, respectively.

     At September 30, 2004, the Company had committed credit facilities totaling $2.8 billion.

     Currently $1.1 billion of the committed credit facilities are represented by a combination of multi-year and 364-day global committed credit facilities provided by 19 participating banks. In addition to direct borrowings by the Company, the multi-year and 364-day global facilities allow any subsidiary of the Company to borrow on the basis of a guarantee by the Company. The multi-year facilities were re-negotiated effective July 1, 2004 and currently total $999 million with expirations as follows (in millions of dollars): $46 on June 30, 2005, $35 on June 30, 2006, $108 on June 30, 2007, $102 on June 30, 2008 and $708 on June 30, 2009. The multi-year facilities that expire in 2009 have an evergreen feature, which provides for the automatic extension of the expiration date one year forward unless the bank provides timely notice. Effective June 17, 2004, the 364-day global committed credit facilities, which totaled $94 million, were renegotiated and currently expire on June 16, 2005. Under the terms of the 364-day facilities, the Company is permitted to convert any amount outstanding prior to expiration into a two-year loan. In addition, the Company has other international credit facilities totaling $140 million which expire at various times during 2004 and 2005.

     Effective September 18, 2002, as part of the ABS program, the Company transferred $928 million of its 364-day global committed credit facilities to the ABS program. In accordance with the agreement to transfer these commitments, the Company has waived any right to transfer these commitments back to the 364-day global committed credit facilities without the consent of the participating banks. As of September 30, 2004, $814 million is currently available under these facilities. These facilities expire on June 30, 2005. In addition to the transfer of the 364-day commitments, the Company raised $215 million of committed credit support through an ABS letter of credit from banks that participate in the Company’s multi-year global committed credit facilities. In exchange for this credit support, the Company agreed to reduce the banks’ multi-year facility commitment by one half of the amount of their ABS letter of credit participation. These credit facilities expire on July 5, 2007.

     In addition to these bank credit facilities, in February 1997, Ford extended to the Company a credit facility for $500 million that currently expires on June 30, 2006. This line of credit has an evergreen feature that provides on an annual basis for automatic one-year extensions of the expiration date, unless timely notice is provided by Ford at least one year prior to the then scheduled expiration date. The line of credit automatically terminates however, at any time Ford ceases to own, directly or indirectly, capital stock of the Company having more than 50% of the total voting power of all capital stock outstanding of the Company. Obligations of the Company under this agreement would rank pari passu with the Company’s senior debt securities. A commitment fee of 0.2% per annum is payable on the unused available credit.

     In May 2004, Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, Inc. (“S&P”), affirmed the long and short-term debt ratings of, and their outlook for Ford, Ford Credit and the Company. In July 2004, Dominion Bond Rating Service Limited (“DBRS”) affirmed the Company’s long and short-term debt ratings and revised the trend from negative to stable, similar to Ford and Ford Credit. In October 2004, Moody’s Investors Service, Inc. (“Moody’s”) and Fitch, Inc. (“Fitch”) each affirmed the long and short-term debt ratings of, and their outlook for Ford, Ford Credit and the Company. The current ratings for the Company are as follows:

	Debt Ratings
	Long-Term	Short-Term	Outlook/Trend
Moody’s	Baa2	P-2	Negative
S&P	BBB-	A-3	Stable
Fitch	BBB+	F2	Stable
DBRS	BBB (high)	R-1 (low)	Stable

     By virtue of its 100% ownership interest in the Company, Ford has the right to make any changes that it deems appropriate in the Company’s assets, corporate structure, capitalization, operations, properties and policies (including dividend policies). The Company anticipates paying Ford quarterly dividends commencing in 2005.

21

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

     Car rental and equipment rental operations are seasonal businesses, with decreased levels of business in the winter months and heightened activity during the spring and summer. To accommodate increased demand, the Company increases its available fleet and staff during the second and third quarters. As business demand declines, fleet and staff are decreased accordingly. However, certain operating expenses, including rent, insurance, and administrative overhead, remain fixed and cannot be adjusted for seasonal demand.

Other Financial Information

     The interim financial information included in this quarterly report on Form 10-Q has not been audited by PricewaterhouseCoopers LLP (“PwC”). In reviewing such information, PwC has applied limited procedures in accordance with professional standards for reviews of interim financial information. Accordingly, reliance on their reports on such information should be restricted. PwC is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its reports on the interim financial information because such reports do not constitute “reports” or “parts” of registration statements prepared or certified by PwC within the meaning of Sections 7 and 11 of the Securities Act of 1933.

ITEM 4. Controls and Procedures

     Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chairman of the Board and Chief Executive Officer and Executive Vice President and Chief Financial Officer (the “Certifying Officers”), as appropriate to allow timely decisions regarding required disclosure.

     As required by Rules 13a-15 and 15d-15 under the Exchange Act, the Certifying Officers carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2004. Their evaluation was carried out with the participation of other members of the Company’s management. Based upon their evaluation, the Certifying Officers concluded that the Company’s disclosure controls and procedures were effective.

     The Company’s internal control over financial reporting is a process designed by, or under the supervision of, the Certifying Officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Company’s financial statements in accordance with generally accepted accounting principles; and that the Company’s receipts and expenditures are being made only in accordance with the authorization of the Company’s Board of Directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements. There has been no change in the Company’s internal control over financial reporting that occurred in the quarter ended September 30, 2004, that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

22

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

     The Company is not required to disclose any pending legal proceedings in response to Item 103 of Regulation S-K. The following information is furnished on a supplemental basis.

     The Company notes the following recent developments pertaining to legal proceedings described in the Company’s Form 10-K for the fiscal year ended December 31, 2003 or the Company’s Form 10-Q for the quarter ended March 31, 2004:

     In Wide World Tours of Mission Valley, Inc. et al. v. The Hertz Corporation, the Company’s motion for summary judgment was denied by the court in September 2004. The case remains scheduled for a trial commencing on January 28, 2005.

     In Jose M. Gomez, individually and on behalf of all other similarly situated persons, v. The Hertz Corporation, after the court ruled on the Company’s preliminary motion, the plaintiff filed a second amended complaint which scaled back the putative class from a nationwide class to a class of all Texas residents who were charged a fuel and service charge by the Company or by its Corpus Christi licensee. A new cause of action was also added for “conversion.”

ITEM 6. Exhibits and Reports on Form 8-K

          (a) Exhibits:

10(a)	Ford/Hertz Framework Supply Agreement dated February 20, 1997, as amended effective September 1, 2004.*
10(b)	Amended and Restated Advertising Agreement dated February 20, 1997, as amended effective September 1, 2004.*
12	Consolidated Computation of Ratio of Earnings to Fixed Charges for the nine months ended September 30, 2004 and 2003.
15	Letter of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, dated November 8, 2004, relating to Financial Information.
31.1	Certification of Chief Executive Officer Pursuant to Rule 15d – 14(a).
31.2	Certification of Chief Financial Officer Pursuant to Rule 15d – 14(a).
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

*The Company has applied for confidential treatment of portions of this Exhibit. Accordingly, portions thereof have been omitted and filed separately.

          (b) Reports on Form 8-K:

The Company filed a Form 8-K dated September 15, 2004, reporting under Item 1.01 thereof, the signing of an Amended and Restated Advertising Agreement and an Amended Framework Supply Agreement with Ford Motor Company, effective September 1, 2004 for a period of three years covering the 2005 through 2007 vehicle model years.

23

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	THE HERTZ CORPORATION      (Registrant)
Date: November 8, 2004	By:	/s/ Paul J. Siracusa
		Paul J. Siracusa
		Executive Vice President and Chief Financial Officer (principal financial officer and duly authorized officer)

EXHIBIT INDEX

10(a)	Ford/Hertz Framework Supply Agreement dated February 20, 1997, as amended effective September 1, 2004.*
10(b)	Amended and Restated Advertising Agreement dated February 20, 1997, as amended effective September 1, 2004.*
12	Consolidated Computation of Ratio of Earnings to Fixed Charges for the nine months ended September 30, 2004 and 2003.
15	Letter of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm, dated November 8, 2004, relating to Financial Information.
31.1	Certification of Chief Executive Officer Pursuant to Rule 15d – 14(a).
31.2	Certification of Chief Financial Officer Pursuant to Rule 15d – 14(a).
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

*The Company has applied for confidential treatment of portions of this Exhibit. Accordingly, portions thereof have been omitted and filed separately.

24

EX-10.A

EXHIBIT 10(a)

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE SYMBOL “****” HAS BEEN INSERTED IN PLACE OF THE PORTIONS SO OMITTED.

February 20, 1997, as amended

     effective September 1, 2004

Ford/Hertz Framework Supply Agreement

Agreement Objective - Ford Motor Company (“Ford”) agrees to provide vehicles to The Hertz Corporation (“Hertz”) for use in its daily rental business and Hertz agrees to acquire such vehicles. Ford and Hertz agree to negotiate in good faith on an annual basis to provide and acquire vehicles at an adequate volume and with the best possible terms and conditions. Effective September 1, 2004, this Framework Supply Agreement (i) shall only apply to Hertz U.S. Domestic fleet requirements and (ii) the term “Ford Vehicles” shall apply only to new vehicles offered for sale in the United States under the “Ford”, “Lincoln” or “Mercury” brands.

Term of Contract - September 1, 1997 to August 31, 2007 (10 years).

Ford Volume Commitment Prior to September 1, 2004, Ford agrees to provide for Hertz acquisition the lesser of 150,000 units or 55% of Hertz’ U.S. domestic fleet annually for use in its daily rental business. Ford will make its best efforts to supply 35% of Hertz European fleet and 55% of Hertz fleet requirements in its other non-U.S. operations.

Effective September 1, 2004, Ford agrees to provide for Hertz acquisition Ford Vehicles in the following volumes: **** model year 2005 Ford Vehicles; **** model year 2006 Ford Vehicles; and **** model year 2007 Ford Vehicles.

A minimum of 50% of all such vehicles shall be non-risk units (repurchase).

Hertz Volume Commitment - Prior to September 1, 2004, Hertz agrees to acquire from Ford the lesser of 150,000 units or 55% of its U.S. domestic fleet annually for use in its daily rental business. Hertz also agrees to acquire 35% of its European fleet from Ford and 55% of its fleet for other non-U.S. operations from Ford.

Effective September 1, 2004, Hertz agrees to acquire from Ford the following volumes of Ford Vehicles: **** model year 2005 Ford Vehicles; **** model year 2006 Ford Vehicles; and **** model year 2007 Ford Vehicles.

A minimum of 50% of all such vehicles shall be non-risk units (repurchase).

and $255 million was long-term. At September 30,

Competitive Supply - Ford will strive to develop fleet offerings for use in the daily rental business that shall be competitive with those similar offerings by other automotive manufacturers, as to terms and conditions. In addition, Ford will make available to Hertz, Ford vehicles on terms that are no less favorable than Ford makes available to other daily rental companies, excluding franchised Ford and Lincoln-Mercury Dealers.

Other Automotive Manufacturers - Hertz and its affiliates, in their discretion, may enter into vehicle supply agreements with other automotive manufacturers in the U.S. and in other countries, including Ford brands in other countries, effective September 1, 2004. Any such agreements may not alter or affect Hertz’s obligations under this Framework Supply Agreement.

FORD MOTOR COMPANY	THE HERTZ CORPORATION
By: /s/ James G. O’Connor	By: /s/ Craig R. Koch
James G. O’Connor     9/7/04	Craig R. Koch     9/10/04
Ford Motor Company	The Hertz Corporation

EX-10.B

EXHIBIT 10(b)

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE SYMBOL “****” HAS BEEN INSERTED IN PLACE OF THE PORTIONS SO OMITTED.

February 20, 1997, as amended

effective September 1, 2004

Hertz System, Inc.
225 Brae Boulevard
Park Ridge, New Jersey 07656

Dear Sirs:

     This Amended and Restated Advertising Agreement (hereinafter referred to as this “Advertising Agreement” or “Agreement”) is made effective as of September 1, 2004 to amend and restate the agreement dated as of February 20, 1997 between the parties. The purpose of this letter is to set forth the terms and conditions of the agreement between Hertz System, Inc. (“Hertz”) and Ford Motor Company (“Ford”) for a joint advertising program in which Hertz and its affiliates (hereinafter sometimes collectively referred to as “Hertz”) will promote the rental and leasing of vehicles manufactured by or for Ford and its affiliated companies (“Ford Vehicles”). Effective September 1, 2004, this Advertising Agreement and the term “Ford Vehicles” shall apply only to new vehicles offered for sale in the United States under the “Ford”, “Lincoln” or “Mercury” brands, and “Ford” shall not include companies affiliated with Ford. According to the understanding of the parties:

     1. The joint advertising program (i) will be for a term commencing as of September 1, 1997 and ending on August 31, 2007, (ii) will be conducted primarily in the United States of America, and also in other countries, and (iii) will be conducted in such media or manner as Hertz may select, provided that not more than 10% of the expense of the program per year will be in purely local advertising and not more than 15% of the expense of the program per year will be in collateral material, such as direct mail literature, primarily associated with the Hertz # 1 Club Gold and related programs. Each period of September 1 to and including the next following August 31 shall be called an Advertising Year hereunder. Effective September 1, 2004 the joint advertising program will be conducted only in the United States of America. Hertz, in its discretion, may enter into vehicle advertising agreements with other automotive manufacturers or brands in the U.S. and in other countries, including Ford brands in other countries, beginning with the 2005 Advertising Year, effective from September 1, 2004.

     2. Subject to the provisions of Paragraphs 3(a) and 3(c), Ford will pay one-half of the costs of such joint advertising to the extent that it is considered Eligible Advertising under Paragraph 4 hereof. Without prior discussion with and approval by Ford, Ford’s share of such costs (the “Base Amount”) will not exceed $39.0 million in the Advertising Year ending on August 31, 1998 (the “1998 Advertising Year”). For each of the Advertising Years indicated below, the Base Amounts shall be calculated as follows:

     (a) for the 1999 Advertising Year, an amount equal to $39.0 million multiplied by: (i) a fraction, the numerator of which is the CPI for April 1998 and the denominator of which shall be the CPI for April 1997, or (ii) ****, whichever is smaller.

     (b) for the 2000 Advertising Year, an amount equal to the 1999 Base Amount multiplied by: (i) a fraction, the numerator of which is the CPI for April 1999 and the denominator of which shall be the CPI for April 1998, or (ii) ****, whichever is smaller.

     (c) for the 2001 Advertising Year, an amount equal to the 2000 Base Amount multiplied by: (i) a fraction, the numerator of which is the CPI for April 2000 and the denominator of which shall be the CPI for April 1999, or (ii) ****, whichever is smaller.

     (d) for the 2002 Advertising Year, an amount equal to the 2001 Base Amount multiplied by: (i) a fraction, the numerator of which is the CPI for April 2001 and the denominator of which shall be the CPI for April 2000, or (ii) ****, whichever is smaller.

     (e) for the 2003 Advertising Year, an amount equal to the 2002 Base Amount multiplied by: (i) a fraction, the numerator of which is the CPI for April 2002 and the denominator of which shall be the CPI for April 2001, or (ii) ****, whichever is smaller.

     (f) for the 2004 Advertising Year, an amount equal to ****.

     (g) for the 2005 Advertising Year, an amount equal to ****, adjusted as provided in Paragraph 3(c).

     (h) for the 2006 Advertising Year, an amount equal to ****, adjusted as provided in Paragraph 3(c).

     (i) for the 2007 Advertising Year, an amount equal to ****, adjusted as provided in Paragraph 3(c).

As used herein, “CPI” means the United States Department of Labor’s Bureau of Labor Statistics Revised Consumer Price Index for All Urban Consumers, or the successor of such Index. The costs of such joint advertising shall include Hertz’s direct costs, including costs of materials, of preparing and distributing Hertz charge cards or Hertz-sponsored credit cards and related materials (but not other costs of Hertz’s charge card department), of preparing and distributing direct mail advertising material (advertising which is contemplated by this Agreement), and of administering the Hertz advertising department.

     3. (a) As it is the express purpose and intent of the joint advertising program (and the payments provided thereunder) to increase the demand for the rental of, and thereby increase the demand for the purchase by retail buyers of, Ford Vehicles, it is the understanding and agreement of the parties hereto that, during each Advertising Year prior to the 2005 Advertising Year, Ford will not be required to pay Hertz any amounts under Paragraph 2 if the Ford Vehicle Share is not at least 55%; provided, however, that Ford will be required to pay such amounts to the extent that Hertz’s failure to achieve a 55% Ford Vehicle Share was attributable to (i) Ford’s failure to make Ford Vehicles available for acquisition by Hertz in quantities sufficient to achieve a 55% Ford Vehicle Share, or (ii) the fact that Ford Fleet Programs were not competitive with those similar fleet programs offered by other automotive manufacturers, as to terms and conditions; provided further, however, that in no event shall Ford be required to pay Hertz under Paragraph 2 should the Ford Vehicle Share be less than 40%.

Notwithstanding the preceding sentence, if Ford’s failure to make available sufficient quantities of Ford Vehicles is caused by a production disruption of more than one year due to (i) a shortage or curtailment of material, labor, transportation or utility service; (ii) any labor or production difficulty; (iii) any governmental action; or (iv) any cause beyond the reasonable control of Ford, then the parties will negotiate in good faith to reduce the amounts under Paragraph 2 above by amounts reflective of the nature, extent and duration of the production disruption and the Ford Vehicle Share actually achieved. For the purposes of this Agreement, (i) “Ford Vehicle Share” means the percentage that new Ford Vehicles acquired in an Advertising Year for Hertz’s domestic U.S. corporate fleet represent of the total vehicles acquired for such domestic U.S. corporate fleet in such Advertising Year, (ii) “Ford Fleet Programs” mean the price discount, guaranteed resale or repurchase, incentive or similar programs offered by Ford and Ford affiliates whose primary business is the sale or manufacture and sale of vehicles, and (iii) Hertz’s domestic U.S. corporate fleet shall not include the fleets of independent businesses or individuals licensed by Hertz for the daily car rental business as part of the Hertz System.

     (b) In addition to the Base Amount payments for joint advertising under Paragraph 2 above,

Ford will pay Hertz 100% of the cost of Eligible Advertising in excess of those costs qualifying for the maximum contribution under Paragraph 2, related solely to corporate car rental programs during each Advertising Year prior to the 2005 Advertising Year in accordance with the schedule below:

	Ford’s additional payment for Eligible
If the Ford Vehicle Share	Advertising of Corporate Car Rental
Should Reach:	Programs will be (in millions):
58%	****
****	****
****	****
****	****
****	****
****	****
****	****
****	****
****	****
****	****
****	****
****	****
****	****

Ford’s additional payments will be subject to the same annual increases, based on the CPI, as defined in Paragraph 2 above.

Ford shall be required to make additional payments hereunder only to the extent that Hertz’s total expenditure for Eligible Advertising in an Advertising Year prior to the 2005 Advertising Year exceeds those costs subject to Ford’s one-half contribution under Paragraph 2. By way of example:

Eligible Advertising

Costs & Ford Contribution

Amount of Hertz

Hertz Total

under Paragraph 2

Entitlement to

Expenditure for

Supplemental Support

Eligible Advertising

Eligible

Adv.

Based Upon ****Ford

In Advertising Year

Adv.

Payment

Vehicle Share

(Mils)

(Mils)

(Mils)

(Mils)

Example A

*

***

*

***

*

***

*

***

Example B

*

***

*

***

*

***

*

***

Example C

*

***

*

***

*

***

*

***

The calculation of such additional payments for Hertz’s corporate advertising costs will be subject to the following terms:

(i) By no later than August 15 of each Advertising Year, Hertz will submit to Ford a written estimate of the Ford Vehicles to be delivered to Hertz and its Ford Vehicle Share for the following Advertising Year.

(ii) On the first day of each quarter of each Advertising Year, Ford will pay Hertz one quarter of that year’s amount of supplemental support as calculated from the schedule in this Paragraph 3(b) based on the written estimate of Ford Vehicle Share for its domestic U.S. corporate fleet submitted by Hertz in accordance with Paragraph 3(b)(i) above.

(iii) By no later than August 15 of each Advertising Year, Hertz will provide Ford with a reconciliation of Hertz’s total vehicle deliveries to its domestic U.S.corporate fleet and Ford Vehicles delivered to its domestic U.S. corporate fleet during that Advertising Year. If Hertz’s Ford Vehicle Share falls short of the Ford Vehicle Share estimated pursuant to Paragraph 3(b)(i), the September 1 payment in the following Advertising Year will be reduced by any amounts prepaid by Ford pursuant to Paragraph 3(b)(ii) based on the actual Ford

Vehicle Share attained; provided however, that no reduction in such payment shall be required if Hertz’s failure to achieve the estimated Ford Vehicle Share was attributable to a failure by Ford to make Ford Vehicles available in quantities sufficient to achieve the estimated Ford Vehicle Share. Notwithstanding the preceding sentence, if Ford’s failure to make available sufficient quantities of Ford Vehicles is caused by a production disruption of more than one year due to (i) a shortage or curtailment of material, labor, transportation or utility service; (ii) any labor or production difficulty; (iii) any governmental action; or (iv) any cause beyond the reasonable control of Ford, then the parties will negotiate in good faith to reduce the amounts under Paragraph 2 above by amounts reflective of the nature, extent and duration of the production disruption and the Ford Vehicle Share actually achieved. If any refund is due Ford pursuant to this provision with respect to the Advertising Year ending on August 31, 2004, Hertz will make payment of such amount to Ford no later than September 15. 2004.

(c) As it is the express purpose and intent of the joint advertising program (and the payments provided thereunder) to increase the demand for the rental of, and thereby increase the demand for the purchase by retail buyers of, Ford Vehicles, it is the understanding and agreement of the parties hereto that, during the 2005, 2006 and 2007 Advertising Years, and subject to the provisions of this Paragraph 3(c), Ford will not be required to pay Hertz any amounts under Paragraph 2 if the number of Ford Vehicles acquired in that Advertising Year is not at least **** Ford Vehicles; provided, however, that Ford will be required to pay such amounts to the extent that Hertz’s failure to acquire **** Ford Vehicles was attributable to (i) Ford’s failure to make Ford Vehicles available for acquisition by Hertz in quantities sufficient to achieve the acquisition of **** Ford Vehicles, or (ii) the fact that Ford Fleet Programs were not competitive with those similar fleet programs offered by other automotive manufacturers, as to terms and conditions; provided further, however, that in no event shall Ford be required to pay Hertz under Paragraph 2 should the number of Ford Vehicles acquired in an Advertising Year not be at least **** Ford Vehicles.

Notwithstanding the preceding sentence, if Ford’s failure to make available sufficient quantities of Ford Vehicles is caused by a production disruption of more than one year due to (i) a shortage or curtailment of material, labor, transportation or utility service; (ii) any labor or production difficulty; (iii) any governmental action; or (iv) any cause beyond the reasonable control of Ford, then the parties will negotiate in good faith to reduce the amounts under Paragraph 2 above by amounts reflective of the nature, extent and duration of the production disruption and the number of Ford Vehicles actually acquired. For the purposes of this Paragraph 3(c), (i) the number of Ford Vehicles acquired means the number of Ford Vehicles acquired in an Advertising Year for Hertz’s U.S. corporate fleet, (ii)“Ford Fleet Programs” means the price discount, guaranteed resale or repurchase, incentive or similar programs offered by Ford, and (iii) Hertz’s U.S. corporate fleet shall not include the fleets of independent businesses or individuals licensed by Hertz for the daily car rental business as part of the Hertz System.

The payments to Hertz under Paragraphs 2(g), 2(h) and 2(i) for each Advertising Year shall be:

(1)	increased by **** for each Ford Vehicle acquired by Hertz for its U.S. corporate fleet in excess of **** Ford Vehicles in that Advertising Year, and
(2)	reduced by **** for each Ford Vehicle acquired by Hertz for its U.S. corporate fleet fewer than **** Ford Vehicles, but at least **** Ford Vehicles, in that Advertising Year.

     4. To be considered Eligible Advertising under the joint advertising program, advertising must:

     a. be published, or placed or controlled by Hertz or its affiliates; and

     b. indicate that Hertz features Ford Vehicles or refer only to Ford Vehicles at least once in a phrase, such as “Hertz rents Fords and other fine cars” (or in a manner with a leadership and influence value), and with a prominence that is reasonably satisfactory to Ford, and without mention of any other vehicle manufacturer; and

     c. where feasible, use or contain a pictorial representation of only a Ford Vehicle approved by Ford, in a manner and with a prominence reasonably satisfactory to Ford; and

     d. not contain any pictorial representation, trade name or endorsement of, or testimonial to, any vehicle other than a Ford Vehicle, or any reference by name to any vehicle manufacturer other than Ford , except as Ford may otherwise consent, it being understood that prior to September 1, 2004 vehicles other than Ford Vehicles may be mentioned and pictured (i) in Hertz’s tariffs, directories or rate sheets distributed outside the continental United States or distributed inside the continental United States for rentals outside the continental United States, (ii) in the advertising with Ford’s consent, which shall not be unreasonably withheld, of a vehicle for which, at the time, there is no comparable Ford Vehicle, and (iii) in advertising with Ford’s consent, which shall not be unreasonably withheld, in any country in which Ford Vehicles represent less than 25% of the total Hertz corporate fleet in such country; and

     e. comply with the provisions of Paragraphs 6 and 7 hereof.

     5. Advertising that contains any pictorial representation, trade name or endorsement of, or testimonial to, a Ford Vehicle, or any reference by name to Ford or one of its affiliates shall be published, placed, and controlled by Hertz or its affiliates. As used in this Agreement, Hertz’s “affiliates” consist of The Hertz Corporation and it subsidiaries and other controlled affiliates, and Ford’s “affiliates” exclude Hertz and its affiliates.

     6. While this Agreement is in effect, Hertz will not use, and to the extent practicable will not permit any of its affiliates to use, and will use its best efforts to prevent its licensees and affiliates from using, any advertising that contains the Ford script-in-oval trademark, the word “Ford” in script or any statement that is detrimental to Ford or any of Ford’s affiliates, or to the good name of Ford or any of its affiliates, or to any product made or sold by Ford or its affiliates.

     7. Ford will furnish Hertz, from time to time, pictorial representations and vehicles for Hertz-sponsored photo shoots of Ford Vehicles for use in Eligible Advertising. Each pictorial representation of a Ford Vehicle used in an Eligible Advertisement originally released more than one month after the public introduction of a new model of such Ford Vehicle will, if practicable, be a pictorial representation of such new model.

     8. Hertz will hold in confidence all pictorial representations of Ford Vehicles, and all information and data disclosed by Ford to Hertz hereunder; and will not use or disclose the same to others except as required to carry out the purpose of this Agreement or as authorized by Ford in writing. Hertz will impose, insofar as practicable, a similar restriction on Ford’s behalf on its parent and on its affiliates and will use its best efforts to cause its licensees and the licensees of its parent and affiliates and all others to whom it discloses any of such material to hold such representations, information and data in confidence.

     9. Hertz will use all reasonable efforts to obtain all Eligible Advertising at competitive rates and charges and will notify Ford in writing of the agency or agencies handling the same from time to time. Hertz will furnish to Ford upon request, during the term hereof, copies or examples of all advertising, including, without limitation, print advertisements, collateral material, mat services, telecommunication material, and outdoor displays prepared for Hertz or on Hertz’s behalf and placed by or through its advertising agencies during the month preceding such request.

     10. While this Agreement is in effect, Ford will pay Hertz, toward Ford’s share of the costs of Eligible Advertising, as provided in Paragraph 2 hereof, on the first day of each quarter (i.e., September 1, December 1, March 1 and June 1) in each Advertising Year during the term hereof, one-quarter of the respective annual amounts specified in Paragraph 2.

     a. In no event will Ford be required hereunder to contribute:

(i)	any portion of funds paid by Hertz’s licensees (other than Hertz’s parent or affiliates) for local advertising, or
(ii)	any portion of funds used directly or indirectly for tariffs, directories or rate sheets, to the extent used to advertise vehicles other than Ford Vehicles, except as Ford may otherwise consent, and

     b. As soon as practicable after the end of each quarter of each 12 month period beginning January 1 and ending December 31 during the term of this Agreement (“Calendar Year”), and as soon as practicable after the termination of this Agreement, Hertz will deliver to Ford a statement in reasonable detail for such quarter or for the final period preceding termination, certified by Hertz’s treasurer, controller, or an assistant treasurer or assistant controller, setting forth the amount spent or committed by Hertz during said period for Eligible Advertising. Ford may at any time proportionately reduce any quarterly payment if, during the year, the sum of its quarterly payments thus far in such year substantially exceeds 50% of the cost thus far for Eligible Advertising, and may continue such reduction as long as such excess exists.

     c. As soon as practicable at the end of each Calendar Year prior to the termination hereof, and in no event later than April 1 of the following Calendar Year, Hertz will deliver to Ford a statement in reasonable detail for such Calendar Year, certified by its treasurer, controller, assistant treasurer or assistant controller, setting forth receipts for and expenditures or commitments made, charged or chargeable to said Calendar Year, and Hertz will pay to Ford or charge to the next quarterly payment any excess of Ford’s payments in that Calendar Year over 50% of the total amount expended or committed for Eligible Advertising for such Calendar Year. For this purpose, Ford’s payments in any Advertising Year will be pro-rated equally over each month in each Calendar Year as appropriate.

     d. Within a reasonable time after any termination of this Agreement, Hertz will deliver to Ford a statement in reasonable detail, certified by its treasurer, controller, assistant treasurer, or assistant controller, setting forth its expenditures for Eligible Advertising during the period between the first day of the Calendar Year in which such termination will have occurred and the date of such termination, and also setting forth the amount held in its advertising funds or the advertising funds of its parent or affiliates as of the date of termination of this Agreement, less all accrued liabilities chargeable thereto, or commitments made as of said date, plus prepaid expenses which may have been charged to such funds, such as for non-Ford components of spectacular outdoor displays (which will have been amortized over the shorter of the term of the applicable lease or five years from the date such display commenced), which will be restored to such funds on a prorata basis, plus the amount, if any, by which expenditures are in excess of the limitations agreed upon for local advertising and collateral material (herein sometimes called “the termination date balance of such funds”) and Hertz will simultaneously with the delivery of said statement to Ford, pay the portion of the termination date balance of such finds which Ford has theretofore contributed, or Ford will pay to the funds any sum so shown to be due, as the case may be.

     11. Subject to Paragraph 12 hereof, Hertz will have sole discretion and control over all copy, art work, editorial matter, media, and release dates for all Eligible Advertising.

     12. Hertz warrants that no Eligible Advertising, and no other item released by Hertz or anyone under its control that contains any pictorial representation of a Ford Vehicle or any reference to Ford or its affiliates, will violate the copyright or right of privacy of, or constitute a libel or slander or actionable derogation of, or violate any legal or equitable right of, any person or entity.

     13. Hertz will indemnify and hold harmless Ford, its dealers, its affiliates and their dealers from and against all claims by third parties, damages, liabilities, losses, costs and expenses arising out of or connected with any Eligible Advertising or any other advertising, promotion or publicity released by Hertz or under Hertz’s control. Ford will indemnify and hold harmless Hertz, its affiliates, and Hertz’s licensees and the licensees of its affiliates, from and against all claims by third parties, damages, liabilities, losses, costs and expenses arising out of or connected with the use, pursuant to this Agreement, of any pictorial representation, information or data furnished by Ford hereunder.

     14. This Agreement is not made in connection with or as part of any transaction related to the sale of any Ford Vehicle or Vehicles, and nothing contained herein will be construed as imposing, directly or indirectly, any obligation on anyone to purchase or supply any Ford Vehicle or Vehicles.

     15. (a) Except as otherwise specifically provided in this Agreement, if there is published, placed or paid for by Hertz or anyone under its control, by its parent or any of its affiliates, any advertising of any make of vehicle other than a Ford Vehicle which Ford believes has reduced or may reduce the value to Ford or its affiliates of the joint advertising program provided hereunder, Ford in its sole discretion may, after thorough discussion with Hertz, terminate this Agreement as of the end of any month by giving Hertz at least twenty (20) days’ prior notice of

termination. On and after the start of the 2005 Advertising Year, the publication by itself of advertising of a make of vehicle other than a Ford Vehicle or a manufacturer other than Ford does not give rise to Ford’s above right of termination under this Paragraph 15(a); any such termination must be based on the overall content of such advertising. However, Ford shall have no right of termination with respect to (i) advertising published, placed, or paid for by any of Hertz’s licensees or any licensee of any of its affiliates, unless such advertising is published or placed with the approval or consent of Hertz or its affiliates, (ii) advertising published or placed with Ford’s consent of a vehicle for which, at the time, there is no comparable Ford Vehicle prior to the 2005 Advertising Year, or (iii) advertising published or placed with Ford’s consent in any country in which Ford Vehicles represent less than 25% of the total Hertz corporate fleet in such country prior to the 2005 Advertising Year.

     (b) If either Hertz or Ford shall be in breach of any provision of this Agreement, the other may terminate this Agreement as of the last day of any succeeding month by giving at least twenty (20) days’ prior notice of termination to the party in breach unless such breach is cured within such notice period, or, if not capable of being cured within said notice period, the curing thereof is commenced and proceeds with all due diligence during said notice period and is cured within sixty (60) days after such notice.

     16. If this Agreement is rendered illegal by enactment of a statute or a final decision by a court or governmental agency of competent jurisdiction, either party may terminate the Agreement after reasonable consultation with the other party. If, during the term hereof, any federal or state law is enacted which would require Ford, by reason of the existence of this Agreement, to provide its franchised automobile dealers, operating as such, with annual payments in an aggregate amount equal to or greater than those provided to Hertz, either in the form of price reductions or otherwise, then Ford, at its option, may terminate this Agreement, effective immediately, without any further obligations by either party to the other except as to such obligations that are due and payable as of the effective date of termination.

     17. Ford, through its duly authorized agents or representatives, may examine all pertinent records of Hertz, its parent, or its affiliates at any and all reasonable times for the purposes of determining, and to the extent necessary for the determination of, the accuracy of all statements that may be furnished by Hertz to Ford hereunder. Such records will include all documents pertaining to the advertising funds of Hertz or its affiliates, and to the number of vehicles in Hertz’s domestic U.S. corporate fleet.

     18. At Ford’s request from time to time and upon not less than ten (10) days’ prior notice to Hertz, Hertz’s duly authorized officials shall meet with Ford representatives at Hertz’s headquarters for the purpose of discussing the joint advertising program, particularly as it relates to Ford’s name (or Ford’s affiliates’ names) and good will or any of its trade or service marks. Hertz will use any such trade or service marks only in strict accordance with written authorization received from Ford and will in good faith, when not inconsistent with Hertz’s objectives, seek to meet Ford’s other requests or objections. Major changes in advertising campaigns or strategy will be discussed with Ford in advance of implementation.

     19. This Agreement may not be changed in any way except in writing signed and delivered by the duly authorized representatives of Ford and Hertz.

     This Agreement and any amendments may be executed in counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument.

     20. Any notice, consent, approval or other communication required or permitted hereunder will be in writing, will be given by registered or certified United States mail and will be deemed given when deposited in the mail, postage paid and addressed as follows:

          (a) if to Ford:

Ford Motor Company
Office of the Secretary
One American Road
Dearborn, Michigan 48126; and

          (b) if to Hertz:

Chairman of the Board
Hertz System, Inc.
225 Brae Boulevard
Park Ridge, New Jersey 07656

Such addresses may be changed by notice given in like manner.

     21. This Agreement will be deemed to be a Michigan agreement and will be construed and governed by the laws of the State of Michigan.

     22. The joint advertising agreement dated as of January 1, 1988 (“1988” Agreement”), between Ford and Hertz shall terminate as of midnight, August 31, 1997, and this Agreement shall supersede the 1988 Agreement.

If the foregoing correctly states the understanding of both parties, on this subject, please sign and return a copy of this letter.

Yours very truly, FORD MOTOR COMPANY
By:	/s/ James G. O'Connor
	James G. O'Connor 9/7/04

AGREED:

HERTZ SYSTEM, INC.

By: /s/ Craig R. Koch
     Craig R. Koch     9/10/04

EX-12

EXHIBIT 12

THE HERTZ CORPORATION AND SUBSIDIARIES
CONSOLIDATED COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands of Dollars Except Ratios)
Unaudited

	Nine Months Ended
	September 30,
	2004		2003
Income before income taxes and minority interest	$	392,584	$	190,371
Interest expense		300,829		280,377
Portion of rent estimated to represent the interest factor		97,896		91,641
Earnings before income taxes, minority interest and fixed charges	$	791,309	$	562,389
Interest expense (including capitalized interest)	$	301,404	$	280,802
Portion of rent estimated to represent the interest factor		97,896		91,641
Fixed charges	$	399,300	$	372,443
Ratio of earnings to fixed charges		2.0		1.5

EX-15

EXHIBIT 15

November 8, 2004

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re:  The Hertz Corporation Registration Statements on Form S-3 (Files No. 333-109955 and 333- 57138) and on Form S-8 (File Nos. 333-32543, 333-60311, 333-80457 and 333-32868).

Commissioners:

We are aware that our report dated November 4, 2004, on our review of interim financial information of The Hertz Corporation and its subsidiaries (the “Company”) for the three and nine month periods ended September 30, 2004 and September 30, 2003 and included in the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2004 is incorporated by reference in the above referenced Registration Statements.

Very truly yours,

PricewaterhouseCoopers LLP
Florham Park, New Jersey

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 15d – 14(a)

I, Craig R. Koch, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2004 of The Hertz Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2004

By:	/s/ Craig R. Koch
	Craig R. Koch
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 15d – 14(a)

I, Paul J. Siracusa, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2004 of The Hertz Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial data; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2004

By:	/s/ Paul J. Siracusa
	Paul J. Siracusa
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the quarterly report of The Hertz Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig R. Koch, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2004	By:	/s/ Craig R. Koch
		Craig R. Koch
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the quarterly report of The Hertz Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul J. Siracusa, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2004	By:	/s/ Paul J. Siracusa
		Paul J. Siracusa
		Chief Financial Officer