UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission File Number 1-7541

THE HERTZ CORPORATION

Registrant’s telephone number, including area code: 201-307-2000

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

None

The Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K 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 þ  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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

State the aggregate market value of the voting and non-voting common stock held by non-affiliates of the Registrant: None (As of March 21, 2005, all of the common stock of the Registrant is owned by its affiliate, Ford Holdings LLC).

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of March 21, 2005: Common Stock, $0.01 par value per share – 100 shares.

Documents Incorporated By Reference

None

THE HERTZ CORPORATION AND SUBSIDIARIES
INDEX

Explanatory Note

The Hertz Corporation (together with its subsidiaries, referred to herein as “Hertz” or the “Company”) is restating its consolidated statements of operations for the years ended December 31, 2003 and 2002, and for the quarters ended March 31, 2004, June 30, 2004, September 30, 2004 and the four quarters of 2003 (the “Restatement”). The Restatement also affects periods prior to 2002. The Restatement is reported in this Annual Report on Form 10-K for the year ended December 31, 2004 (the “Report”) and will be reported in the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2005, June 30, 2005 and September 30, 2005.

The Restatement corrects certain of the Company’s historical accounting policies in order to conform with generally accepted accounting principles (“GAAP”). Under those historical policies, the Company netted certain amounts charged to its car rental and industrial and construction equipment rental customers or other parties against expenses and netted certain expenses incurred relating to amounts charged to its customers or other parties against revenues. The effect of the Restatement will be to increase previously reported revenues and expenses for each of the affected periods by equal amounts. Consequently, the Restatement will not result in a change in the Company’s previously reported income before income taxes and minority interest, income before cumulative effect of change in accounting principle or net income (loss), nor will it change the Company’s liquidity or financial condition. Additionally, the Restatement will not have any effect on the Company’s previously reported consolidated balance sheets or consolidated statements of cash flows.

For a discussion of the Restatement adjustments, see Note 1A to the Notes to the Company’s consolidated financial statements included in this Report. For more information on the impact of the Restatement on years 2001 and 2000, see Item 6, Selected Financial Data, included in this Report. For more information on the impact of the Restatement on quarterly consolidated statements of operations for 2004 and 2003, see Note 13 to the Notes to the Company’s consolidated financial statements included in this Report.

The Company did not amend its previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for the periods affected by the Restatement and the financial statements and related financial information contained in such reports should no longer be relied upon.

All prior period amounts affected by the Restatement and presented in this Annual Report on Form 10-K are reflected on a restated basis.

PART I

ITEM 1. Business.

General

The Company is an indirect wholly owned subsidiary of Ford Motor Company (“Ford”).

The Company and its affiliates, associates and independent licensees represent what the Company believes is the largest worldwide general use car rental brand based upon revenues and one of the largest industrial and construction equipment rental businesses in North America based upon revenues. The Company’s Hertz brand name is recognized worldwide as a leader in quality rental services and products. The Company, together with its affiliates, associates and independent licensees, currently rents cars and industrial and construction equipment and operates its other businesses from over 7,200 locations throughout the United States and in over 150 foreign countries and jurisdictions.

For the year ended December 31, 2004, the Company generated revenues, income before income taxes and minority interest and net income of $6.7 billion, $502.6 million and $365.5 million, respectively.

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The Company, which was incorporated in Delaware in 1967, is a successor to corporations that have been engaged in the automobile and truck rental and leasing business since 1918. Ford first acquired an ownership interest in the Company in 1987. Previously, the Company had been a subsidiary of UAL Corporation (formerly Allegis Corporation), which had acquired the Company’s outstanding capital stock from RCA Corporation in 1985. See Note 1 to the Notes to the Company’s consolidated financial statements included in this Report.

Hertz became a wholly owned subsidiary of Ford as a result of a series of transactions in 1993 and 1994. Hertz continued as a wholly owned subsidiary of Ford until April 1997. In 1997, Hertz completed a public offering of approximately 50.6% of its Class A Common Stock (the “Class A Common Stock”), which represented approximately 19.1% of the economic interest in Hertz. In March 2001, Ford FSG, Inc. (“FSG”), an indirect wholly owned subsidiary of Ford that then owned an approximate 81.5% economic interest in the Company, acquired all of the Company’s outstanding Class A Common Stock that it did not already own for $35.50 per share, or approximately $735 million. As a result of FSG’s acquisition, the Company’s Class A Common Stock ceased to be traded on the New York Stock Exchange. However, because certain of the Company’s debt securities were sold through public offerings, the Company continues to file periodic reports under the Securities Exchange Act of 1934.

In 2003, FSG was dissolved and the shares of the Company’s Common Stock owned by FSG were distributed to Ford and Ford Holdings LLC. In February 2004, Ford Holdings LLC became the sole owner of the Company’s Common Stock.

The Company’s principal executive offices are located at 225 Brae Boulevard, Park Ridge, New Jersey 07656. The Company’s telephone number is (201) 307-2000 and its principal U.S. website is www.hertz.com. Access to the Company’s periodic reports filed with the Securities and Exchange Commission is available through the Company’s website.

“Hertz,” “HERC,” “The Source,” “Hertz Local Edition,” “Hertz #1 Club Gold,” “The Hertz #1 Club,” and “Hertz NeverLost” are trademarks or service marks of the Company. All other trademarks, service marks or brand names appearing in this Report are the property of their respective holders.

Certain statements contained in this report under “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, including, without limitation, those concerning (i) the Company’s outlook and (ii) the Company’s liquidity and capital resources, 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.

Car Rental

The Company maintains a substantial network of company-operated car rental locations both in the United States and in Europe, and what it believes to be the largest number of on-airport car rental locations in the world, enabling the Company to provide consistent quality and service worldwide. The Company derives approximately 74% of its car rental revenues from on-airport locations.

The Company’s worldwide car rental operations and certain other related activities generated $5.5 billion in revenues and $438 million in income before income taxes and minority interest during 2004.

Industrial and Construction Equipment Rental

The Company, domestically through its wholly owned subsidiary, Hertz Equipment Rental Corporation, and internationally through various subsidiaries (all such subsidiaries, collectively, “HERC”), maintains a

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significant market share in the North American industrial and construction equipment rental market. HERC rents a broad range of earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, pumps, small tools, compaction equipment and construction-related trucks. HERC currently operates what it believes to be the third largest equipment rental business in North America, the third largest equipment rental business in Spain and the fourth largest in France based upon revenues.

The Company’s worldwide industrial and construction equipment rental operations generated $1.2 billion in revenues and $88 million in income before income taxes and minority interest during 2004.

Other Activities

Other activities of the Company include third-party claim management services.

Business Segments

The Company’s business consists of two significant segments, the rental of cars and light trucks (“car rental”), and the rental of industrial, construction and material handling equipment (“industrial and construction equipment rental”). Set forth below is certain information with respect to these segments, as well as “corporate and other,” for the year ended December 31, 2004. Corporate and other includes general corporate expenses, as well as other business activities, such as claim management services. See Note 11 to the Notes to the Company’s consolidated financial statements included in this Report.

Set forth below is certain information with respect to the Company’s U.S. and foreign operations for the year ended December 31, 2004 (substantially all of the Company’s foreign operations consist of car rental and industrial and construction equipment rental operations).

Worldwide Car Rental

U.S. Operations

Car Rental. The Company provides car rental services through facilities operated at all major airports and in central business districts and key suburban centers throughout the United States.

The Company uses a wide variety of makes and models of cars for daily rental purposes, nearly all of which are the current or previous year’s models. The Company rents cars on a daily, weekend, weekly or monthly basis, with rental charges computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge. The Company’s rates vary at different locations depending on local market conditions and other competitive and cost factors. While cars are often returned to the locations from which they are rented, the Company also allows one-way rentals of its cars under its Rent It Here – Leave It There

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program. In addition to car rentals and licensee fees, the Company generates revenues from reimbursements by customers of airport concession fees and vehicle licensing costs; fueling charges; and charges for ancillary customer products and services such as supplemental equipment (child seats and ski racks), loss or collision damage waiver, liability insurance and personal accident/effects coverage, Hertz NeverLost navigation system and satellite radios.

The Company conducts operations in the United States through company-operated and licensee-operated locations. Company-operated locations are those locations through which the Company, or an agent of the Company, rents cars that the Company owns, as compared to licensee locations through which licensees rent cars that they own. The Company believes that its extensive worldwide ownership of its operations contributes to the consistency of its high-quality service, cost control, fleet utilization, yield management, competitive pricing and the Company’s ability to offer one-way rentals through its Rent It Here – Leave It There program. However, in certain predominantly smaller domestic markets, the Company has found it more efficient to utilize licensees. At December 31, 2004, the Company owned 95% of all the cars in the combined company-owned and licensee fleet.

At the Company’s major airport rental locations, as well as at selected off-airport locations, customers participating in the Company’s Hertz #1 Club Gold program are able to rent vehicles in an expedited manner, often bypassing the rental counter entirely and proceeding directly to their vehicles upon arrival at the Company’s facility. The Company believes the Hertz #1 Club Gold program provides it a significant competitive advantage, particularly among frequent travelers, and it has, through travel industry relationships, targeted such travelers for participation in the program.

The Company maintains automobile maintenance centers at certain airports and in certain urban and suburban areas, providing maintenance facilities for the Company’s rental fleet. Many of these facilities, which include sophisticated car diagnostic and repair equipment, are accepted by automobile manufacturers as eligible to perform and receive reimbursement for warranty work. Collision damage and major repairs are generally performed by independent contractors.

Airport Operations. The Company has 335 concession agreements at airports in the United States. These agreements are entered into with airport authorities, through either negotiation or bidding for the right to conduct a car rental business at the airport. The agreements typically provide for concession payments based upon a specified percentage of revenue generated at the airport, subject to a minimum annual fee and sometimes include fixed rent for terminal counters or other leased properties and facilities. Concession agreements typically do not forbid, and in a few instances actually require, the Company to seek reimbursement from customers of concession fees paid; however, in certain states such reimbursement is limited or prohibited by law. The number of car rental concessions available at airports varies considerably, but it is rarely less than four.

Suburban Operations. The Company’s expanding number of suburban locations offer rental services to a variety of types of customers, including those who have been referred by, and whose rental costs are being wholly or partially reimbursed by, insurance companies following accidents in which their vehicles were damaged (often called “insurance replacement rentals”), those needing vehicles while theirs are being repaired by automobile dealers or body shops and those wishing to rent for local commercial or leisure purposes. At many of its suburban locations, the Company will provide pick-up and delivery services in connection with rentals.

International Operations

At December 31, 2004, the Company and its affiliates, associates and licensees, operated in over 150 foreign countries and jurisdictions. In general, international operations are conducted similarly to those of the Company in the United States. Although the Company has found it more efficient to conduct a greater proportion of its international operations through licensees as compared to the Company’s U.S. operations, it continues to conduct its operations primarily through company-operated locations in the major Western European markets, as well as in Australia, Brazil, Canada and New Zealand. The international car rental operations that generated the highest volumes of business from company-operated

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locations in 2004 were, in descending order of revenues, those conducted in France, Germany, Italy, the United Kingdom, Australia, Canada, Spain, the Netherlands and Switzerland.

The Company’s global reservations systems and websites allow customers worldwide to book reservations in any of the Company’s worldwide markets. Additionally, a local or toll-free telephone number is offered in all major foreign countries which provides access to the Company’s global car rental reservations system.

Reservations

The Company accepts reservations for Hertz car rental services worldwide through computerized reservations systems, also known as global distribution systems, utilized by travel agents and, in major countries, including the United States and all other countries with company-operated locations, through local, national, or toll-free telephone calls to Hertz reservations centers. In addition, reservations are accepted through the Company’s interactive website and websites operated by third parties. The Company’s car rental websites, which also allow customers to enroll in its loyalty programs, obtain copies of bills for past transactions and obtain information about the Company’s rental offerings, have grown significantly in importance as a reservations channel in recent years.

Car Acquisition and Disposition

The Company believes it is one of the largest private sector purchasers of new cars in the world. The Company acquires, subject to availability, a majority of its cars pursuant to various fleet repurchase programs established by automobile manufacturers. Under these programs, automobile manufacturers agree to repurchase cars at a specified price during established repurchase periods, subject to certain car condition and mileage requirements. Repurchase prices under the repurchase programs are based on either (i) a predetermined percentage of original car cost and the month in which the car is returned or (ii) the original capitalized cost less a set daily depreciation amount. These repurchase programs limit the Company’s residual risk with respect to cars purchased under the programs. For these reasons, cars purchased by car rental companies under repurchase programs are sometimes referred to by industry participants as “non-risk” or “program” cars. Conversely, those cars not purchased under repurchase programs for which the car rental company is exposed to residual risk are sometimes referred to as “risk” cars. During 2004, non-risk cars as a percentage of all cars purchased by the Company’s U.S. operations and international operations were approximately 85% and 74%, respectively.

Over the five years ended December 31, 2004, on a weighted-average basis, approximately 55% of the cars acquired by the Company for its U.S. car rental fleet, and approximately 29% of the cars acquired by the Company for its international fleet, were manufactured by Ford and its subsidiaries. During 2004, approximately 41% of the cars acquired by the Company domestically were manufactured by Ford and its subsidiaries and approximately 32% of the cars acquired by the Company for its international fleet were manufactured by Ford and its subsidiaries, which represented the largest percentage of any automobile manufacturer in that year. See Note 15 to the Notes to the Company’s consolidated financial statements included in this Report.

Purchases of cars are financed through funds provided from operations and by active and ongoing global borrowing programs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

The Company disposes of “risk” cars, as well as program cars that have for any reason become ineligible for manufacturer repurchase, through a variety of disposition channels, including auctions, brokered sales, sales to wholesalers and, to a lesser extent (primarily in the United States), sales at retail through a network of company-operated car sales locations dedicated exclusively to the sale of used cars from the Company’s rental fleet.

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Licensees

While the Company believes that its extensive worldwide ownership of its operations provides an important competitive advantage, the Company has found it more efficient to operate through licensees in certain markets. The Company’s licensees operate in over 150 countries and jurisdictions worldwide. The Company believes that its licensee arrangements are important to the Company’s business because they enable the Company to offer expanded national and international service and a broader one-way rental program. Licenses are issued principally by the Company’s wholly owned subsidiaries, Hertz System, Inc. (“System”) and Hertz International, Ltd. (“Hertz International”), under franchise arrangements to independent licensees and affiliates who are engaged in the car rental business in the United States and in many foreign countries and jurisdictions.

Licensees generally pay fees based on the number of cars they operate and/or on their revenues. The operations of all licensees, including the purchase and ownership of vehicles, are financed independently by the licensees, with the Company having no investment interest in them or their fleet. Licensees also share in the cost of the Company’s advertising program, reservations system, sales force and certain other services. In return, licensees are provided the use of the Hertz brand name, management and administrative assistance and training, reservations through the Company’s reservations channels, the Hertz #1 Club and #1 Club Gold expedited rental programs, the Rent It Here – Leave It There one-way rental program and other services.

System licenses ordinarily are limited as to transferability without the Company’s consent and are terminable by the Company only for cause or after a fixed term. Licensees may generally terminate for any reason on 90 days’ notice. Initial license fees or the price for the sale to a licensee of a company-owned location may be payable over a term of several years. New licenses continue to be issued and, from time to time, licensee businesses are purchased by the Company.

Car Leasing

Effective January 1, 2000, Hertz International entered into license and management services agreements with Axus International, Inc. (“Axus”), a wholly owned vehicle leasing subsidiary of Ford Motor Credit Company (“Ford Credit”), a subsidiary of Ford, under which Hertz International licensed the Hertz name and agreed to provide management services to Axus for a five-year term. On August 31, 2000, the Company transferred substantially all the net assets of its leasing operations in Australia, New Zealand and the United Kingdom to Axus for $99.2 million. In the fourth quarter of 2002, Ford Credit sold the Axus operations in Australia and New Zealand and in the first quarter of 2003, Axus operations in Europe were sold. Hertz International continued to license the Hertz name and provide management services until these operations were sold. During 2003 and 2002, fees earned by the Company from these agreements were approximately $1.8 million and $11.5 million, respectively. The Company continues to maintain leasing operations in Brazil.

Industrial and Construction Equipment Rental

HERC’s principal business is the rental of industrial and construction equipment. HERC rents a broad range of equipment; major categories include earthmoving equipment, material handling equipment, aerial and electrical equipment, air compressors, pumps, small tools, compaction equipment and construction-related trucks. HERC expanded its operations, mainly as a result of acquisitions, from 1998 through 2000.

HERC’s comprehensive line of equipment enables it to supply equipment to a wide range of customers from local contractors to large industrial plants. Also, larger companies, particularly those with industrial plant operations, are requiring single source vendors, not only for equipment rental, but also for management of their total equipment needs. This includes maintenance of their owned equipment, tools and supplies for their labor force, and custom management reports. HERC supports this through its dedicated in-plant operations, tool trailers, and plant management systems.

HERC’s customers consist predominantly of commercial accounts and represent a wide variety of industries, such as railroad, automobile manufacturing, petrochemicals, movie production, shipbuilding and construction. Serving a number of different industries enables HERC to reduce its dependence on a

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single or limited number of customers in the same business. HERC primarily targets customers in medium to large metropolitan markets.

HERC’s rental locations generally are situated in industrial or commercial zones. A growing number of locations have highway or major thoroughfare visibility. The average location is two acres in size, though smaller in Europe, and includes a customer service center, an equipment service area and storage facilities for equipment. The branches are built or conform to the specifications of the HERC prototype branch, which stresses efficiency, safety and environmental compliance. Most branches have stand-alone maintenance and fueling facilities and showrooms.

HERC acquires its industrial and construction equipment from a variety of manufacturers. The equipment is typically new at the time of acquisition and is acquired on a “risk” basis. HERC disposes of its used equipment through a variety of channels, including auctions, brokered sales, sales to wholesalers and negotiated sales to customers and other third parties. Ancillary to its rental business, HERC is also a dealer of certain brands of new equipment in the United States and Canada, and sells consumables such as gloves and masks at many of its rental locations.

Other Operations of the Company

Claim Management

The Company’s wholly owned subsidiary, Hertz Claim Management Corporation (“HCM”), provides claim administration services to the Company and to outside customers. These services include investigating, evaluating, negotiating and disposing of a wide variety of claims, including third party, first party, bodily injury, property damage, general liability and product liability, but not the underwriting of risks. HCM conducts business at nine regional offices in the United States. Separate subsidiaries of the Company conduct similar operations in seven countries throughout Europe.

Risk Management

Third-Party Liability

In its domestic operations, the Company is required by applicable financial responsibility laws to maintain insurance against legal liability for bodily injury (including death) or property damage to third parties arising from the operation of its vehicles (sometimes called “vehicle liability”) in stipulated amounts. In most places, the Company satisfies those requirements by qualifying as a self-insurer, a process that typically involves governmental filings and demonstration of financial responsibility, which sometimes requires the posting of a bond or other security. In the remaining places, the Company obtains an insurance policy from an unaffiliated insurance carrier and indemnifies the carrier for any amounts paid under the policy. As a result of such arrangements, the Company bears economic responsibility for domestic vehicle liability, except to the extent it successfully transfers such liability to others through insurance or contractual arrangements.

For its car rental operations in Europe, the Company has established two wholly owned insurance subsidiaries, Probus Insurance Company Europe Limited (“Probus”), a direct writer of insurance domiciled in Ireland, and Hertz International RE Limited (“HIRE”), a reinsurer currently organized in Ireland. In most European countries with company-operated locations, the Company purchases from Probus the vehicle liability insurance required by law, and Probus reinsures the risks under such insurance with HIRE. In the remaining countries in Europe with company-operated locations, the Company obtains the coverage from unaffiliated insurance carriers, which reinsure their risks with HIRE. Thus, as with its domestic operations, the Company bears economic responsibility for vehicle liability in its European car rental operations, except to the extent that it transfers such liability to others through insurance or contractual arrangements. For its international operations outside Europe and for HERC’s operations in Europe, the Company maintains some form of vehicle liability insurance coverage. The nature of such coverage, and the Company’s economic responsibility for covered losses, varies considerably.

Both domestically and in its international operations, the Company from time to time in the course of its business becomes legally responsible to members of the public for bodily injury (including death) or property damage arising from causes other than the operation of its vehicles (sometimes known as “general liability”). As with vehicle liability, the Company bears economic responsibility for general liability

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losses, except to the extent it transfers such losses to others through insurance or contractual arrangements.

To mitigate its exposure to large vehicle and general liability losses domestically and in its car rental operations in Europe, the Company maintains excess insurance coverage with unaffiliated insurance carriers against such losses to the extent they exceed $10 million per occurrence (for occurrences domestically before December 15, 2002, and in Europe before December 15, 2003, to the extent such losses exceeded $5 million per occurrence). The coverage provided under such excess insurance policies is limited to $695 million in any policy year (for occurrences between January 1, 2001, and December 15, 2002, $725 million in any policy year; for occurrences before January 1, 2001, $450 million in any policy year). For its international operations outside Europe and for HERC’s operations in Europe, the Company also maintains liability insurance coverage with unaffiliated carriers in such amounts as it deems adequate in light of the respective potential hazards, where such insurance is obtainable on commercially reasonable terms.

The Company’s domestic rental contracts, both for car rental and for industrial and construction equipment rental, typically provide that the renter will indemnify the Company for liability arising from the operation of the rented vehicle or equipment (for car rentals in certain places, though, only to the extent such liability exceeds the amount stipulated in the applicable financial responsibility law). In addition, many of HERC’s domestic rental contracts require the renter to maintain liability insurance under which HERC is entitled to coverage. While such provisions are sometimes effective to transfer liability to renters, their value to the Company, particularly in cases of large losses, may be limited. The rental contracts used in the Company’s international operations sometimes contain provisions relating to insurance or indemnity, but they are typically more limited than those employed in the Company’s domestic operations.

In its domestic car rental operations, the Company offers an optional liability insurance product, Liability Insurance Supplement (“LIS”), that provides vehicle liability insurance coverage substantially higher than state minimum levels to the renter and other authorized operators of a rented vehicle. LIS coverage is provided under excess liability insurance policies issued by an unaffiliated insurance carrier, the risks under which are reinsured with a subsidiary of the Company. As a consequence of those reinsurance arrangements, rental customers’ purchases of LIS do not reduce the Company’s economic exposure to vehicle liability. Instead, the Company’s exposure to vehicle liability is potentially increased when LIS is purchased, because insured renters and other operators may have vehicle liability imposed on them in circumstances and in amounts where the applicable rental agreement or applicable law would not, absent the arrangements just described, impose vehicle liability on the Company.

In both its domestic car rental operations and its company-operated international car rental operations in many countries, the Company offers an optional product or products providing insurance coverage (“PAI/PEC coverage”) to the renter and the renter’s immediate family members traveling with the renter for accidental death or accidental medical expenses arising during the rental period or for damage or loss of their property during the rental period. PAI/PEC coverage is provided under insurance policies issued by unaffiliated carriers or, in some parts of Europe, by Probus, and the risks under such policies either are reinsured with HIRE or another subsidiary of the Company or are the subject of indemnification arrangements between the Company and the carriers. Rental customers’ purchases of PAI/PEC coverage create additional risk exposures for the Company, since it would not typically be liable for the risks insured by PAI/PEC coverage if that coverage had not been purchased.

The Company’s offering of LIS and PAI/PEC coverage in its domestic car rental operations is conducted pursuant to limited licenses or exemptions under state laws governing the licensing of insurance producers. In its international car rental operations, the Company’s offering of PAI/PEC coverage historically has not been regulated; however, in the countries of the European Union and Australia, the regulatory environment for insurance intermediaries is rapidly evolving, and there can be no assurance either that the Company will be able to continue offering PAI/PEC coverage without substantial changes in its offering process or in the terms of the coverage or that such changes, if required, would not render uneconomic the Company’s continued offering of the coverage.

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Provisions on the Company’s books of account for self-insured vehicle and other liability losses are made by charges to expense based upon evaluations of estimated ultimate liabilities on reported and unreported claims. At December 31, 2004, this liability was estimated at $391.7 million for the Company’s combined domestic and international operations.

Damage to Company Property

The Company bears the risk of damage to its own property, unless such risk is transferred through insurance or contractual arrangements.

To mitigate its risk of large, single-site property damage losses domestically and in Europe, the Company maintains property insurance with unaffiliated insurance carriers, generally with a per-occurrence deductible of $3.0 million domestically and $2.5 million in Europe. For its international operations outside Europe, the Company also maintains property insurance coverage with unaffiliated carriers in such amounts as it deems adequate in light of the respective hazards, where such insurance is available on commercially reasonable terms.

The Company’s rental contracts typically provide that the renter is, subject to certain exceptions, responsible for damage to or loss (including loss through theft) of rented vehicles or industrial and construction equipment. The Company generally offers an optional rental product, known in various countries as loss damage waiver, collision damage waiver, theft protection or accident excess reduction, under which the Company waives or limits its right to make a claim for such damage or loss. This product is not regulated as insurance, but it is subject to specific laws in roughly half of the domestic jurisdictions where the Company operates.

Collision damage costs and the costs of stolen or unaccounted-for vehicles and equipment, along with other damage to the Company’s property, are charged to expense as incurred.

Other Risks

To manage other risks associated with its businesses, or to comply with applicable law, the Company purchases other types of insurance carried by business organizations, such as worker’s compensation and employer’s liability (for which the Company, through contracts with its insurers domestically, bears the risk of the first $5 million of loss from any occurrence), commercial crime and fidelity, performance bonds and directors’ and officers’ liability insurance, from unaffiliated insurance companies in amounts deemed by the Company to be adequate in light of the respective hazards, where such coverage is obtainable on commercially reasonable terms. In certain cases, such insurance is obtained under policies procured by Ford.

Competition

The markets in which the Company operates are highly competitive. In any given location, the Company may encounter competition from national, regional and local companies. In the United States, the Company’s principal competitors in the airport car rental market are Cendant Corporation, which operates the “Avis” and “Budget” brands, Vanguard Car Rental USA Group, which operates the “National Car Rental” and “Alamo” brands and Dollar Thrifty Automotive Group, Inc., which operates the “Dollar” and “Thrifty” brands. Enterprise Rent-A-Car Company (“Enterprise”), which also competes in the airport car rental market, is the Company’s principal competitor in the suburban local use and insurance replacement markets in the United States. In Europe, the Company’s principal competitors in the car rental market are Avis Europe plc, Europcar, Sixt, National Car Rental and Enterprise. The Company competes primarily on the basis of customer service and price. In addition, the Company believes extensive worldwide ownership of its operations and its access to the global capital markets provide it with an advantage over its competitors.

HERC’s competitors in the equipment rental industry range from other large national companies, such as United Rentals, Inc. and the Rental Service Division of Atlas Copco Group, to many small regional businesses. HERC’s competitive success is primarily due to its 40 years of experience in the equipment

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rental industry, its systems and procedures for monitoring, controlling and developing its branch network, its capacity to maintain a comprehensive rental fleet and its established national accounts program.

The Company believes that price is one of the primary competitive factors in the car and industrial and construction equipment rental markets. Competitors of the Company, some of which have access to substantial capital, may seek to compete aggressively on the basis of pricing. To the extent that the Company matches downward competitor pricing, it could have an adverse impact on the Company’s results of operations. To the extent that the Company is not willing to match competitor pricing, it could also have an adverse impact on the Company’s results of operations as the Company may lose market share.

Employees

On December 31, 2004, the Company employed approximately 31,400 persons in its domestic and foreign operations. Labor contracts covering the terms of employment of approximately 7,600 employees in the United States are presently in effect under 145 active contracts with local unions, affiliated primarily with the International Brotherhood of Teamsters and the International Association of Machinists (AFL-CIO). Labor contracts covering approximately 2,500 of these employees will expire during 2005. Employee benefits in effect include group life insurance, hospitalization and surgical insurance, pension plans and a defined contribution plan. Overseas employees are covered by a wide variety of union contracts and governmental regulations affecting, among other things, compensation, job retention rights and pensions. The Company has had no material work stoppage as a result of labor problems during the last 10 years. The Company believes its labor relations to be good.

In addition to the employees referred to above, the Company employs a substantial number of temporary workers, and engages outside services, as is customary in the industry, principally for the non-revenue movement of the rental fleet between locations.

Governmental Regulation and Environmental Matters

Throughout the world, the Company is subject to numerous types of governmental controls, including those relating to price regulation and advertising, privacy and data protection, currency controls, labor matters, charge card operations, insurance, environmental protection, used car sales and franchising.

The Company’s operations, as well as those of its competitors, could be affected by any limitation in the fuel supply or by any imposition of mandatory allocation or rationing regulations. In the event of a severe disruption of fuel supplies, the operations of all car and industrial and construction equipment rental companies could be adversely affected. Historically, there has been no material disruption of operations resulting from lack of fuel availability.

The environmental legal and regulatory requirements applicable to the Company’s operations pertain to (i) the operation and maintenance of cars, trucks and other vehicles, such as heavy equipment, buses and vans; (ii) the ownership and operation of tanks for the storage of petroleum products, including gasoline, diesel fuel and used oil; and (iii) the generation, storage, transportation and disposal of waste materials, including used oil, vehicle wash sludge and waste water. The Company has made, and will continue to make, expenditures to comply with applicable environmental laws and regulations.

The use of cars and other vehicles is subject to various governmental requirements designed to limit environmental damage, including those caused by emissions and noise. Generally, these requirements are met by the manufacturer, except in the case of occasional equipment failure requiring repair by the Company. Measures are taken at certain locations in states that require the installation of Stage II Vapor Recovery equipment to reduce the loss of vapor during the fueling process.

The Company operates approximately 400 underground tanks and 1,500 aboveground tanks in the U.S. to store petroleum products, and the Company believes its tanks are maintained in material compliance with environmental regulations, including federal and state financial responsibility requirements for corrective action and third-party claims due to releases. The Company’s compliance program for its tanks is intended to ensure that (i) the tanks are properly registered with the state in which the tanks are located

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and (ii) the tanks have been either upgraded or replaced to meet federal and state leak detection and spill, overfill and corrosion protection requirements.

The Company is also incurring and providing for expenses for the cleanup of contamination from the discharge of petroleum substances at its owned and leased properties, as well as contamination at other locations at which the Company’s wastes have reportedly been identified. With respect to cleanup expenditures for the discharge of petroleum substances at the Company’s owned or leased properties, the Company has received reimbursement, in whole or in part, from certain states that maintain underground storage tank petroleum cleanup reimbursement funds. Such funds have been established to assist tank owners in the payment of cleanup costs associated with releases from registered tanks. With respect to off-site locations at which the Company’s wastes have reportedly been identified, the Company has been and continues to be required to contribute to cleanup costs due to strict joint and several cleanup liability imposed by the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 and comparable state superfund statutes.

Environmental legislation and regulations and related administrative policies have changed rapidly in recent years, both in the United States and in other countries. There is a risk that governmental environmental requirements, or enforcement thereof, may become more stringent in the future and that the Company may be subject to legal proceedings brought by government agencies or private parties with respect to environmental matters. In addition, with respect to cleanup of contamination, additional locations at which wastes generated by the Company may have been released or disposed, and of which the Company is currently unaware, may in the future become the subject of cleanup for which the Company may be liable, in whole or part. Further, at airport-leased properties, the Company may be subject to environmental requirements imposed by airports that are more restrictive than those obligations imposed by environmental regulatory agencies. Accordingly, while the Company believes that it is in substantial compliance with applicable requirements of environmental laws, there can be no assurance that the Company’s future environmental liabilities will not be material to the Company’s consolidated financial position, results of operations or cash flows.

ITEM 2. Properties.

The Company operates car rental locations at or near airports and in central business districts and suburban areas of major cities in North America (the United States, including Puerto Rico and the U.S. Virgin Islands, and Canada), Europe (France, Germany, Italy, the United Kingdom, Spain, the Netherlands, Switzerland, Belgium and Luxembourg), the Pacific (Australia and New Zealand) and Brazil, as well as retail used car sales locations in the United States and France. The Company operates industrial and construction equipment rental locations in North America (the United States and Canada) and Europe (France and Spain). The Company also operates headquarters, sales offices and service facilities in the foregoing countries in support of its car rental and industrial and construction equipment rental businesses, as well as small car rental sales offices and service facilities in a select number of other countries in Europe and Asia.

Of such locations, fewer than 10% are owned by the Company. The remaining locations are leased or operated under concessions from governmental authorities and private entities. Those leases and concession agreements typically require the payment of minimum rents or minimum concession fees and often also require the Company to pay or reimburse operating expenses; to pay additional rent, or concession fees above guaranteed minimums, based on a percentage of revenues or sales arising at the relevant premises; or to do both. See Note 10 to the Notes to the Company’s consolidated financial statements included in this Report.

The Company owns four major facilities in the vicinity of Oklahoma City, Oklahoma at which reservations for its car rental operations are processed, global strategic information systems for its car rental and industrial and construction equipment rental businesses are serviced and major domestic and international accounting functions are performed. The Company also has an owned reservation and

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financial center near Dublin, Ireland, at which it has centralized its European car rental reservation operations and accounting functions, and leases a reservation center in Saraland (Mobile County), Alabama to supplement the capacity of its Oklahoma City car rental reservation center. The Company maintains its executive offices in an owned facility in Park Ridge, New Jersey, and leases a European headquarters office near London, England.

ITEM 3. 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.

Litigation – Pending

On March 1, 2002, Bowdoin Square, L.L.C. v. Winn-Dixie Montgomery, Inc., Wal-Mart Stores East, Inc., The Hertz Corporation, et al. was commenced in the Circuit Court for Madison County, Alabama. The complaint alleges that the Company, Wal-Mart Stores East, Inc. and other defendants violated certain private land use restrictions and intentionally interfered with plaintiff’s contractual relationship with its tenant, Winn-Dixie Montgomery, Inc., when the Company subleased a former Wal-Mart store located in a shopping center in Saraland (Mobile County), Alabama. The complaint also alleges that the Company and other defendants negligently and wantonly injured the value of plaintiff’s interest in the shopping center. A motion to transfer the case to the Circuit Court for Mobile County was granted in September 2002, and the Company filed its answer to the complaint. The plaintiff’s claims against Winn-Dixie Montgomery, Inc. have been severed and will be tried separately from the claims against Wal-Mart and the Company. A trial of the claims against Wal-Mart and the Company is scheduled to begin in April 2005.

On August 1, 2002, Jennifer Myers, an individual and on behalf of all others similarly situated, v. The Hertz Corporation was filed in the United States District Court for the Eastern District of New York. The complaint alleges a nationwide “opt-in collective action” on behalf of all Senior Station Managers, Station Managers and “B” Station Managers employed by the Company throughout the United States, contesting their exempt classification and seeking payment of overtime compensation under the federal Fair Labor Standards Act (“FLSA”). The complaint also contains a subclass for all such managers employed in New York for alleged violations of state labor laws. Plaintiffs have not yet been permitted to obtain a nationwide “opt-in,” as discovery has been thus far limited to the location where the plaintiffs are employed in an effort by the court to determine the viability of a nationwide action. To that end, depositions were completed, and in July 2004 the Company fully briefed and filed a motion for summary judgment, which was denied in March 2005.

On June 16, 2003, Wide World Tours of Mission Valley, Inc., Travel Support Systems, Inc., Vacation Marketing Group of Hawaii., Cecilia Pedroza, and International Travel Bureau, Inc. v. Avis Rent A Car System, Inc., Budget Rent A Car System, Inc., Dollar Rent A Car, Inc., Enterprise Rent-A-Car Company, The Hertz Corporation, and Thrifty Rent-A-Car System, Inc. was commenced in Superior Court of the State of California, for the County of San Diego. Wide World Tours purports to be a class action on behalf of certain United States travel agents and agencies that regularly book customers with the major rental car companies. The complaint alleges that the defendant rental car companies breached their unwritten contracts with the plaintiffs by knowingly and deliberately under-reporting and underpaying the commissions due to the plaintiffs, that in so doing the defendants engaged in deceit and that the defendants engaged in unfair competition by deducting processing fees or other administrative fees from payments they make to travel agents. After the defendants filed misjoinder motions, an amended complaint was filed against the Company with a separate new lawsuit commenced against Avis. After a hearing in April 2004, the judge certified a class of “California only” travel agencies. In November 2004, the Company and the representative plaintiffs, following mediation, agreed to a nationwide settlement. Under the terms of the settlement, the plaintiffs will file an amended complaint on behalf of a nationwide class of travel agents and the Company, without admitting liability and in return for a general release, will provide members of the settlement class with car rental certificates the majority of which, when utilized by customers of the class members, will result in the payment of a bonus commission to the sponsoring

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members. In addition, the Company has agreed to pay the fees of the plaintiffs’ attorneys. In March 2005, the court granted preliminary approval to the settlement.

On August 28, 2003, Naomi R. Henderson, individually and on behalf of all others similarly situated, v. The Hertz Corporation was commenced in the Superior Court of New Jersey, Essex County. Henderson purports to be a class action on behalf of all persons who purchased optional insurance products in the State of New Jersey or in other states from or through the Company at times that the Company did not have required licenses to sell such insurance. In January 2004, the Company’s motion to dismiss was granted and an order of dismissal was thereafter entered. The plaintiff has appealed the dismissal, and that appeal has now been briefed, argued and submitted to the New Jersey Appellate Division for a decision.

On December 22, 2003, Stephen Moore, on behalf of himself and all others similarly situated, v. The Hertz Corporation was commenced in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, in and for Hillsborough County. Moore purports to be a class action on behalf of persons who rented vehicles from the Company in Florida and were allegedly overcharged for the recovery of a tire and battery solid waste management fee and the recovery of registration fees for the issuance of Florida license plates. Similar lawsuits were separately commenced by the same plaintiff against Avis Rent A Car System Inc. and Budget Rent A Car System, Inc. In February 2004, the plaintiff filed an amended class action complaint which alleges that, in addition to the initial causes of action, the Company deceptively collected an improper “federal excise tax” on frequent flyer mileage awards to class members. The Company answered the amended complaint and discovery commenced. In January 2005, the Company filed a motion for summary judgment and the plaintiff filed a revised motion for class certification. Rulings on these motions are expected in the second quarter of 2005.

On March 15, 2004, Jose M. Gomez, individually and on behalf of all other similarly situated persons, v. The Hertz Corporation was commenced in the 214^th Judicial District Court of Nueces County, Texas. Gomez purports to be a class action filed alternatively on behalf of all persons who were charged a Fuel and Service Charge (“FSC”) by the Company or all Texas residents who were charged a FSC by the Company. The complaint alleges that the FSC is an unlawful penalty and that, therefore, it is void and unenforceable. In response to various motions by the Company, the plaintiff has filed two amended complaints which scaled back the putative class from a nationwide class to a class of all Texas residents who were charged a FSC by the Company or by its Corpus Christi Licensee. A new cause of action was also added for conversion. After some limited discovery, the Company filed a motion for summary judgment in December 2004. That motion was denied in January 2005. More extensive discovery will now commence.

On November 18, 2004, Keith Kochner, individually and on behalf of all similarly situated persons, v. The Hertz Corporation was commenced in the District Court in and for Tulsa County, State of Oklahoma. As with the Gomez case, Kochner purports to be a class action, this time on behalf of Oklahoma residents who rented from the Company and incurred the Company’s FSC. The petition alleges that the imposition of the FSC is a breach of contract and amounts to an unconscionable penalty or liquidated damages in violation of Article 2A of the Oklahoma Uniform Commercial Code. In March 2005, the trial court granted the Company’s motion to dismiss the action but also granted the plaintiff the right to replead.

In addition, the Company is currently a defendant in numerous actions and has received numerous claims on which actions have not yet been commenced for bodily injury, including death, and property damage (“PL/PD”) arising from the operation of motor vehicles and equipment rented from the Company and its licensees. In aggregate, the Company can be expected to expend material sums to defend and settle PL/PD actions and claims or to pay judgments resulting from them.

Among the PL/PD pending actions against the Company are a total of 142 actions filed in Mississippi on behalf of 4,176 plaintiffs seeking damages for silicosis, which the plaintiffs allegedly sustained from the use of equipment rented from HERC. The complaints name HERC as one of approximately 88 co-defendants. PL/PD claims and actions are provided for within the Company’s PL/PD program.

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The Company believes it has meritorious defenses in the foregoing matters and will defend itself vigorously.

In addition to the foregoing, various legal actions, claims and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against the Company and its subsidiaries. Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance. It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided unfavorably to the Company or the subsidiary involved. Although the amount of liability with respect to these matters cannot be ascertained, potential liability in excess of related accruals is not expected to materially affect the consolidated financial position, results of operations or cash flows of the Company.

Litigation – Recently Resolved

James Han, individually and on behalf of all others similarly situated v. The Hertz Corporation. (Previously discussed on pages 9 and 10 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.) The Appellate Division of the New York Supreme Court, First Department, affirmed the trial court’s dismissal of Han. The time period for further appeal has now expired.

ITEM 4. Submission Of Matters To A Vote Of Security Holders.

     Omitted.

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PART II

ITEM 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

All shares of the Company’s Common Stock at December 31, 2004 were owned by Ford Holdings LLC and, as such, there is no market for the Company’s Common Stock.

Based on the terms of an indenture dated April 1, 1986, under which the Company has outstanding debt securities, the Company’s ability to pay dividends is restricted. Such restriction provides that the Company may not pay dividends, invest in its own shares or permit investments by certain subsidiaries of the Company (“Restricted Subsidiaries”) in the Company’s shares subsequent to a specified date if, together with total investments by the Company and its Restricted Subsidiaries in subsidiaries that are not Restricted Subsidiaries made subsequent to such specified date, the aggregate of any such dividends or investments exceeds the sum of (i) a specified dollar amount, (ii) the aggregate net income of the Company and its Restricted Subsidiaries earned subsequent to such specified date and (iii) net proceeds received from capital stock issued subsequent to such specified date. At December 31, 2004, approximately $1,172 million of consolidated stockholder’s equity was free of such limitations. The foregoing amount was not affected by the Restatement described in Note 1A to the Notes to the Company’s consolidated financial statements included in this Report.

The Company did not pay any dividends in 2004, 2003 and 2002. The Company expects to begin paying semi-annual dividends to Ford, commencing in June 2005, in aggregate amounts that would cause the Company to maintain an estimated prospective 3.5-to-1 full-year average debt-to-equity ratio, after dividend payments, computed on a monthly average basis (with no dividends to be paid if such ratio would exceed 3.5-to-1).

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ITEM 6. Selected Financial Data.

The selected consolidated statement of operations data for each of the years in the three-year period ended December 31, 2004, and consolidated balance sheet data as of December 31, 2004 and 2003 presented below (other than the ratio of earnings to fixed charges) were derived from the audited consolidated financial statements of the Company and the related notes thereto included in this Report. The selected consolidated statement of operations data presented below for the years ended December 31, 2003, 2002, 2001 and 2000 has been restated. For a discussion of the Restatement, see Note 1A to the Notes to the Company’s consolidated financial statements included in this Report. The financial data presented below and the related notes thereto should be read in conjunction with the consolidated financial statements of the Company and the related notes thereto included in this Report.

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ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Restatement of Consolidated Statements of Operations

The Company is restating its previously issued consolidated statements of operations for the years ended December 31, 2003 and 2002 and the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 (the “Restatement”). The restated amounts for these quarters and the corresponding interim periods of 2003 are presented in Note 13 to the Notes to the Company’s consolidated financial statements included in this Report. The Restatement also affects periods prior to 2002. The Restatement corrected certain of the Company’s historical accounting policies to conform with generally accepted accounting principles (“GAAP”).

Before the Restatement, the Company’s consolidated statements of operations reflected its historical accounting policies, under which (1) amounts charged by the Company to its car rental customers to reimburse the Company for certain operating expenses (principally concession fees incurred for the privilege of operating at airports and certain other locations and vehicle licensing fees) were netted against related operating expenses, (2) amounts charged by the Company to its car rental and industrial and construction equipment rental customers for fueling of vehicles and equipment were netted against related operating expenses, (3) costs incurred in connection with the sale of consumables and dealer inventory from its industrial and construction equipment rental business were netted against revenues and (4) other, immaterial, items of revenues and expenses were presented on a net basis.