Ladies and gentlemen thank you for standing by, and welcome to the Hertz Global Holdings Fourth Quarter 2007 Earnings Call. At this time all participants are in a listen-only-mode. Later we will conduct a question-and-answer session and instructions will be given that time. (Operator Instructions) The company has asked me to remind you that certain statements made on this call contain forward-looking-statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking-statements are not guarantees of performance, and by their nature are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of this date and the company undertakes no obligations to update that information to reflect changed circumstances. Additional information concerning these statements is contained in the company's press release regarding its fourth quarter and full year results issued earlier today, and the risk factors and forward-looking-statements sections of the company 2006 10-K and third quarter 2007 10-Q filings with the SEC. Copies of these material are available from the SEC, the Hertz website, or from the company's investor relations department. I also want to remind you that this conference call is being recorded by the company. I would now like the turn the call over to your host Ms. Lauren Babus. Please go ahead.

Good morning and welcome to Hertz Global Holdings fourth quarter and full year 2007 conference call. You should all have our press release and associated financial information. We have also provided slide to accompany our conference call. You can access these documents at www.hertz.com/investor relations. In a minute I will turn the call over to Mark Frissora, Hertz's Chairman and CEO. Also speaking today is Elyse Douglas, Hertz's Chief Financial Officer. In addition, we have Joe Nothwang, Executive Vice President and President, Vehicle Rental and Leasing, The Americas and Pacific; Michel Taride, Executive Vice President and President, Hertz Europe Limited; and Gerry Plescia, Executive Vice President and President of Hertz with us for the Q&A session. Today we will use certain non-GAAP financial measures, all of which are reconciled with GAAP numbers in our press release posted on our website. We believe that our profitability and improved performance is better demonstrated using these non-GAAP metrics. In response to analyst feedback, we've added a table to help reconcile adjusted pretax income to corporate EBITDA. Our call today focuses on Hertz Global Holdings, a publicly traded company. Results for the Hertz Corporation differed only slightly as explained in our press release. And now I will turn the call over to Mark Frissora.

Thanks, Lauren and good morning everyone and thanks for joining us today. Let's start with Slide number 5. We are pleased to report such strong results for the fourth quarter and full year 2007. Our story is particularly gratifying, given that we face the headwinds of a weaker US economy in the quarter, and the threat of recession. As you can see, Hertz exceeded the high range of our full year guidance on four of five key financial measurements. Number one; the revenues which increased 7.8% year-over-year. Number two; on adjusted pretax income which grew 35.8%. Number three; on adjusted net income up 36.7%, and finally on number four, adjusted earnings per share which increased 37%. Corporate EBITDA at $1.541 billion, an increase of 11.8% was in line with our guidance. Our cash performance was very strong in 2007. Early in the year, we set a target of $1 billion in positive cash flow over a two to three year period. In 2007, we delivered over half of our target and reduced net corporate debt by $553 million. A key component of that was reducing the working capital requirement, resulting in a 12 day improvement in day sales outstanding through intense focus on the balance sheet. Cash management is now a priority for the business units as well, and we have set additional goals for 2008. In fact, full year cash flow per share, which is levered after tax cash flow, after pre-growth divided by 324.8 million shares, almost doubled year-over-year, and more than matched our adjusted EPS improvement for the same period. I would like to now transition into a discussion around our revenue diversification and efficiency initiatives to show you what truly differentiates us from our competitors. This is on Slide 6. With the slowing US economy, our…

Thank you Mark, and good morning everyone. Our 2007 operating data is in our press release, so I will focus my remarks on the operating environment and outlooks of car rental and equipment rental. Let's turn to Slide 9. Starting with US Rent-A- Car, on our October conference call, we discussed the positive pricing outlook for the industry for the balance of the year. As you will recall, the industry had experienced multiple price increases in the third quarter and the momentum carried into the fourth quarter. However, volume and pricing proved challenging in November and December, as business and leisure rental volumes were impacted by reductions in airline traffic and economic concern. Airport leisure pricing eroded, as the industry's post-summer supply outweighed demand, and pricing remained below prior year, despite attempts by Hertz and others to raise prices on a market-by-market basis. In our corporate account negotiations in the fourth quarter, however, we achieved rate increases of about 2.4% together with very high account retention. About 45% of our total revenues come from business transaction, with almost 60% of that from our corporate accounts and the remainder from other business category. Looking at another important operating metric, average rental links in the US, increased by 3.2% in the fourth quarter, reflecting a shift away from traditional booking sources to online leisure rental sources and growth in the off-airport sector, particularly insurance related business. These transactions tend to be longer in length which reduces operating costs. As we have pointed out in earlier calls while rentals rates are lower, these rentals are profitable due to lower transaction and vehicle costs. I am happy to report though, that pricing in reservation bills at our airport locations currently are above prior year for the March forward period. For 2008 generally, we anticipate…

Thanks, Elyse. As you can see we finished 2007 with a solid fourth quarter and strong full year performance, despite economic headwinds. We met our full year guidance for all metrics, and exceeded it for revenue, adjusted pretax income, adjusted debt income, and adjusted EPS. For the full year 2008, we are expecting improvement in all of our guidance metrics as shown on Slide 17. We are forecasting total revenues to increase to between $8.9 billion to $9 billion with car rental and equipment rental revenues growing at about the same pace. This did not change our previous Hertz guidance of growth between 3% to 8%. Corporate EBITDA is projected to improve as well to $1.575 billion to $1.615 billion. We expect adjusted pretax and adjusted net income to also improve year-over-year, and should be between $725 million and $750 million and between $450 million and $470 million, respectively. Using the notional tax rate of 34%, and 325.5 million shares, the number of diluted shares outstanding as of the year ended December 31, 2007, adjusted earnings per share is expected to grow to between $1.38 to $1.44 per share. These earnings projections are weighted towards the back half of the year, as we expect the first half of 2008 to be a tough operating environment, particularly the first quarter. We project 2008 will be another year of improved cash flow with levered after tax cash flow after fleet growth to be between $550 million and $650 million in 2008. Looking ahead in to the 2008, we have set a real estate growth agenda for the Rent-A-Car and Hertz businesses, with further expansion in to new geographies, increased penetration in to new and under served products and markets and network extension through a combination of green field openings and acquisitions. Our focus on efficiency and cost reduction has intensified, as programs initiated in 2007 are now cascading throughout the organization and cost savings are flowing through our income statement. Against the current economic backdrop, our cost actions will include staff reductions, and will help improve profits during what will be a challenging year. Despite a slowing economy that will impact our top and bottom line growth, we believe there are sufficient diversification in our appliance to limit that impact and allow us to achieve the targets we have set for 2008. Project Genesis will transform Hertz's business model giving us a stronger platform to fuel growth, further reduce cost, operate even more efficiently, and of course deliver increased value to our shareholders. And now operator we will take questions.

(Operator Instructions). Our first question comes from Jeff Kessler from Lehman Brothers. Please go ahead.

Thank you. A quick question about your tax rate for next year. It's up a little bit from what you have been estimating historically on an accrued basis from 30%, to 34%. And to the extent that it's taking perhaps your estimate down a little bit by a couple of cent each way, could you explain where the higher tax or at least the higher accrued tax rate is coming from?

Yes Jeff, this is Elyse. Let me talk a little bit about the 2007 rate which was 26.5%, which really is driven by a couple of facts, one being valuation allowance adjustments in the year, as well as reduced both state and foreign tax rate. So in 2008, basically we're not factoring in any of those valuation allowances obviously which is going to have an impact and so it becomes a more normalized rate upto 24%.

Because you weren’t figuring 26.5% to begin with for 2007 anyway. The question is, it possible that you're going to get some of these valuation allowances as the year goes on?

No, I think.

Jeff, listen. The tax rate's down, okay. Understand that, I think, we are saying in the wrong figure. Effectively the tax rate in 2007 was 35%. That's what we told people to put in.

That's a normalized rate.

(inaudible) Normalized rates.

Sure. Okay.

Correct.

And now we are saying, you can reduce it to 34%. So we are reducing the normalized rate of effective tax. Now the actual performance, as you know, was, I think, 26.5%. And the reason why it was lower was a lot of one time benefits that we got. Plus in addition to those one-time benefits, we do expect to have a lower tax rate due to our effective tax strategies that we've been implementing over the last 12 to 18 months.

Great, I apologies for misunderstanding. Can we go to, disposal efficiency and disposal time on your at risk vehicles at auctions. You say you are beginning to - one of the problems obviously historically with that at-risk vehicle is the disposal time relative to guarantee buyback programs. And you mentioned briefly online disposals. Could you go through not just online disposal, but what you can do to make that disposable more efficient and there and hopefully improve, actually improve the margin a little bit on those at risk vehicles?

Jeff, I guess, yes. First of all, just to clarify to the fact that, as you move to a higher risk of vehicle mix, there is an increased two week period of maybe holding time. But at the same time, we have found this year, being '07 that I am talking about, we have found that there has been no real issue in terms of getting rid of the fleet that we want. In other words, we have been able to sell cars at an all time record rate quickly within the company as needed. And to your point, what we are trying to do is develop new alternative outlets. New channels if you will. And one of those new channels, that we will announce a little bit later, is an online service that allows to sell to consumers direct. There is Manheim Online, as well, and then there is Dealer Direct, which is another program outlet that we have been developing and expanding on. So these things, these new, if you will, three new channels will allow us to get better pricing than you may get in a wholesale channel. The wholesale channel has pressure. So we are adding more auction sites, that's another thing that we are doing to increase if you will not only the ability to sell cars quickly, but also get higher prices, if one channel is getting lower prices than another. So it just really helps us to have a real balanced approach, and we have been increasing our capability to do this over the last 12 months, and a lot of those efforts come to fruition in 2008.

Okay. One final question and that is, if you could update us on where your thoughts are on going off-airport in 2008 in to 2009? What types of targets do you have with regard to both overall off-airport business, and particularly the insurance replacement business with regard to what types of, what percentage of insurance covers you intend to get, and how many offices do you expect to have out there.

Okay, our current plans are to add about 200 more off-airport sites in the United States this year, and that would be additional incremental over what we have today. In terms of penetration of insurance replacement accounts, roughly, I think we've have reported about 159 out of the top 207, 208. We expect to continue to have further penetration of that. We don’t want to really talk about that until we actually regain those accounts, but as you know, we have been pretty fast at putting those numbers up, and will continue to have pretty good growth rate on getting business where we are listed at secondary source. So currently, if you add the number of locations we opened, I just want to give you the location count. In 2007, we had 202 opened, and in 2008, if you add that, the total would be 1750 stores, okay?

All right. And approximately what percentage of your revenue base will that be?

Well, right now, its.

Of the RAC revenue base.

Off-airport in the US is about $1 billion. Joe, you want to answer what the percent is of the total?

Yeah. In revenue, it's about 23%, and in transaction days that will be about 29%.

Okay. And then at off-airport in Europe, we’ve got Michel Taride on the call. It's over 50% of our business in Europe. And like the US actually, that off-airport business is much more resilient to any kind of recessionary issues.

Is the off-airport business in Europe generally used, or is there any insurance replacement business in there?

No, there's not. I mean there is some insurance replacement, but it's generally used. It's in downtown locations in cities, metropolitan areas, and it's driven around local usage, if you will. Michel, do you want to expand on that?

Sure, quickly. It's commercial, leisure, individual use. You know when we operate vans and trucks; it’s a pretty significant chunk of our revenue there. I would say, between 25% and 50%, depending on the countries and that's uncyclical. And I just wanted to add to that, that we will add about 75 to 80 new branches in Europe off-airport in 2008, after another almost a 100 branches we've opened in 2007. So also here we have many more, modest but also network expansion.

And then will you give a total of how many branches opened?

In Europe?

Yes.

Well, I don't have the exact figures, but it's going to be above the 1000 corporate. Then we also have licensee branches which are also expanding, and I would think that with our licenses, it's about 2500 branches.

Okay, great. Okay thank you very much and thanks for a good - congratulations on a very good quarter.

Thanks a lot Jeff.

Our next question comes from Chris Agnew from Goldman Sachs, please go ahead.

Thank you. Good morning.

Good morning Chris.

First question, can I ask you about, or can you help me to think about fleet cost in 2008 both in terms of fleet growth and as net cost inflation on a per car basis? Thanks.

I guess, I'll let Joe - I will turn it over to Joe on that. But it's going to be roughly about 2%. Any color on that Joe?

It's a combination of inflation, very close to that, approximately 2.5% to 2.7%, and continued process improvements to bring the net down to the 2%, and I believe that there is a upside opportunity for improvement there.

We had indicated before, Chris, I think numbers between 2% and 4% to you before. So this represents an improvement of what we’ve told you in the past.

Okay. And on the -- how should we think about the fleet growth in the overall fleet, and is that something that we should continue to think that transaction day should grow something inline with fleet growth?

Yeah, I guess we expect to give at least a full point of utilization in our fleet plan this year in 2008, and because of that we'll be a little bit more productive in terms of funding the growth that we see at this point in time. In general, if you had 4% transaction day growth, you would usually need 2% more fleet. That’s just a guideline, a general guideline. We’re trying to break that paradigm so that we need less fleet than to fund that transaction day growth and we believe we'll make progress on that in 2008. So that makes sense. We're actually going to have probably in 2008- -

Positive transaction growth - transaction day growth in 2008.

Fleet and - go ahead Joe.

Yeah. Fleet in the US was down about 1% year-over-year because of the efficiency gain, and we have upward flexibility built into the planning as volume increases.

So for your model itself, you could almost model sleeping down 1%?

Right. Just for the full year?

For the full year, that’s back.

Okay, great. And one of the slides you talked about mentioned current pricing has improved. Could you add some color there, and maybe share with us what you and Hertz have observed historically and what happens in the slowing economics, slowing travel environment in terms of pricing and volume dynamics? Thanks.

Certainly from a general historic perspective, and this is something that I had said on previous calls, the industry is usually moved in fairly good units. And as it relates to soft demand, when soft demand occurs, fleets tighten up. As those fleets tighten up, again the industry seems to move in parallel paths. As it relates to pricing, price improvement occurs once fleets tighten. So again we saw that phenomena, and had talked about it during the call in the script that we had seen more favorable conditions on pricing overall. Anything other than that, I really can't comment on. You know pricing is very sensitive issue for me legally. So I don’t want to say anything other than what I have said before, that a general [background.]

Okay, great. And then, final question. I mean, you gave revenue growth guidance. You said HERC and RAC would grow similarly, and can you just clarify how that fits in consistent with your previous guidance of 3% to 8% for HERC. I guess it's you're just pointing towards lower end of that. I mean, is there anything that you are observing causing you to be more cautious.

But no. I guess I know we said the 3 to 8. I mean, I think if you do the math on it, you will find that that 3 to 8 guideline, you pick up middle or even up in to that curve. HERC represents about what percent of our revenues Gerry?

20% of our revenues. So even if they grow at a faster rate, the impact of the whole is not that great. So we are comfortable stating in our guidance what the overall corporation will look like, and still being able to guide HERC at 3 day percent. So nothing's changed there. I know you are asking if it changed, and we sort of know that we still feel the same as we did before.

Great, thanks a lot.

Thank you.

Our next question comes from Rich Kwas from Wachovia. Please go ahead.

Hi good morning.

Hey, Rich how are you?

All right. Mark on the 75 million that's included in the pretax guidance income guidance, what are the swing factors that could drive that higher for '08?

Well I think timing is one. As Mark said, there is a significant amount of headcount reduction [sessions], so there is headcount reduction in that number. So the timing of when those events occur would certainly affect that number. I think

The issue really boils to – Rich, it's a difficult question to answer because it can be more than $75 million based on what economics we are able to offset, based on issues of pricing, for example. I mean, for us that 250 million we've said we are committing to that cost reduction number, we are sure that number being delivered in 2008. That’s $250 million in '08 you'll actually get. The question is how much of it offsets industry conditions, any issues that you may have with economics on goods and services. For example we buy day in and day out, some of those goods and services may be up, some down, we are negotiating contracts as we speak. Everyday contract renewals come up. So a lot of it is just put in there just to make sure that we have insurance to cover economics that generally occur. We are also reinvesting a lot in new facilities. We talked about some pretty good growth plans on new stores, so some of that cost savings are going to go into those growth plans as well. And as the year unfolds, again, and we have better visibility in to economic conditions and goods and services contracts, we'll be able to say, how much of that 250 will be used to offset things, versus baked in to the bottom line. So what we are saying to you now is, we can bake 75 million in the bottom line of that.

Okay. That’s very helpful.

I mean, the only thing I would add is, there are a number of re-engineering projects, and the timing of those would affect it, and thirdly, we always look at potentially doing some tuck in acquisition. We might use some of the cash flow for that as well.

Okay. And then on Genesis, how far you, how long are you on that on the $6 billion. What would you characterize, in terms of the total valuation of that?

On the $6 billion on cost structure, we have completed really the bulk of the work on deciding how much of that six will go into, lets say, buckets for re-engineering versus outsourcing. We completed that work but we have not begun all of the contracts, the outsourcing contracts, we have not completed the reengineering efforts. All of that work will be completed probably over the next 18 months, and we'll get a big chunk of it done this year and then we'll improve a lot of the savings in the 2009. So what we've committed to you for is $250 million obviously this year savings that comes from those variety of projects ,and then again we haven’t announced we'll have in the 2009 but if we get more visibility throughout '08 we'll be able to tell you other installments of that, that would unfold into 2009.

Okay, so the 250 though, that includes the portion of Genesis, but there sounds like there's still lot more to go in it.

That’s correct.

Okay.

And our restructuring cost, we've talked about that range, and depending on what happens in attrition those cost may be a lower as well.

Right, okay. And then on the ABS market at least LIBOR rates have come in since the beginning of the year, but spreads are still wide and the asset backed market. It sounds like you're still viewing the securitization market as reasonably attractive. What do you expect as the year progresses in terms of spreads, and what would make you kind of consider those alternative strategies you detailed.

We've actually- when we saw spreads coming almost back to normalized levels. So with respect to our conduit financing, we’ve seen the level really normalized, just a slight premium over historical - over the crisis period in the fourth quarter. I think that if the market unfolds, I think that there is an opportunity to do transaction in the marketplace probably we are on the unwrapped style versus a model line type financing, and as I said we'll continually look at those alternatives, and we'll take advantages of those opportunities as we do them appropriately.

Okay.

Yes, thank you so much.

Our next question is from Emily Shanks from Lehman Brothers. Please go ahead.

Hi, good morning and nice quarter to a strong year. I've got a couple of questions, the first one maybe for Gerry. I was hoping that that you could breakout for us. What your CapEx expectations on maintenance versus growth at the [heard] business?

For 2008?

Yeah.

Actually, we have slightly negative growth CapEx, but the maintenance CapEx should be about a [vertical] north of the 250 for maintenance CapEx. I am sorry that's 2007, about 250 to 350 in 2008 or about 300 on average, and the growth about a negative 125 and that's essentially where you are going to be able to drive better utilizations on the existing fleet platform.

Great, that's very helpful. And then just a question around what's happened with the [ADR] and your fleet level since the end of the year? Could you let us know what your balance is on your [ADR] today?

About $1.450 available.

[Available] by $1.450 billion.

Okay, great. And then if I could just one last question. Around potential debt reduction for this coming year, would you or have you started to contemplate any open market repurchases of your bonds, given that there are pretty nice discount right now?

Yeah, we are certainly looking at it. We do have some restrictions within our bank facilities, but we are looking at that as a potential opportunity.

Great. Thank you very much.

Thanks, Emily.

Our next question is from Christina Woo from Morgan Stanley. Please go ahead.

Thanks. I was hoping you could clarify for me the [restructuring] charges. In your prepared comments you had said, you take about $30 million to $40 million in the first half of the year, and I understand that might be a little bit lighter, it might be lighter than that. Is that in addition to the restructuring charges you have been taking, or is that the full amount that we should consider for the first half of the year.

That should be the full amount for the first half of the year.

Okay. And will there be any restructuring in the second half, or this is it for '08?

Well right now this is all we have planned, but obviously as the year goes on we'll reevaluate alternatives in our possibilities.

Okay, great. You've also mentioned that your higher depreciation and amortization costs per vehicle are a bit lower in Europe. Is the cost of acquiring vehicles overseas starting to come under pressure as we have seen in the US during the past two years, or has that remained fairly steady for you?

We have seen Europe. It has been tougher in Europe the last couple of years than it has been in the US.

Okay.

So I mean, just in general, car costs are a little bit higher there than what you would see in the US. I think, in general, it's fair to say and I'll let Michel add to this. That mid single-digit is the kind of increases we have been able to [obliterate] the demand to, so you will get inflationary pressures on just the apples-to-apples based on car costs. It is car inflation itself we can usually bring that down at a mid-single digit range. Michel you want to add to that?

No, it is correct, Mark. I mean the conditions offered by the manufacturers increase in the region of about 7% to 8% but two additions as we said we are capable of bringing that down. For example in '07 it was just about 6%. So it is the…

Okay. That's helpful. And one last question. You've commented a bit about the macro environment slowing. I was just wondering if you could be a bit more specific about what you are seeing, what your view is on the macro environment in 2008. Mark, I think you had commented that you would expect the first quarter to be a bit softer. Are you expecting a pickup in the macro environment in the second half of the year, or softness throughout?

First of all, I'll comment in two ways. One is, our advance reservations, which we use as an indicator have been improving into the positive territory. That’s recent, in the last several weeks we've seen a general strengthening in the overall environment for the first half of the year. Having said that, we still say that the first quarter is probably the toughest quarter in terms of what we have seen both from a future standpoint. We are building our plan that there would be a more normalized environment in the back half. So to answer your question, yes, more of a normalized environment in the back half, good news is that we are seeing a little bit of improvement in the first half as well.

Okay. Thanks so much.

Our next question comes from Zafar Nazim from JPMorgan. Please go ahead.

Yes, thank you. Elyse just, first of all, one quick follow-up. What kind of dollar restrictions do you have under your credit facility to buy back bonds from the market?

What kind of dollar restriction? It's limited to an excess cash flow recapture amount.

Okay. And would you have a number given your --.

Well, less than a $100 million.

Okay, okay. And then just on your guidance, you are going to reduce CapEx by roughly $300 million year-over-year, your EBITDA is going to be up 2% to 4% according to guidance, cash interest expense is probably going to be down given deduction in LIBOR and (inaudible) yet your free cash flow balance for the next year is going to be flat to slightly up? Is this on account, I mean I would have thought the number would have been higher.

Yeah. Well, it's probably a little bit of a conservative number, but you have to keep in mind that a lot of the improvement in 2007 was driven by working capital improvements. And it's very hard to continue to [leverage] that number. So if you look at our 2007 cash flow year-over-year improvements, easily $200 million to $300 million driven by working capital. We're going to continue to look to get efficiencies in working capital. We just won't see the positive cash flow impacted in 2008.

But you don't (inaudible) the range. Just to be clear, just to be clear the range is flat to up 17.6%, so 17% is pretty good improvement in cash year-over-year, and as you know we're able to take that. It's best to look at the cash flow after fleet growth and apply to debt. So again if we achieve what we say we are going to achieve here, we hit that $1 billion ahead a schedule okay.

Okay, good. And just one last question. So I guess since your basket for bond buyback is less that $100 million, we should assume that the remainder of the free cash flow will primarily be use to bid on bank debts?

Yes.

That's correct.

Great, thank you. Operator Our next question comes from Michael Millman from Soleil Securities. Please go ahead.

Thank you it's Soleil Securities. I guess a couple of questions. Just to clarify it looks like your forecast for '08 growth is basically all from the savings and not necessarily dollar for dollar but sort of netting everything out. Is that correct?

That would be, I mean, that would be very linear to look at it that way. We have so many different moving pieces on the P&L that whether its volume pricing etcetera issues we've purposely said that it would tie into that pre-tax improvement. That doesn’t mean that we are not going to have improvement in margin overall due to things beyond that. Obviously our guidance, we make sure that we exceed our guidance and we dump and able to do that pretty much every single quarter for five quarters in a row. So our guidance certainly is in a range where we feel comfortable telling investors that would be able to hit it.

Okay. Could you talk about -- in the fourth quarter there was a deceleration in off-airport gross substantially, what was behind that or is that the level we should be looking at?

This is Joe Nothwang. We did see some weakening in December only, and in January it has popped right back up to the double digit transaction day growth levels and we will be expect -- to be able to continue that throughout '08.

Okay, thank you. Could you talk about in terms of cost savings, this is more of a 30,000 foot question. Is this an industry that still likely to give back a lot of those cost savings in terms of price rather than, in terms of margins and to the shareholders?

No. First of all, you mean pricing is really the key here, that’s what you are talking about, you give those; do you give those things back in the form of price. I think history is my best answer to you. Typically the industry has always been able to pull on average over any cycle 2.5 points of price. That’s been Hertz experience. And I've got 24 years of data that's really granular on this, and that’s just what we see on a cycle basis. That's my best answer to you. And that’s the case if the industry pulls off this year 2.5% on price then obviously cost savings are allowed to accrue to the bottom line and historically that’s what you've seen. I mean we've seen that in this business where we've fleet savings for example and there have been periods of time where the fleets come in lower in costs, year-over-year, that we've been able to accrue that to shareholders. Joe, Joe is been in the industry for 35years and knows the rental car business better than anyone. Joe, would you answer that question as well.

I just agree with what Mark said. If you go back to that period of time when there has been weakness in transaction day growth we have been able to pull price. When there has been tremendous or even-keel pricing, we are able to grow transaction and the cost reduction has been able to go to the bottom line and accrue to the shareholders and I don't expect any significant change in that going forward.

I just agree with what Mark said. If you go back to that period of time when there has been weakness in transaction day growth we have been able to pull price. When there has been tremendous or even-keel pricing, we are able to grow transaction and the cost reduction has been able to go to the bottom line and accrue to the shareholders and I don't expect any significant change in that going forward.

Okay. And finally, not sure if you're saying that the first quarter should be below a year ago and that would suggest that possibly you are looking for negative earnings or loss in the first quarter?

We've not suggested that, and that's the best way for me to answer that. We've not suggested that. We just said that the fourth quarter was a tough operating environment and we saw in January continuation of that, that we've also seen some improvement also during the quarter.

Okay. Thank you.

Our next question comes from Clark Orsky from KDP Investment Advisors. Please go ahead.

Thanks. I think you said you saw some softening in residuals in 4Q. And you expect that to continue in to the first quarter, but that it would dissipate later in the year. I'm just wondering what is driving that outlook for the dissipation of the pressure.

I think the real factor is the up tick in our total reservation growth. Now, on the positive side, we have seen that accelerate in the last week to 10 days. That’s one factor. I think that stability overall in residuals that we have seen and we believe that the capacity will be there for us to dispose off the car, we need to dispose off residuals even with the macro conditions have been relatively stable. And we expect that to continue. So we have real data to support our optimism about the second half.

Okay. And then 73% non programmed, remind me what your sort of longer run target is for that. I thought it was a little lower?

If you go through, the year will drop to as low as about 60% in the summer and then move back up to the high 60s, 70% as we get into the Q4 of '08. So there are some seasonal adjustments in the way cars are taken in to the fleet. But our benchmark target is 65% to 78%.

Okay. That’s helpful. And I guess a last question. Elyse, I just wanted you, on the $1 billion maturity in 2009, can you remind us what exactly that is? What it is composed of?

It's mostly the US ABS notes. As you recall, when the deal was done back in 2005, the ABS notes were 3, 4 and 5 year notes. So it is the first [turn] of those maturities coming to.

Okay. Thanks very much.

Operator, we have time for two more questions.

Okay. And the next question will come from Doug Carson. Please go ahead.

Great guys, thanks. Quick question on the fleet cost on the debt side, LIBOR at 3.1% now, I mean could we expect '08 cost to fall out on that side, given where LIBOR is and just [sounds] more on audit how much sensitivity do you have there on LIBOR?

Well, as I think we've said in the statement about 35% of debt is floating.

Alright.

And a rule of the thumb is 1% year-over-year change in interest rates and $10 million in profit. Profit or loss depending on the (inaudible).

And separately, you guys have done a great job maintaining liquidity here in this market, and hopefully debt is at around I think $6.5 billion and you kind of commented on the ABS market feeling still pretty strong. People are worried about, they will cross the industry and if we kind of look at contingency into that ABS market, you know something happens in it, where it either shuts down or get very limited. What would be the best alternative for you to maintain that liquidity, or how would you?

Well, I mean, obviously, we have a lot of excess liquidity today both in the corporate debt component of our balance sheet as well as free debt. So obviously, we have corporate liquidity that we could cap. But we believe that there's definitely a market for a lot of this equipment, financing this equipment. So I don't necessarily think it's going to go away. I think that there will be new structures that will come out of this, maybe not at the same cost levels at the old structures that were being done and we're seeing that that’s alive and well. So I am confident that there will be fleet financing in the event that there's not there's certainly the corporate liquidity to be [had].

Okay, great, thanks guys.

Thank you.

Thank you, and have next question is from Jeff Kessler from Lehman Brothers. Please go ahead.

Thank you. One final question on pricing and that is, you alluded to price discipline in the industry at the beginning of this year a very large company in the industry, increased prices 2% or 3% and this apparently went along with that. And I am just wondering, Howard, could you just elaborate a little bit more on price discipline as you're seeing it right now, optimism or no optimism regarding the other companies in the industry sticking with the price increases at these large companies and your industry you're putting in place?

Jeffrey, I mean obviously I can't comment on anyone or anything. I can tell you that Hertz generally speaking is the price leader, and that we always try to support any kind of the industry wide increase, but we don't, as a rule ever, we are usually the leader and that, and but in terms of commenting on competitors or what we're going to do or anything else I really can comment on that so I apologies but I really can't answer your question.

All right. You allude to increased optimism with regards to industry discipline?

No I think what we're saying is that as the business conditions have softened when that happens particularly see tighter fleets and we didn't say that we had seen we saw that what had happening, I am sorry during the quarter. So that's what we said I think so.

Pardon me.

Go ahead tell me what I said?

Historically.

Historically, I mean this is historically what we're saying

Okay. All right, very good. Thank you very much.

Thanks Jeff.

Yeah.

There are no further questions in queue at this time.

I look forward to sharing our next quarter results with you before long. Thanks you for joining us today

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