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Employee Retirement Benefits | 12 Months Ended
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Dec. 31, 2017
Retirement Benefits [Abstract] |
Employee Retirement Benefits | Employee Retirement Benefits 401(k) Savings Plan and Other Defined Contribution Plans Prior to the Spin-Off, the Company participated in a THC-sponsored U.S. defined contribution plan covering substantially all U.S. employees (the "Hertz Savings Plan"), as well as certain non-U.S. defined contribution plans covering eligible non-U.S. employees, primarily in Canada. On July 1, 2016, the Company established the Herc Holdings Savings Plan covering all of its U.S. employees. Following the Spin-Off, the accounts (including loans) of the Company's current and former employees were transferred from the Hertz Savings Plan to the new Herc Holdings Savings Plan. Contributions to the plans are made by both the employee and the Company. Company contributions to these plans are based on the level of employee contributions and formulas determined by the Company. Expenses for the defined contribution plans for the years ended December 31, 2017, 2016 and 2015 were approximately $9.4 million, $7.5 million and $7.4 million, respectively. Defined Benefit Pension and Postretirement Plans Prior to the Spin-Off, the Company participated in certain THC-sponsored U.S. defined benefit pension and postretirement plans covering substantially all U.S. employees, as well as certain non-U.S. defined benefit plans covering eligible non-U.S. employees. Qualified U.S. employees of the Company, after completion of specified periods of service, were eligible to participate in The Hertz Corporation Account Balance Defined Benefit Pension Plan (the "Hertz Plan"), a cash balance plan that was frozen effective December 31, 2014. In July 2016, the Company established the Herc Holdings Retirement Plan (the "Plan"), a U.S. qualified pension plan. The majority of assets and liabilities of the Hertz Plan attributable to current and former employees of the equipment rental business were transferred to the Plan following the Spin-Off based on a preliminary allocation. The final allocations and transfers were completed in April and August 2017 and were lower than the preliminary allocation, resulting in a $3.6 million increase to the pension liability funded status and a corresponding offset of $2.0 million, net of taxes, to additional paid-in capital. Postretirement benefits, other than pensions, provide healthcare benefits, and in some instances, life insurance benefits for certain eligible retired employees in the U.S. The Company reflects the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability. This amount is defined as the difference between the fair value of plan assets and the benefit obligation. The Company is required to recognize as a component of other comprehensive income (loss), net of tax, the actuarial gains/losses and prior service credits that arise but were not previously required to be recognized as components of net periodic benefit cost. Other comprehensive income (loss) is adjusted as these amounts are later recognized in the statement of operations as components of net periodic benefit cost. The Company’s policy for funded plans is to contribute, at a minimum, amounts required by applicable laws, regulations and union agreements. The Plan represents approximately 98% of the Company's defined benefit plan obligations and 100% of its plan assets. The Company did not make any cash contributions to the Plan or the predecessor Hertz Plan in 2017, 2016 or 2015 and does not anticipate making any contributions during 2018. The level of future contributions will vary, and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation. Additionally, pursuant to various collective bargaining agreements, certain union-represented employees participate in multiemployer pension plans. The following table provides a reconciliation of benefit obligations and plan assets of the Company’s pension plans and postretirement benefit plans (in millions):
| Pension |  | Postretirement
| 2017 |  | 2016 |  | 2017 |  | 2016
Change in Projected Benefit Obligations |  |  |  |  |  |  |
Benefit obligations at beginning of year | $ | 149.4 |  |  | $ | 143.0 |  |  | $ | 1.0 |  |  | $ | 1.0 |
Service cost | — |  |  | 0.1 |  |  | — |  |  | — |
Interest cost | 6.1 |  |  | 5.8 |  |  | — |  |  | — |
Employee contributions | — |  |  | — |  |  | — |  |  | 0.1 |
Plan settlements | (6.8 | ) |  | (0.1 | ) |  | — |  |  | — |
Benefits paid | (0.3 | ) |  | (3.7 | ) |  | — |  |  | (0.1 | )
Net transfer (1) | — |  |  | 3.6 |  |  | — |  |  | — |
Actuarial loss | 11.6 |  |  | 0.7 |  |  | 0.1 |  |  | — |
Benefit obligations at end of year | $ | 160.0 |  |  | $ | 149.4 |  |  | $ | 1.1 |  |  | $ | 1.0 |
Change in Fair Value of Plan Assets |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | $ | 133.2 |  |  | $ | 124.3 |  |  | $ | — |  |  | $ | — |
Actual return on plan assets | 17.9 |  |  | 9.4 |  |  | — |  |  | — |
Company contributions | — |  |  | 0.1 |  |  | — |  |  | — |
Employee contributions | — |  |  | — |  |  | — |  |  | 0.1 |
Plan settlements | (6.8 | ) |  | (0.1 | ) |  | — |  |  | — |
Benefits paid | (0.3 | ) |  | (3.7 | ) |  | — |  |  | (0.1 | )
Adjustment (2) | (3.6 | ) |  | 3.2 |  |  | — |  |  | — |
Fair value of plan assets at end of year | $ | 140.4 |  |  | $ | 133.2 |  |  | $ | — |  |  | $ | — |
Funded Status | $ | (19.6 | ) |  | $ | (16.2 | ) |  | $ | (1.1 | ) |  | $ | (1.0 | )
Accumulated benefit obligations | $ | 160.0 |  |  | $ | 149.4 |  |  |  |  |
(1) The benefit obligation is determined each January 1, based upon updated participant information. In connection with the Spin-Off, the net transfer in 2016 represented a liability adjustment related to updated participant information. (2) In connection with the Spin-Off, assets were allocated between THC and the Company in proportion to the associated liability. The adjustment for 2017 represented the final allocations and settlements with the Hertz Plan and for 2016 represented an adjustment for the updated liability.
| Pension |  | Postretirement
| 2017 |  | 2016 |  | 2017 |  | 2016
Amounts Recognized in Balance Sheet |  |  |  |  |  |  |
Accrued liabilities | $ | (0.1 | ) |  | $ | (0.2 | ) |  | $ | (0.1 | ) |  | $ | (0.1 | )
Other long-term liabilities | (19.5 | ) |  | (16.0 | ) |  | (1.0 | ) |  | (0.9 | )
Net amount recognized | $ | (19.6 | ) |  | $ | (16.2 | ) |  | $ | (1.1 | ) |  | $ | (1.0 | )
Amounts Recognized in Accumulated Other Comprehensive Loss |  |  |  |  |  |  |
Net actuarial gain (loss) | $ | (21.8 | ) |  | $ | (24.2 | ) |  | $ | 0.1 |  |  | $ | 0.1 |
Prior service credits | 0.2 |  |  | 0.2 |  |  | — |  |  | — |
Net amount recognized | $ | (21.6 | ) |  | $ | (24.0 | ) |  | $ | 0.1 |  |  | $ | 0.1 |
Weighted‑Average Assumptions Used to Determine Projected Benefit Obligations |  |  |  |  |  |  |
Discount rate | 3.6 | % |  | 4.1 | % |  | 3.5 | % |  | 4.0 | %
Average rate of increase in compensation | — | % |  | — | % |  | — | % |  | — | %
Initial healthcare cost trend rate |  |  |  |  | 6.4 | % |  | 6.7 | %
Ultimate healthcare cost trend rate |  |  |  |  | 4.5 | % |  | 4.5 | %
The benefit obligations and fair value of plan assets for the Company’s qualified and non-qualified pension and postretirement plans with projected benefit obligations or accumulated benefit obligations in excess of plan assets are as follows (in millions):
| Pension |  | Postretirement
| 2017 |  | 2016 |  | 2017 |  | 2016
Plans with Benefit Obligations in Excess of Plan Assets |  |  |  |  |  |  |
Projected benefit obligations | $ | 160.0 |  |  | $ | 149.4 |  |  | $ | 1.1 |  |  | $ | 1.0 |
Accumulated benefit obligations | 160.0 |  |  | 149.4 |  |  | — |  |  | — |
Fair value of plan assets | 140.4 |  |  | 133.2 |  |  | — |  |  | — |
The following table sets forth the net periodic pension cost (benefit) (in millions):
| Years Ended December 31,
| 2017 |  | 2016 |  | 2015
Components of Net Periodic Pension Cost (Benefit): |  |  |  |  |
Service cost | $ | — |  |  | $ | 0.1 |  |  | $ | 0.1 |
Interest cost | 6.1 |  |  | 5.8 |  |  | 5.6 |
Expected return on plan assets | (6.2 | ) |  | (8.0 | ) |  | (8.7 | )
Net amortization of actuarial net loss | 1.4 |  |  | 1.4 |  |  | 0.3 |
Settlement loss | 0.9 |  |  | — |  |  | 0.2 |
Net periodic pension cost (benefit) | $ | 2.2 |  |  | $ | (0.7 | ) |  | $ | (2.5 | )
Weighted‑Average Assumptions Used to Determine Net Periodic Pension Cost (Benefit) |  |  |  |  |
Discount rate | 4.1 | % |  | 4.3 | % |  | 3.9 | %
Expected return on assets | 6.5 | % |  | 7.2 | % |  | 7.4 | %
Average rate of increase in compensation | — | % |  | 4.3 | % |  | 4.0 | %
The net periodic postretirement cost was insignificant in 2017, 2016 and 2015. The discount rate reflects the rate the Company would have to pay to purchase high-quality investments that would provide cash sufficient to settle its current pension obligations. The discount rate is determined based on a range of factors, including the rates of return on high-quality, fixed-income corporate bonds and the related expected duration of the obligations. The discount rate for the Plan is based on the rate from the Mercer Pension Discount Curve-Above Mean Yield that is appropriate for the duration of the obligations. The discount rate used to measure the pension obligation at the end of the year is also used to measure pension cost in the following year. The expected return on plan assets for the U.S. qualified plan is based on expected future investment returns considering the target investment mix of plan assets. It reflects the average rate of earnings expected on the funds invested, or to be invested, to provide for the benefits included in the projected benefit obligations. In determining the expected long-term rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. There was no average rate of increase in compensation for 2017 as there are no longer any employees in the Plan accruing benefits. Rates prior to 2017 reflected expected long-term average rate of salary increases and were based on historic salary increase experience and management’s expectations of future salary increases. The ultimate healthcare cost trend rates for the postretirement benefit plans are expected to be reached in 2038. Changing the assumed health care cost trend rates by one percentage point is estimated to have an insignificant (less than $0.1 million) impact on the accumulated postretirement benefit obligation as of December 31, 2017 and the 2017 aggregate of service and interest costs. The Company expects to amortize $0.6 million of net actuarial losses from accumulated other comprehensive loss into net periodic pension cost (benefit) in 2018. Plan Assets The Company has a long-term investment outlook for its Plan assets, which is consistent with the long-term nature of the Plan's respective liabilities. The Plan currently has a target asset allocation of 35% equity and 65% fixed income. The equity portion of the assets are invested in one passively managed U.S. large cap index fund, one actively managed U.S. small/mid cap fund, one actively managed international fund and one actively managed emerging markets fund. The fixed income portion of the assets is actively managed with the majority invested in long and intermediate duration government/credit funds and smaller allocations to an actively managed high yield fund, a bank loan fund and a hard currency emerging market debt fund. A modest amount of cash is maintained to facilitate payment of benefits and plan expenses. The fair value measurements of all plan assets are based upon significant other observable inputs (Level 2), except for cash which is based upon quoted market prices in active markets for identical assets (Level 1). The following represents the Company's pension plan assets (in millions):
Asset Category | December 31, 2017 |  | December 31, 2016
Cash | $ | 2.2 |  |  | $ | 1.5 |
Short Term Investments | 0.1 |  |  | 0.2 |
Equity Securities: |  |  |
U.S. Large Cap | 16.3 |  |  | 34.7 |
U.S. Mid Cap | 7.3 |  |  | 11.3 |
U.S. Small Cap | 1.6 |  |  | 9.5 |
International Large Cap | 17.8 |  |  | 20.8 |
International Emerging Markets | 6.8 |  |  | 6.9 |
Fixed Income Securities: |  |  |
U.S. Treasuries | 20.8 |  |  | 6.8 |
Corporate Bonds | 43.7 |  |  | 21.4 |
Government Bonds | 9.3 |  |  | 3.5 |
Municipal Bonds | 2.3 |  |  | 3.2 |
Mortgage-Backed Securities | 2.8 |  |  | 1.8 |
Asset-Backed Securities | 2.7 |  |  | 1.2 |
Bank Loans | 6.4 |  |  | — |
Other | 0.3 |  |  | — |
| 140.4 |  |  | 122.8 |
Plan assets receivable from the Hertz Plan | — |  |  | 10.4 |
Total fair value of pension plan assets | $ | 140.4 |  |  | $ | 133.2 |
Estimated Future Benefit Payments The following table presents estimated future benefit payments (in millions):
| Pension |  | Postretirement
2018 | $ | 5.5 |  |  | $ | 0.1 |
2019 | 6.4 |  |  | 0.1 |
2020 | 7.3 |  |  | 0.1 |
2021 | 7.8 |  |  | 0.1 |
2022 | 8.8 |  |  | 0.1 |
2023-2027 | 58.3 |  |  | 0.5 |
| $ | 94.1 |  |  | $ | 1.0 |
Multiemployer Pension Plans The Company contributes to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain union represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects: (a) Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (b) If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) If the Company ceases to have an obligation to contribute to the multiemployer plan in which the Company had been a contributing employer, the Company may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of the Company's participation in the plan prior to the cessation of its obligation to contribute. The amount that an employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is referred to as a withdrawal liability. The Company's participation in multiemployer plans for the annual period ended December 31, 2017 is outlined in the table below. For each plan that is individually significant to the Company, the following information is provided:
• | The "EIN / Pension Plan Number" column provides the Employer Identification Number assigned to a plan by the Internal Revenue Service.
• | The "Pension Protection Act Zone Status" available is for plan years that ended in 2017 and 2016. The zone status is based on information provided to the Company and other participating employers by each plan and is certified by the plan's actuary. A plan in the "red" zone has been determined to be in "critical status," based on criteria established under the Internal Revenue Code, or the "Code," and is generally less than 65% funded. A plan in the "yellow" zone has been determined to be in "endangered status," based on criteria established under the Code, and is generally less than 80% funded. A plan in the "green" zone has been determined to be neither in "critical status" nor in "endangered status," and is generally at least 80% funded.
• | The "FIP/RP Status Pending/Implemented" column indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the "yellow" zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the plan year that ended in 2017.
• | The "Surcharge Imposed" column indicates whether a surcharge was paid during the most recent annual period presented for the Company's contributions to any plan in the red zone in accordance with the requirements of the Code. The last column lists the expiration dates of the collective bargaining agreements pursuant to which the Company contributed to the plans.
There are no plans where the amount contributed by the Company represents more than 5% of the total contributions to the plan for the years ended December 31, 2017, 2016 and 2015.
(In millions) |  | EIN / Pension Plan Number |  | Pension Protection Act Zone Status |  | FIP / RP Status Pending / Implemented |  | Contributions |  | Surcharge Imposed |  | Expiration Date of Collective Bargaining Agreement
Pension Fund |  |  | 2017 |  | 2016 |  |  | 2017 |  | 2016 |  | 2015 |  |
Midwest Operating Engineers |  | 36-6140097 |  | Green |  | Green |  | N/A |  | $ | 0.8 |  |  | $ | 0.7 |  |  | $ | 0.7 |  |  | N/A |  | 8/31/2018
Other Plans (a) |  |  |  |  |  |  |  |  |  | 0.9 |  |  | 0.8 |  |  | 0.7 |  |  |  |  |
Total Contributions |  |  |  |  |  |  |  | $ | 1.7 |  |  | $ | 1.5 |  |  | $ | 1.4 |  |  |  |  |
(a) Consists of six plans, none of which are individually significant to the Company.

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