Hertz 2007 Annual Report Download - page 224

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DEFINITIONS AND NON-GAAP RECONCILIATIONS
Definitions of Non-GAAP Measures
Pro Forma
Pro-forma metrics give effect to our new capital structure as if the debt associated with the acquisition on
December 21, 2005 and related purchase accounting adjustments had occurred on January 1, 2005.
The year ended December 31, 2005 profitability performance metrics are presented on a ‘‘pro forma’’
basis.
EBITDA
Earnings before net interest expense, income taxes, depreciation and amortization.
Corporate EBITDA
Corporate EBITDA is calculated as earnings before net interest expense (other than interest expense
relating to certain car rental fleet financing), income taxes, depreciation (other than depreciation related
to the car rental fleet), amortization and certain other items specified in the credit agreements governing
Hertz’s credit facilities. For purposes of consistency, we have revised our calculations of Corporate
EBITDA for the years ended December 31, 2005 and 2006 so that the identified extraordinary, unusual or
non-recurring gains and losses are consistent with those used in our calculation of adjusted pre-tax
income.
Adjusted Pre-Tax Income
Adjusted pre-tax income is calculated as income before income taxes and minority interest plus
non-cash purchase accounting charges, non-cash debt charges relating to the amortization of debt
financing costs and debt discounts, unrealized transaction gains (losses) on Euro-denominated debt
(through September 30, 2006) and certain one-time charges and non-operational items.
Adjusted Net Income
Adjusted net income is calculated as adjusted pre-tax income less an assumed provision for income
taxes and minority interest.
Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is calculated as adjusted net income divided by the pro forma
post-IPO number of shares outstanding.
Unlevered Pre-Tax Cash Flow
Unlevered pre-tax cash flow is calculated as Corporate EBITDA less equipment rental fleet depreciation
including gain (loss) on sale, non-fleet capital expenditures, net of non-fleet disposals, plus changes in
working capital (accounts receivable, inventories, prepaid expenses, accounts payable and accrued
liabilities), and changes in other assets and liabilities (including public liability and property damage,
U.S. pension liability, other assets and liabilities, equity and minority interest).
Levered After-Tax Cash Flow before Fleet Growth
Levered after-tax cash flow before fleet growth is calculated as unlevered pre-tax cash flow less
corporate net cash interest and corporate cash taxes.