Hertz 2007 Annual Report Download - page 228

Non-GAAP Reconciliations (Continued)
(In millions, except per share amounts)
Adjusted Pre-Tax Income (Loss) and Adjusted Net Income (Loss)
Year Ended December 31, 2007 Year Ended December 31, 2006
Car Equipment Corporate Car Equipment Corporate
Rental Rental and Other Total Rental Rental and Other Total
Income (loss) before income taxes and
minority interest ............... $468.6 $ 308.5 $(390.3) $ 386.8 $ 373.5 $ 269.5 $(442.4) $ 200.6
Adjustments:
Purchase accounting(a) ........... 35.3 58.1 1.8 95.2 23.8 64.7 1.9 90.4
Non-cash debt charges(b) ......... 66.5 11.2 28.2 105.9 75.0 11.3 13.2 99.5
Restructuring charges(c) .......... 64.5 4.9 27.0 96.4 — — — —
Vacation accrual adjustment(c) ...... (25.8) (8.9) (1.8) (36.5) — — — —
Unrealized gain on derivative(d) ..... — — (4.1) (4.1) — — — —
Secondary offering costs(d) ........ — — 2.0 2.0 — — — —
Management transition costs(d) ...... — — 15.0 15.0 — — 9.8 9.8
Stock purchase compensation
charge(d) .................. — — — — — — 13.3 13.3
Gain on sale of swap derivative(d) . . . . — — — — — — (1.0) (1.0)
Sponsor termination fee(d) ......... — — — — — — 15.0 15.0
Unrealized transaction loss on
Euro-denominated debt(d)(e) ...... — — — — — — 19.2 19.2
Interest on HGH debt ............ — — — — — — 39.9 39.9
Adjusted pre-tax income (loss) ........ 609.1 373.8 (322.2) 660.7 472.3 345.5 (331.1) 486.7
Assumed (provision) benefit for income
taxes of 35% ................. (213.2) (130.8) 112.8 (231.2) (165.3) (120.9) 115.9 (170.3)
Minority interest ................. — — (19.7) (19.7) — — (16.7) (16.7)
Adjusted net income (loss) .......... $395.9 $ 243.0 $(229.1) $ 409.8 $ 307.0 $ 224.6 $(231.9) $ 299.7
Pro forma post-IPO diluted number of
shares outstanding ............. 324.8 324.8
Adjusted diluted earnings per share . . . . $ 1.26 $ 0.92
Year Ended December 31, 2005
(Combined)—Pro Forma
Car Equipment Corporate
Rental Rental and Other Total
Income (loss) before income taxes and
minority interest ............... $291.6 $ 173.3 $(335.2) $ 129.7
Adjustments:
Purchase accounting(a) .......... 23.1 66.0 1.9 91.0
Non-cash debt charges(b) ......... 83.2 0.8 25.0 109.0
Unrealized transaction gain on
Euro-denominated debt(d)(e) ..... — — (2.8) (2.8)
European headquarters relocation
costs(d) ................... 4.0 — — 4.0
Adjusted pre-tax income (loss) ....... 401.9 240.1 (311.1) 330.9
Assumed (provision) benefit for income
taxes of 35% ................. (140.7) (84.0) 108.9 (115.8)
Minority interest ................. — — (12.6) (12.6)
Adjusted net income (loss) .......... $261.2 $ 156.1 $(214.8) $ 202.5
Pro forma post-IPO diluted number of
shares outstanding ............. 324.8
Adjusted diluted earnings per share . . . . $ 0.62
(a) Includes the purchase accounting effects of the acquisition of all of Hertz’s common stock on December 21, 2005 and any
subsequent acquisitions on our results of operations relating to increased depreciation and amortization of tangible and
intangible assets and accretion of revalued workers’ compensation and public liability and property damage liabilities.
(b) Non-cash debt charges represents the amortization of deferred debt financing costs and debt discounts. For the year ended
December 31, 2007, also includes $20.4 million associated with the ineffectiveness of our interest rates swaps and the write off
of $16.2 million of unamortized debt costs associated with a debt modification. For the year ended December 31, 2006, also
includes $1.0 million associated with the reversal of the ineffectiveness of our interest rate swaps. For the year ended
December 31, 2005, also includes $1.0 million associated with the ineffectiveness of our interest rate swaps.
(c) Amounts are included within direct operating and selling, general and administrative expense in our statement of operations.
(d) Amounts are included within selling, general and administrative expense in our statement of operations.
(e) Represents unrealized gains and losses on currency translation of Euro-denominated debt, which are included within selling,
general and administrative expense in our statement of operations. On October 1, 2006, we designated this
Euro-denominated debt as an effective net investment hedge of our Euro-denominated net investment in our foreign
operations, as such we will no longer incur unrealized exchange transaction gains or losses in our consolidated statement of
operations.