Hertz 2008 Annual Report Download - page 188

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(a) The following table reconciles adjusted pre-tax income (loss) to income (loss) before income taxes and minority interest for
the years ended December 31, 2008, 2007 and 2006 (in millions of dollars):
Years ended December 31,
2008 2007 2006
Adjusted pre-tax income
Car rental ....................................... $ 289.1 $ 605.0 $ 472.3
Equipment rental ................................... 272.0 373.8 345.5
Total reportable segments ............................ 561.1 978.8 817.8
Adjustments:
Other reconciling items(1) .............................. (323.9) (318.1) (331.1)
Purchase accounting(2) ............................... (101.0) (95.2) (90.4)
Non-cash debt charges(3) .............................. (100.2) (105.9) (99.5)
Restructuring charges ................................ (216.2) (96.4) —
Restructuring related charges(4) .......................... (26.3) — —
Impairment charges(5) ................................ (1,168.9) — —
Management transition costs ........................... (5.2) (15.0) (9.8)
Stock purchase compensation charge ..................... — — (13.3)
Unrealized transaction loss on Euro-denominated debt(6) .......... — — (19.2)
Unrealized gain (loss) on derivatives(7) ..................... (12.0) 4.1 —
Realized gain on derivatives(7) ........................... 9.8 — —
Gain on sale of swap derivatives ......................... — — 1.0
Sponsor termination fee .............................. — — (15.0)
Interest on Hertz Holdings debt .......................... — — (39.9)
Secondary offering costs .............................. — (2.0) —
Vacation accrual adjustment(8) ........................... — 36.5 —
Income (loss) before income taxes and minority interest ........... $(1,382.8) $ 386.8 $ 200.6
(1) Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well
as other business activities such as our third-party claim management services.
(2) Represents the purchase accounting effects of the Acquisition 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.
(3) Represents non-cash debt charges relating to the amortization of deferred debt financing costs and debt discounts.
For years ended December 31, 2008 and 2007, also includes $11.8 million and $20.4 million, respectively,
associated with the ineffectiveness of the HVF swaps. During the year ended December 31, 2008, also includes
$30.0 million related to the write-off of deferred financing costs associated with those countries outside the United
States as to which take-out asset-based facilities have not been entered into. During the year ended December 31,
2007, includes the write-off of $16.2 million of unamortized debt costs associated with a debt modification. During
the year ended December 31, 2006, also includes $1.0 million associated with the reversal of the ineffectiveness of
our HVF swaps.
(4) Represents incremental, one-time costs incurred directly supporting our business transformation initiatives. Such
costs include transition costs incurred in connection with our business process outsourcing arrangements and
incremental costs incurred to facilitate business process re-engineering initiatives that involve significant
organization redesign and extensive operational process changes.
(5) Represents the non-cash goodwill, other intangible asset and property and equipment charges recorded in the
fourth quarter of 2008.
(6) Represents unrealized losses on currency translation of our Euro-denominated debt. On October 1, 2006, we
designated this Euro-denominated debt as an effective net investment hedge of our Euro-denominated net
investment in our international operations and as such we will no longer incur unrealized exchange transaction
gains or losses in our consolidated statement of operations.
(7) Represents unrealized gains and losses and a realized gain on interest rate swaptions.
(8) Represents a decrease in the employee vacation accrual relating to a change in our U.S. vacation policy in 2007
which provides for vacation entitlement to be earned ratably throughout the year versus the previous policy which
provided for full vesting on January 1 of each year.
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