Hertz 2009 Annual Report Download - page 95

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
operations resulting from changes in depreciation rates to reflect the estimated residual value of
vehicles, lower net proceeds received in excess of book value on the disposal of used vehicles and the
effects of foreign currency translation of approximately $21.3 million.
Equipment Rental Segment
Depreciation of revenue earning equipment in our equipment rental segment of $350.4 million for the
year ended December 31, 2008 increased 13.8% from $308.0 million for the year ended December 31,
2007. The increase was primarily due to lower net proceeds received in excess of book value on the
disposal of used equipment, a 1.8% increase in the average acquisition cost of rental equipment
operated during the period and the effects of foreign currency translation of approximately $4.4 million,
partly offset by a $3.9 million net decrease in depreciation in certain of our equipment rental operations
resulting from changes in depreciation rates to reflect the estimated residual value of equipment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased 0.8%, primarily due to a decrease in advertising
and sales promotion expenses, partly offset by the effects of foreign currency translation of
approximately $76.1 million and an increase in administrative expenses.
Advertising expenses decreased $10.1 million, or 5.9%, primarily due to decreased media
advertising, partly offset by the effects of foreign currency translation of approximately $6.4 million.
Sales promotion expenses decreased $5.7 million, or 3.4%, primarily related to a decrease in sales
commissions.
Administrative expenses increased $9.5 million, or 2.2%, primarily due to increases in employee
relations and purchasing costs totaling $12.4 million, consultant fees of $9.1 million and an increase
in the losses on our interest rate swaptions of $6.2 million, as well as the effects of foreign currency
translation of approximately $68.8 million, partly offset by a decrease in management incentive
compensation costs of $24.8 million.
Interest Expense
Car Rental Segment
Interest expense for our car rental segment of $452.4 million for the year ended December 31, 2008
increased 2.2% from $442.5 million for the year ended December 31, 2007. The increase was primarily
due to the effects of foreign currency translation and increased interest expense relating to the
International ABS Fleet Financing Facility entered into in 2008.
Equipment Rental Segment
Interest expense for our equipment rental segment of $110.8 million for the year ended December 31,
2008 decreased 24.8% from $147.4 million for the year ended December 31, 2007. The decrease was
primarily due to a decrease in weighted average interest rate on our borrowings and a decrease in the
weighted average debt outstanding due to reduced fleet size.
Other
Other interest expense relating to interest on corporate debt of $306.8 million for the year ended
December 31, 2008 decreased 6.1% from $326.8 million for the year ended December 31, 2007 primarily
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