Hertz 2010 Annual Report Download - page 84

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Depreciation of Revenue Earning Equipment and Lease Charges
Car Rental Segment
Depreciation of revenue earning equipment and lease charges for our car rental segment of
$1,594.6 million for the year ended December 31, 2010 decreased 1.2% from $1,614.2 million for the
year ended December 31, 2009. The decrease was primarily due to an improvement in certain vehicle
residual values and a change in mix of vehicles, partly offset by the effects of foreign currency translation
of approximately $9.2 million.
Equipment Rental Segment
Depreciation of revenue earning equipment and lease charges in our equipment rental segment of
$273.5 million for the year ended December 31, 2010 decreased 13.8% from $317.2 million for the year
ended December 31, 2009. The decrease was primarily due to a 4.9% reduction in average acquisition
cost of rental equipment operated during the period and higher residual values on the disposal of used
equipment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 3.6%, due to increases in advertising, sales
promotion expenses and administrative expenses.
Advertising expenses increased $20.7 million, or 18.3%, primarily due to a new television campaign
in the U.S., as well as, a reduction in advertising funding received from third parties.
Sales promotion expenses increased $1.6 million, or 1.2%, primarily related to the effects of foreign
currency translation.
Administrative expenses increased $1.1 million, or 0.3%, primarily due to increases in legal
expenses related to the Dollar Thrifty Automotive Group transaction which has now been
terminated, as well as consulting expenses, salaries and related expenses, foreign exchange losses
and stock option expense, partly offset by a decrease in restructuring and restructuring related
expenses.
Interest Expense
Car Rental Segment
Interest expense for our car rental segment of $401.3 million for the year ended December 31, 2010
increased 27.0% from $316.1 million for the year ended December 31, 2009. The increase was primarily
due to an increase in the weighted average debt outstanding as a result of an increased fleet size.
Equipment Rental Segment
Interest expense for our equipment rental segment of $39.4 million for the year ended December 31,
2010 decreased 26.1% from $53.3 million for the year ended December 31, 2009. The decrease was
primarily due to a reduction in the weighted average debt outstanding as a result of reduced fleet size.
Other
Other interest expense relating to interest on corporate debt of $332.7 million for the year ended
December 31, 2010 increased 7.0% from $310.9 million for the year ended December 31, 2009. The
increase was primarily due to interest expense on the Convertible Senior Notes issued in May 2009.
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