Hertz 2010 Annual Report Download - page 87

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
EXPENSES
Years Ended
December 31,
2009 2008 $ Change % Change
(in millions of dollars)
Expenses:
Fleet related expenses ...................... $ 880.1 $1,210.9 $ (330.8) (27.3)%
Personnel related expenses .................. 1,321.3 1,560.1 (238.8) (15.3)%
Other direct operating expenses ............... 1,882.8 2,159.0 (276.2) (12.8)%
Direct operating ......................... 4,084.2 4,930.0 (845.8) (17.2)%
Depreciation of revenue earning equipment and
lease charges ......................... 1,931.4 2,194.2 (262.8) (12.0)%
Selling, general and administrative ............ 641.1 769.6 (128.5) (16.7)%
Interest expense ......................... 680.3 870.0 (189.7) (21.8)%
Interest and other income, net ............... (64.5) (24.8) (39.7) 160.1%
Impairment charges ...................... — 1,168.9 (1,168.9) (100.0)%
Total expenses ........................ $7,272.5 $9,907.9 $(2,635.4) (26.6)%
Total expenses decreased 26.6%, and total expenses as a percentage of revenues decreased from
116.2% for the year ended December 31, 2008 to 102.4% for the year ended December 31, 2009.
Direct Operating Expenses
Direct operating expenses decreased 17.2% as a result of decreases in fleet related expenses, other
direct operating expenses and personnel related expenses.
Fleet related expenses decreased 27.3%. The decrease was primarily related to a reduction in fleet
levels as a result of worldwide rental volume demand which resulted in decreases in gasoline costs
of $163.0 million, vehicle damage and maintenance costs of $94.4 million, self insurance expense of
$37.9 million and equipment rental delivery costs of $26.3 million. All of these decreases include the
effects of foreign currency translation of approximately $34.0 million.
Other direct operating expenses decreased 12.8%. The decrease was primarily related to a
reduction in fleet levels as a result of a decrease in worldwide rental volume demand which resulted
in decreases in equipment rental cost of goods sold of $51.0 million, concession fees in our car
rental operations of $35.7 million, facility expenses of $32.6 million, equipment rental re-rent
expense of $17.7 million, charge card fees of $13.9 million, commission fees of $12.5 million and
customer service costs of $10.0 million. In addition, restructuring and restructuring related charges
decreased by $81.8 million due to actions taken in late 2008. All of these decreases include the
effects of foreign currency translation of approximately $61.8 million.
Personnel related expenses decreased 15.3%. The decrease was primarily related to reductions in
wages and benefits as a result of restructuring activities of $220.2 million, reservation costs of
$12.1 million and management incentive compensation costs of $6.4 million. All of these decreases
include the effects of foreign currency translation of approximately $29.9 million.
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