Hertz 2011 Annual Report Download - page 88

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Direct Operating Expenses
Car Rental Segment
Direct operating expenses for our car rental segment of $3,840.3 million for 2011 increased
$235.6 million, or 6.5%, from 2010 as a result of increases in fleet related expenses, other direct
operating expenses and personnel related expenses.
Fleet related expenses for our car rental segment of $926.8 million for 2011 increased
$104.7 million, or 12.7% from 2010. The increase was primarily related to worldwide rental volume
demand which resulted in increases in gasoline costs of $58.4 million, self insurance expenses of
$10.1 million, vehicle license taxes of $7.4 million, vehicle maintenance costs of $6.2 million and
vehicle registration fees of $5.4 million, as well as the effects of foreign currency translation of
approximately $29.4 million. The increase in gasoline costs also related to higher gasoline prices.
These increases were partly offset by a decrease in vehicle damage costs of $11.5 million.
Other direct operating expenses for our car rental segment of $1,695.5 million for 2011 increased
$74.9 million, or 4.6% from 2010. The increase was primarily related to increases in field
administrative expenses of $23.0 million, customer service costs of $13.8 million, third-party claim
management expenses of $12.9 million, concession fees of $12.8 million, computer costs of
$10.1 million, charge card fees of $4.7 million and reservation costs of $4.3 million, as well as the
effects of foreign currency translation of approximately $36.8 million. The increases were primarily a
result of improved worldwide rental volume demand. The increase in field administrative expenses
also related to a reimbursement received from a manufacturer in 2010. The increases in other direct
operating expenses were partly offset by decreases in facilities expenses of $34.8 million, field
systems of $4.7 million and restructuring and restructuring related charges of $2.8 million. The
decrease in facilities expenses primarily related to gains recognized on the sale of certain properties
in 2011.
Personnel related expenses for our car rental segment of $1,218.0 million for 2011 increased
$56.0 million, or 4.8% from 2010. The increase was related to increases in salaries and related
expenses of $34.0 million and outside services, including transporter wages of $14.8 million, as well
as the effects of foreign currency translation of approximately $20.6 million, partly offset by a
decrease in benefits of $14.2 million. The expense increases were primarily related to improved
results, as well as additional U.S. off-airport and Advantage locations in 2011. The decrease in
benefits primarily related to the U.K. pension plan curtailment gain.
Equipment Rental Segment
Direct operating expenses for our equipment rental segment of $730.6 million for 2011 increased
$53.3 million, or 7.9% from $677.3 million for 2010 as a result of increases in other direct operating
expenses, fleet related expenses and personnel related expenses.
Other direct operating expenses for our equipment rental segment of $314.6 million for 2011
increased $27.8 million, or 9.7% from 2010. The increase was primarily related to increases in
restructuring and restructuring related charges of $5.3 million, legal expenses of $3.6 million, re-rent
expense of $3.5 million, amortization expense of $2.4 million, cost of sales of $2.2 million, field
systems and administrative expenses of $1.9 million and credit and collections expense of
$1.1 million, as well as the effects of foreign currency translation of approximately $4.2 million. The
increases in re-rent expense, costs of sales, field systems and administrative expenses and credit
and collections expense primarily related to improved worldwide rental volume demand.
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