Hertz 2011 Annual Report Download - page 93

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Other
Revenues from all other sources decreased 46.6%, primarily due to a decrease in revenues from our
third-party claim management services.
EXPENSES
Years Ended
December 31,
2010 2009 $ Change % Change
(in millions of dollars)
Expenses:
Fleet related expenses ....................... $1,003.2 $ 880.1 $123.1 14.0%
Personnel related expenses ................... 1,411.2 1,321.3 89.9 6.8%
Other direct operating expenses ................ 1,869.0 1,885.4 (16.4) (0.9)%
Direct operating .......................... 4,283.4 4,086.8 196.6 4.8%
Depreciation of revenue earning equipment and
lease charges .......................... 1,868.1 1,933.8 (65.7) (3.4)%
Selling, general and administrative ............ 664.5 642.0 22.5 3.5%
Interest expense .......................... 773.4 680.3 93.1 13.7%
Interest income .......................... (12.3) (16.0) 3.7 (22.9)%
Other (income) expense, net ................. — (48.5) 48.5 (100.0)%
Total expenses ......................... $7,577.1 $7,278.4 $298.8 4.1%
Total expenses increased 4.1%, and total expenses as a percentage of revenues decreased from 102.5%
for the year ended December 31, 2009 to 100.2% for the year ended December 31, 2010.
Direct Operating Expenses
Car Rental Segment
Direct operating expenses for our car rental segment of $3,604.7 million in 2010 increased
$174.0 million, or 5.1%, from 2009 as a result of increases in fleet related expenses, personnel related
expenses and other direct operating expenses.
Fleet related expenses for our car rental segment of $822.1 million in 2010 increased $92.3 million,
or 12.6% from 2009. The increase was primarily related to worldwide rental volume demand which
resulted in increases in gasoline costs of $35.0 million, self insurance expenses of $33.1 million,
vehicle license taxes of $16.5 million and vehicle damage costs of $14.8 million, partly offset by the
effects of foreign currency translation of approximately $5.8 million.
Personnel related expenses for our car rental segment of $1,162.0 million in 2010 increased
$83.7 million, or 7.8% from 2009. The increase was related to increases in salaries and related
expenses of $35.2 million, outside services, including transporter wages of $22.2 million and
incentive compensation costs of $26.1 million. The expense increases were primarily related to
improved results, as well as additional U.S. off-airport and Advantage locations in 2010.
Other direct operating expenses for our car rental segment of $1,620.6 million in 2010 decreased
$2.0 million, or 0.1% from 2009. The decrease was primarily related to decreases in restructuring
and restructuring related charges of $52.7 million, customer service costs of $12.5 million, field
administrative of $5.0 million and field systems of $4.4 million. The decreases were primarily a result
of disciplined cost management. The decreases were partly offset by increases in commissions of
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