Hertz 2011 Annual Report Download - page 95

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Sales promotion expenses increased $1.6 million, or 1.2%, primarily related to the effects of foreign
currency translation.
Administrative expenses increased $0.2 million 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.
Interest Income
Interest income decreased $3.7 million primarily due to a decrease in interest income received in
connection with value added tax reclaims.
Other (Income) Expense, Net
Other (income) expense, net decreased $48.5 million due to a gain, net of transaction costs, recorded in
connection with the buyback of portions of certain of our Senior Notes and Senior Subordinated Notes in
2009.
ADJUSTED PRE-TAX INCOME
Car Rental Segment
Adjusted pre-tax income for our car rental segment of $641.9 million increased 39.8% from
$459.2 million for the year ended December 31, 2009. The increase was primarily due to stronger
volumes, increased pricing and disciplined cost management. Adjustments to our car rental segment
income before income taxes on a GAAP basis for the years ended December 31, 2010 and 2009, totaled
$200.1 million and $275.2 million, respectively. See footnote c to the table under ‘‘Results of Operations’’
for a summary and description of these adjustments.
Equipment Rental Segment
Adjusted pre-tax income for our equipment rental segment of $78.0 million increased 2.1% from
$76.4 million for the year ended December 31, 2009. The increase was primarily due to strong cost
69