Hertz 2012 Annual Report Download - page 100

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
acquisition cost of rental equipment operated during the period and the effects of foreign currency
translation of approximately $3.1 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 12.2%, due to increases in administrative, sales
promotion and advertising expenses.
Administrative expenses increased $54.5 million, or 13.6%, primarily due to increases in salaries
and related expenses of $34.0 million, consulting expenses of $8.8 million, travel and entertainment
expenses of $3.5 million and legal expense of $2.5 million, as well as the effects of foreign currency
translation of approximately $8.4 million, partly offset by a decrease in unrealized loss on derivatives
of $3.4 million.
Sales promotion expenses increased $14.3 million, or 11.1%, primarily related to increases in sales
salaries and commissions due to improved results, as well as the effects of foreign currency
translation of approximately $2.7 million.
Advertising expenses increased $12.0 million, or 9.0%, primarily due to increased media and
production related to the new campaign (‘‘Gas and Brake’’), as well as the effects of foreign
currency translation of approximately $4.3 million.
Interest Expense
Car Rental Segment
Interest expense for our car rental segment of $333.1 million for 2011 decreased 17.0% from
$401.3 million for 2010. The decrease was primarily due to lower interest rates in 2011, partly offset by 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 $45.3 million for 2011 increased 15.0% from
$39.4 million for 2010. The increase was primarily due to a portion of the write-off of the unamortized debt
costs in connection with the refinancing of our Senior ABL Facility which was allocated to our equipment
rental segment in 2011.
Other
Other interest expense relating to interest on corporate debt of $321.3 million for 2011 decreased 3.5%
from $332.7 million for 2010. The decrease was primarily due to lower rates in 2011, partly offset by
increases due to the write-off of unamortized debt costs in connection with the refinancing of our Senior
Term Facility and Senior ABL Facility, financing costs incurred in connection with the new Senior Term
Facility and the write-off of unamortized debt costs in connection with the redemption of our 10.5%
Senior Subordinated Notes and a portion of our 8.875% Senior Notes in 2011.
Interest Income
Interest income decreased $6.8 million primarily due to interest on a value added tax reclaim received in
2010.
Other (Income) Expense, Net
Other (income) expense, net increased $62.5 million primarily due to premiums paid in connection with
the redemption of our 10.5% Senior Subordinated Notes and a portion of our 8.875% Senior Notes
during 2011.
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