Hertz 2012 Annual Report Download - page 89

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
2011 foreign exchange rates) for the years ended December 31, 2012, 2011 and 2010 (in millions of dollars, except as
noted):
Years Ended December 31,
2012 2011 2010
Car rental segment revenues ............................... $7,633.0 $ 7,083.5 $ 6,486.2
Non-rental rate revenue .................................. (1,676.6) (1,256.7) (1,041.7)
Foreign currency adjustment ............................... (4.0) (151.7) 41.3
Rental rate revenue ..................................... $5,952.4 $ 5,675.1 $ 5,485.8
Transaction days (in thousands) ............................. 148,787 137,301 127,159
Rental rate revenue per transaction day (in whole dollars) ............ $ 40.01 $ 41.33 $ 43.14
(c) Adjusted pre-tax income is calculated as income (loss) before income taxes plus non-cash purchase accounting charges,
non-cash debt charges relating to the amortization and write-off of debt financing costs and debt discounts and certain
one-time charges and non-operational items. Adjusted pre-tax income is important to management because it allows
management to assess operational performance of our business, exclusive of the items mentioned above. It also allows
management to assess the performance of the entire business on the same basis as the segment measure of profitability.
Management believes that it is important to investors for the same reasons it is important to management and because it
allows them to assess our operational performance on the same basis that management uses internally. The contribution of
our reportable segments to adjusted pre-tax income and reconciliation to consolidated amounts are presented below (in
millions of dollars):
Years Ended December 31,
2012 2011 2010
Adjusted pre-tax income:
Car rental ........................................... $1,020.1 $ 850.2 $ 641.9
Equipment rental ....................................... 227.0 161.6 78.0
Total reportable segments ................................ 1,247.1 1,011.8 719.9
Adjustments:
Other reconciling items(1) ................................... (345.6) (331.3) (372.8)
Purchase accounting(2) ................................... (109.6) (87.6) (90.3)
Non-cash debt charges(3) .................................. (83.6) (130.4) (182.6)
Restructuring charges .................................... (38.0) (56.4) (54.7)
Restructuring related charges(4) .............................. (11.1) (9.8) (13.2)
Derivative gains (losses)(5) ................................. (0.9) 0.1 (3.2)
Acquisition related costs and charges(6) ......................... (163.7) (18.8) (17.7)
Management transition costs ............................... — (4.0) —
Pension adjustment(7) .................................... — 13.1 —
Premiums paid on debt(8) .................................. — (62.4) —
Other(9) ............................................. (44.0) — —
Income (loss) before income taxes .......................... $ 450.6 $ 324.3 $ (14.6)
(1) Represents general corporate expenses, certain interest expense (including net interest on corporate debt), as well as
other business activities.
(2) Represents the increase in amortization of other intangible assets, depreciation of property and equipment and
accretion of revalued liabilities relating to purchase accounting.
(3) Represents non-cash debt charges relating to the amortization and write-off of deferred debt financing costs and debt
discounts.
(4) Represents incremental costs incurred directly supporting our business transformation initiatives. Such costs include
transition costs incurred in connection with our business process outsourcing arrangements and incremental costs
incurred to facilitate business process re-engineering initiatives that involve significant organization redesign and
extensive operational process changes.
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