Hertz 2012 Annual Report Download - page 92

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
EXPENSES
Years Ended
December 31,
2012 2011 $ Change % Change
(in millions of dollars)
Expenses:
Fleet related expenses ....................... $1,145.7 $1,120.6 $ 25.1 2.2%
Personnel related expenses ................... 1,563.2 1,478.0 85.2 5.8%
Other direct operating expenses ................ 2,086.9 1,967.8 119.1 6.1%
Direct operating .......................... 4,795.8 4,566.4 229.4 5.0%
Depreciation of revenue earning equipment and
lease charges .......................... 2,148.2 1,905.7 242.5 12.7%
Selling, general and administrative ............ 945.7 745.3 200.4 26.9%
Interest expense .......................... 649.9 699.7 (49.8) (7.1)%
Interest income .......................... (4.9) (5.5) 0.6 (10.9)%
Other (income) expense, net ................. 35.5 62.5 (27.0) (43.2)%
Total expenses ......................... $8,570.2 $7,974.1 $596.1 7.5%
Total expenses increased 7.5%, but total expenses as a percentage of revenues decreased from 96.1%
for the year ended December 31, 2011 to 94.9% for the year ended December 31, 2012.
Direct Operating Expenses
Car Rental Segment
Direct operating expenses for our car rental segment of $4,033.1 million for 2012 increased
$192.8 million, or 5.0%, from $3,840.3 million for 2011 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 $932.1 million for 2012 increased $5.4 million,
or 0.6%, from 2011. On a comparable basis, the increase was primarily related to worldwide rental
volume demand which resulted in increases in gasoline costs of $26.8 million, vehicle maintenance
costs of $8.2 million and self insurance expenses of $4.7 million. The increase in gasoline costs
reflect higher gasoline prices. These increases were partly offset by a decrease in vehicle damage
costs of $20.6 million and the effects of foreign currency translation of approximately $26.0 million.
The remaining 2012 net increase was primarily attributable to the Recent Acquisitions.
Personnel related expenses for our car rental segment of $1,282.9 million for 2012 increased
$64.9 million, or 5.3%, from 2011. On a comparable basis, the increase was primarily related to
increases in salaries and related expenses associated with improved volume and compensation for
employees at additional off-airport locations in 2012 as well as higher incentives. These increases
were partly offset by the effects of foreign currency translation of approximately $18.4 million. The
remaining 2012 net increase was primarily attributable to the Recent Acquisitions.
Other direct operating expenses for our car rental segment of $1,818.1 million for 2012 increased
$122.5 million, or 7.2%, from 2011. On a comparable basis, the increase was primarily related to
increases in facilities expenses of $60.0 million due to 2011 property sales, commissions of
$20.4 million, concession fees of $9.5 million, customer service costs of $10.7 million, field systems
of $7.7 million and restructuring charges of $5.4 million. The increases were primarily a result of
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