Hertz 2012 Annual Report Download - page 93

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
improved worldwide rental volume demand and off-airport expansions. The increases in other direct
operating expenses were partly offset by decreases in computer costs of $4.9 million and charge
card fees of $3.8 million as well as the effects of foreign currency translation of approximately
$34.7 million. The remaining 2012 net increase was primarily attributable to the Recent Acquisitions.
Equipment Rental Segment
Direct operating expenses for our equipment rental segment of $769.7 million for 2012 increased
$39.1 million, or 5.3% from $730.6 million for 2011 as a result of increases in personnel related expenses
and fleet related expenses, partly offset by a decrease in other direct operating expenses.
Fleet related expenses for our equipment rental segment of $213.5 million for 2012 increased
$19.7 million, or 10.1% from 2011. The increase was primarily related to increased rental volume
resulting in increased freight expenses of $11.4 million, higher maintenance costs of $5.9 million
and increased delivery costs of $4.3 million. Additionally, Cinelease and other 2012 equipment
rental segment acquisitions added to the increase of fleet related expenses. These increases were
partly offset by the effects of foreign currency translation of approximately $1.9 million.
Personnel related expenses for our equipment rental segment of $244.8 million for 2012 increased
$22.5 million, or 10.1% from 2011. The increase was attributable to an increase in salaries and
related expenses of $20.5 million and an increase in benefits of $4.8 million primarily related to
increased volumes and new branch openings. Additionally, Cinelease and other 2012 equipment
rental segment acquisitions added to the increase of personnel related expenses. These increases
were partly offset by the effects of foreign currency translation of approximately $2.5 million.
Other direct operating expenses for our equipment rental segment of $311.4 million for 2012
decreased $3.1 million, or 1.0% from 2011. The decrease was primarily related to the effects of
foreign currency translation of approximately $2.6 million.
Depreciation of Revenue Earning Equipment and Lease Charges
Car Rental Segment
Depreciation of revenue earning equipment and lease charges for our car rental segment of
$1,876.1 million for 2012 increased $224.7 million, or 13.6% from $1,651.4 million for 2011. The increase
was primarily attributable to the increase in average fleet due to the Recent Acquisitions. The increase
was partly offset by lower net depreciation per vehicle, higher vehicle residual values, a higher mix of
non-program cars and the effects of foreign currency translation of approximately $31.4 million.
Equipment Rental Segment
Depreciation of revenue earning equipment and lease charges in our equipment rental segment of
$272.1 million for 2012 increased 7.0% from $254.3 million for 2011. The increase was primarily due to a
9.4% increase in the average acquisition cost of rental equipment operated during the period, partly
offset by higher residual values on the disposal of used equipment and the effects of foreign currency
translation of approximately $2.5 million.
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