Hertz 2014 Annual Report Download - page 56

Table of Contents
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Adjusted pre-tax income decreased $693 million, or 63%, from the prior year. See footnote (b) to the table under "Results of Operations and
Selected Operating Data by Segment" for a summary and description of our adjustments to pre-tax income on a consolidated basis.
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Total revenues increased $1,762 million, or 20%, from the prior year due to revenue increases in all four business segments. Higher revenues in
our U.S. Car Rental segment were driven primarily by a 26% increase in transaction days due to the Dollar Thrifty acquisition. Higher revenues in
our International Car Rental segment were driven by increases in Total RPD and transaction days during the period and refueling fees of $12
million. Increases in our Worldwide Equipment Rental segment were driven by higher volume and pricing during the period. Increases in our Donlen
operations were primarily the result of higher volume during the period.
Direct operating expenses increased $916 million, or 19%, from the prior year primarily due to increases in our U.S. and International Car Rental
segments of $805 million and $60 million, respectively, and an increase of $49 million in our Worldwide Equipment Rental segment. The increase
in our U.S. Car Rental segment were driven by increased transaction days due to the Dollar Thrifty acquisition.
Depreciation of revenue earning equipment and lease charges, net increased $405 million, or 19%, from the prior year primarily due to an increase
of $336 million in our U.S. Car Rental segment. The increase was largely driven by a larger U.S. Car Rental fleet size resulting from the Dollar
Thrifty acquisition and a deterioration in used vehicle residual values, offset in part by the implementation of a longer planned hold period for the
fleet.
SG&A expenses during the year ended December 31, 2013 increased $75 million, or 8%, from 2012, primarily due to higher marketing, co-branding
and promotional activity in our U.S. Car Rental segment largely due to the Dollar Thrifty acquisition as well as higher administrative costs within
our International Car Rental segment, partially offset by decreased Hertz-brand advertising.
Interest expense, net increased $60 million, or 9%, in the year ended December 31, 2013 as compared with 2012 primarily due to higher
outstanding levels of debt largely driven by financings related to our November 2012 acquisition of Dollar Thrifty.
Other expense of $102 million in 2013 is primarily comprised of $40 million of impairment charges and asset write-downs, $35 million of debt
extinguishment loss and inducement costs related to the early conversion of a portion of our Convertible Senior Notes and $29 million of premiums
paid and write-offs relating to our European debt. The impairment charges and asset write-downs were related to vehicles subleased to FSNA, the
parent of Simply Wheelz, LLC, the owner and operator of our divested Advantage brand, as further described in Note 5, "Acquisitions and
Divestitures," to the Notes to our consolidated financial statements included in this Annual Report under the caption Item 8, "Financial Statements
and Supplementary Data." Other expense of $34 million in 2012 is primarily comprised of a $31 million loss on the Advantage divestiture and $24
million of additional expenses resulting from divestitures associated with the Dollar Thrifty acquisition. These expenses were partially offset by a
$10 million gain from the sale of our Switzerland operations and a $9 million gain on the investment in Dollar Thrifty stock.
Income before income taxes increased $238 million, or 65%, from the prior year due primarily to stronger volumes and pricing in the U.S. and
International car rental segments, lower depreciation per unit per month in our International car rental segment and stronger volumes and pricing in
our Worldwide Equipment Rental segment. Additionally, 2013 included $79 million of Dollar Thrifty acquisition adjustments and an assumed longer
fleet holding period, which reduced depreciation expense in 2013. This was partially offset by a $75 million increase in SG&A expenses, a $60
million increase in interest expense, net and a $68 million increase in other expenses, net which are more fully described above.
The effective tax rate for the year ended December 31, 2013 was 50% as compared to 50% for the year ended December 31, 2012. The provision
for taxes on income increased $120 million, primarily due to higher income before income taxes, changes in geographic earnings mix, increased
state and local tax rates and an increase in thin cap limitation on deductibility of interest expense in various non-U.S. countries and other
permanent differences, offset by
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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