Thrifty Car Rental 2010 Annual Report Download - page 43

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Significant fluctuations within direct vehicle and operating expense in 2009 primarily resulted
from the following:
¾Vehicle related costs decreased $61.4 million. This decrease resulted primarily from a $35.6
million decrease in gasoline expense resulting from lower average gas prices and lower fuel
consumption due to a decreased fleet (primarily offset in revenue), an $18.1 million decrease
in net vehicle damages resulting from improved damage recovery collections along with
lower aggregate damages due to a lower value of the vehicles, primarily related to the
extended holding periods and a reduced fleet, and a $10.3 million decrease in vehicle
insurance expenses primarily due to a change in insurance reserves resulting from favorable
developments in claim history. These decreases were partially offset by an increase in
vehicle maintenance expense of $13.8 million primarily resulting from the increased holding
period of the fleet.
¾ Personnel-related expenses decreased $33.4 million. Approximately $38.5 million of the
decrease resulted from a reduction in the number of employees attributable to lower
transaction levels and cost efficiency initiatives, in addition to a $4.5 million decrease in
group insurance expense. These decreases were partially offset by a $6.5 million increase
due to a change in the proportion of seasonal employees, coupled with $3.2 million of
incentive compensation expense in 2009, related to the employees at company-owned
stores.
¾ Bad debt expense decreased $4.7 million primarily as a result of the bankruptcy of one of
the Company’s largest tour operators during 2008.
¾Facility and airport concession expenses decreased $3.0 million due to a decrease in rent
expense of $1.6 million, and a decrease in concession fees of $1.3 million due to the overall
decline in concessionable revenue.
Net vehicle depreciation and lease charges decreased $113.3 million. The decrease was primarily
due to a 14.9% decrease in depreciable vehicles, which resulted from efforts to match the fleet with
current demand levels. In addition, net vehicle depreciation expense and lease charges were $337
per unit in 2009, compared to $363 per unit in 2008. The decrease in the depreciation rate is due to
extended vehicle holding periods, improved conditions in the used car market and increased residual
values in 2009 as compared to 2008, partially offset by an increase due to the one-time $12.9 million
settlement of certain manufacturer incentives that lowered per vehicle depreciation expense in 2008
and did not recur in 2009. As a percent of revenue, net vehicle depreciation expense and lease
charges were 27.6% in 2009, compared to 31.8% in 2008.
Selling, general and administrative expenses for 2009 decreased $13.4 million. As a percent of
revenue, selling, general and administrative expenses were 13.0% in 2009, compared to 12.6% in
2008.
The decrease in selling, general and administrative expenses in 2009 resulted from the
following:
¾ Sales and marketing expense decreased $14.5 million due primarily to a decrease in print
media, marketing programs tied to transaction levels and reduced promotional and
advertising expenses.
¾Outsourcing expenses decreased $7.6 million related to IT and reservations. The IT-related
reductions were primarily due to fewer IT-related projects outsourced in 2009, and the
reductions related to reservations were primarily due to decreased rental volume.
42