Hertz 2014 Annual Report Download - page 61

Table of Contents
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Direct operating expenses for our International Car Rental segment increased $84 million, or 6%, from the prior year due to the following:
• Fleet related expenses increased $50 million, or 13%, from 2013 primarily due to higher insurance and license fees of $29 million and
higher vehicle damage costs of $23 million. Insurance costs were higher due to increases in large loss property damage claims and
license fees increased due to a new toll product in Australia and increased conversion expenses from vehicle thefts in Italy. Damage
costs increased due to higher vehicle reconditioning costs and lower damage recoveries; and
• Other direct operating expenses increased $27 million during the period primarily due to higher commissions of $14 million driven by
growth in our value brand segments and higher facilities costs and concession fees of $13 million.
Depreciation of revenue earning equipment and lease charges, net decreased $36 million, or 7%, and net depreciation per unit per month
decreased 9% to $250 from $275 year over year. This change was mainly driven by improvements in fleet purchasing, vehicle mix and the gain
(loss) on vehicles sold during the period.
Income before income taxes increased $61 million, or 179%, from the prior year. The change was primarily due to the factors described above and
a $17 million decrease in interest expense, net driven by a lower average interest rate on fleet debt resulting from the European fleet financings
completed during the period. Additionally, there was a $25 million decrease in other (income) expenses, net which is further described on a
consolidated basis in the Consolidated Results of Operations section of this MD&A.
Adjusted pre-tax income increased $10 million, or 7%, from the prior year. See footnote (b) in the "Footnotes to the Results of Operations and
Selected Operating Data by Segment Tables" for a summary and description of these adjustments on a consolidated basis.
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Total revenues for the segment increased $113 million, or 5%, when compared with the prior year period and increased $104 million, or 5%,
excluding the impact of foreign currency exchange rates. As we expanded our Firefly and Thrifty value brands in Europe we experienced a 4%
increase in Transaction Days, however, Total RPD for the segment remained relatively flat.
Direct operating expenses for our International car rental segment increased $60 million, or 4% from the prior year due to the following, all of which
are a direct result of the expansion of our value brands in Europe:
• Personnel related expenses increased $12 million, or 3%, from 2012 due mainly to increased payroll costs attributable to standard
inflationary increases; and
• Other direct operating expenses increased $48 million, or 8%, from 2012 comprised mainly of a $12 million increase in concessions, an
$11 million increase in restructuring costs and a $11 million increase in reservations and customer service expenses due to the shift in our
business mix to more airports driven by the expansion of our value brands.
Depreciation of revenue earning equipment and lease charges, net increased $4 million, or 1%, from the prior year. The increase was primarily
driven by a larger fleet during the period, partially offset by a slight strengthening of used vehicle residual values, the mix of vehicles and improved
procurement costs to acquire fleet. Net depreciation per unit per month decreased 4% to $275 from $287 year over year.
Income before income taxes decreased $2 million, or 6%, from the prior year. The change was primarily due to the factors described above
combined with a $9 million decrease in interest expense, net, offset by an $22 million increase in SG&A and a $38 million increase in other
(income) expenses, net both of which are further described on a consolidated basis in the Consolidated Results of Operations section of this
MD&A.
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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