Hertz 2007 Annual Report Download - page 178

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$(0.01) per share on a fully diluted basis, a positive impact of $0.01 per share in the fourth quarter of 2006, no
significant impact on the full year 2006 results and earnings per share and no effect on Corporate EBITDA in
any of the 2006 periods.
(9) The first quarter of 2006, second quarter of 2006, third quarter of 2006 and fourth quarter of 2006 include
decreases of $8.6 million, $5.5 million and $1.2 million and an increase of $2.2 million, respectively, in
depreciation expense related to the net effects of changing depreciation rates to reflect changes in the
estimated residual value of revenue earning equipment.
(10) The first quarter of 2006 includes a gain of $6.6 million related to the assignment of certain interest rate swaps.
See note (11).
(11) The fourth quarter of 2006 includes an adjustment of $5.6 million to correct the original gain amount of
$6.6 million disclosed in the first quarter of 2006, which did not take into account the relinquishment of a
counter-party receivable in the amount of $5.6 million—see note (10). This adjustment had a negative impact
on the quarter of $0.02 per share on a fully diluted basis and had no effect on Corporate EBITDA.
(12) The fourth quarter of 2006 includes favorable net tax adjustments of $2.9 million related to prior periods, which
had the impact in the quarter of $0.01 per share on a fully diluted basis and no effect on Corporate EBITDA.
Note 12—Restructuring
As part of our effort to implement our strategy of reducing operating costs, we are evaluating our
workforce and operations and making adjustments, including headcount reductions and process
improvements to optimize work flow at rental locations and maintenance facilities as well as streamlining
our back-office operations, initiating business process reengineering and evaluating outsourcing
opportunities. When we make adjustments to our workforce and operations, we may incur incremental
expenses that delay the benefit of a more efficient workforce and operating structure, but we believe that
increasing our operating efficiency and reducing the costs associated with the operation of our business
are important to our long-term competitiveness.
On January 5, 2007, we announced the first in a series of initiatives to further improve our
competitiveness through targeted job reductions affecting approximately 200 employees primarily at our
corporate headquarters in Park Ridge, New Jersey and our U.S. service center in Oklahoma City,
Oklahoma.
On February 28, 2007, we announced the second initiative to further improve our competitiveness and
industry leadership through targeted job reductions affecting approximately 1,350 employees primarily
in our U.S. car rental operations, with much smaller reductions occurring in our U.S. equipment rental
operations, the corporate headquarters in Park Ridge, New Jersey, and the U.S. service center in
Oklahoma City, Oklahoma, as well as in Canada, Puerto Rico, Brazil, Australia and New Zealand.
On June 1, 2007, we announced the third initiative to further improve our operational efficiency through
targeted reductions affecting approximately 480 positions in our U.S. car and equipment rental
operations, as well as financial and reservations-related jobs in our U.S. service center in Oklahoma City,
Oklahoma.
During 2007, we began to implement cost reducing initiatives in our European operations, and we
expect to continue implementation of these measures in 2008.
During the fourth quarter of 2007, we finalized or substantially completed contract terms with industry
leading service providers to outsource select functions relating to real estate facilities management and
construction, procurement and information technology. Substantially all of the selected functions in
these areas will be transitioned to the third-party service providers which will result in a decrease in
headcount by the end of the third quarter of 2008.
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