Hertz 2008 Annual Report Download - page 197

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In late May and June 2008, our U.S. equipment rental business initiated the closure of 22 branch
operations across the United States to gain further operating efficiencies. This initiative resulted in
severance costs for approximately 180 employees whose positions were eliminated, asset impairment
charges for surplus equipment identified for disposal, recognition of future facility lease obligations and
the impairment of related leasehold improvements. Additionally, in the second quarter of 2008, we
implemented other cost containment and efficiency initiatives resulting in approximately 220 additional
employee reductions.
During the third quarter of 2008, our equipment rental business incurred charges for asset impairments,
losses on disposal of surplus equipment and recognition of future facility lease obligations related to
branch closures in the U.S. and Europe. Our U.S. car rental business, in order to streamline operations
and reduce costs, initiated the closure of 48 off-airport locations and incurred a charge related to facility
lease obligations. Additionally, to address the challenging economic environment, we introduced a
voluntary employment separation program in our U.S. operations as well as initiating involuntary
employee severance actions globally. The third quarter restructuring charges included employee
termination liabilities covering approximately 1,400 employees.
During the fourth quarter of 2008, our North American and European car rental businesses, in order to
further streamline operations and reduce costs, initiated the closure of approximately 200 off-airport
locations. Related to these location closures, as well as the elimination of several more equipment rental
branches in the U.S. and Europe, we incurred charges for asset impairments, losses on disposal of
surplus vehicles and equipment and recognition of future facility lease obligations for those locations
vacated by year-end. The locations closed were strategically selected to enable us to continue to
provide our rental services from other locations in the same area to our loyal customer base. We will
continue to assess the effectiveness, size and geographical presence of our global network footprint and
may make adjustments as warranted. In January 2009, we announced that, as part of a comprehensive
plan to further decrease costs and as a result of reduced rental demand, we were reducing our global
workforce by more than 4,000 employees beginning in the fourth quarter 2008 and continuing through
the first quarter of 2009, more than half of whom are not eligible for severance benefits. We expect job
reductions in the car and equipment rental businesses, corporate and support areas, and in all
geographies, with an emphasis on eliminating non-customer facing jobs. Related to these location
closures and continued cost reduction initiatives, we incurred restructuring charges for employee
termination liabilities covering approximately 1,500 employee separations in the fourth quarter.
For the year ended December 31, 2008, our consolidated statement of operations includes restructuring
charges relating to the initiatives discussed above of $216.1 million, which is composed of $83.8 million
of termination benefits, $89.1 million in asset impairment charges, $14.1 million in facility closure and
lease obligation costs, $4.0 million in facility fixed asset and inventory impairment costs, $10.0 million in
consulting costs, $5.6 million in pension settlement losses and $9.5 million of other restructuring
charges. The after-tax effect of the restructuring charges reduced diluted earnings per share by $0.48 for
the year ended December 31, 2008.
For the year ended December 31, 2007, our consolidated statement of operations includes restructuring
charges relating to the initiatives discussed above of $96.4 million, which is composed of $65.2 million of
involuntary termination benefits, $21.7 million in consulting costs, a net gain of $0.4 million related to
pension and post employment benefits and other charges of $9.9 million. The after-tax effect of the
restructuring charges reduced diluted earnings per share by $0.22 for the year ended December 31,
2007.
Additional efficiency and cost saving initiatives may be developed during 2009. However, we presently
do not have firm plans or estimates of any related expenses.
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