Hertz 2008 Annual Report Download - page 44

ITEM 1. BUSINESS (Continued)
In addition to the employees referred to above, we employ a substantial number of temporary workers,
and engage outside services, as is customary in the industry, principally for the non-revenue movement
of rental cars and equipment between rental locations and the movement of rental equipment to and
from customers’ job sites.
As part of our ongoing effort to implement our strategy of reducing operating costs, we are evaluating
our workforce and operations and making adjustments, including headcount reductions and business
process reengineering to optimize work flow at rental locations and maintenance facilities as well as
streamlining our back-office operations and evaluating potential 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.
In early 2007, we announced several initiatives to further improve our competitiveness and industry
leadership 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, and approximately 1,350 employees primarily in our U.S. car rental operations, with much
smaller reductions occurring in our U.S. equipment rental operations, as well as in Canada, Puerto Rico,
Brazil, Australia and New Zealand. In June 2007, we announced targeted reductions affecting
approximately 480 positions in our U.S. car and equipment rental operations, as well as financial and
reservations-related positions in our U.S. service center in Oklahoma City, Oklahoma. During 2007, we
began to implement cost saving initiatives in our European operations, and we continued
implementation of these measures in 2008. Additionally, during the fourth quarter of 2007, we finalized or
substantially completed contract terms with industry leading service providers to outsource select
functions globally, relating to real estate facilities management and construction, procurement and
information technology. The contracts related to these outsourced functions were completed during the
first quarter of 2008. In the first quarter of 2008, to continue improving our competitiveness and industry
position, we initiated job reductions affecting approximately 950 employees in our U.S. and European
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.
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.
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