Hertz 2009 Annual Report Download - page 78

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
As part of our ongoing effort to implement our strategy of reducing operating costs, we have evaluated
our workforce and operations and made adjustments, including headcount reductions and business
process re-engineering resulting in optimized work flow at rental locations and maintenance facilities as
well as streamlined our back-office operations and evaluated potential outsourcing opportunities. When
we made adjustments to our workforce and operations, we incurred incremental expenses that delay the
benefit of a more efficient workforce and operating structure, but we believe that increased operating
efficiency and reduced costs associated with the operation of our business are important to our
long-term competitiveness.
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 incurred 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 of 2008.
During the first and second quarters of 2009, our equipment rental business incurred charges mainly for
losses on disposal of surplus equipment and recognition of facility lease obligations related to previously
announced U.S. branch closures that were completed during the quarters. Our North American and
European car rental businesses incurred charges mainly for facility lease obligations related to
previously announced off-airport location closures that were completed during the quarters. In the first
quarter of 2009, our European car rental business also eliminated certain specialty rental equipment as a
future cost reduction initiative and incurred related lease termination costs. The first and second quarter
2009 restructuring charges included employee termination liabilities covering approximately 500 and
600 employees, respectively.
During the third and fourth quarters of 2009, our equipment rental business incurred charges mainly for
costs related to facility lease obligations for previously closed branches and additional losses on the
disposal of remaining surplus equipment related to these locations. Our European car rental business
incurred employee termination benefits costs associated with the migration of work to the European
shared service center and the creation of two regions within Europe to manage our European country
operations. Additionally, in the third quarter of 2009, our European car rental business recognized a loss
on sale of a building due to reduced office space needs resulting from headcount reductions. The third
and fourth quarter 2009 restructuring charges included employee termination liabilities covering
approximately 300 and 250 employees, respectively.
For further information on actions taken in 2007 and 2008, see Note 11 to the Notes to our consolidated
financial statements included in this Annual Report under caption ‘‘Item 8—Financial Statements and
Supplementary Data.’’
For the years ended December 31, 2009, 2008 and 2007, our consolidated statement of operations
includes restructuring charges relating to the initiatives discussed above of $106.8 million, $216.1 million
and $96.4 million, respectively.
Additional efficiency and cost saving initiatives are being developed in 2010. However, we presently do
not have firm plans or estimates of any related expenses. See Note 11 to the Notes to our consolidated
financial statements included in this Annual Report under caption ‘‘Item 8—Financial Statements and
Supplementary Data.’’
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