Avis 2007 Annual Report Download - page 87

Table of Contents
2005 Restructuring
In 2005, the Company recorded $26 million of restructuring charges as a result of activities undertaken following the PHH spin-
off and the
initial public offering of Wright Express. The restructuring activities were targeted principally at reducing costs, enhancing organizational
efficiency and consolidating and rationalizing existing processes and facilities. The more significant areas of cost reduction included the
closure of a call center and field locations of the Company’s Truck Rental business and reductions in staff within the Company’s corporate
functions. The initial charge recorded in the Company’s Corporate and Other, Truck Rental and Domestic Car Rental segments amounted
to $19 million, $5 million and $2 million, respectively. During fourth quarter 2006, the Company recorded a $2 million charge
representing a revision to its original estimate of costs to exit a lease in connection with the closure of a truck rental facility in first quarter
2005. As of December 31, 2007, there is a remaining liability of $2 million, primarily relating to obligations under terminated leases.
The initial recognition of the restructuring charges and the corresponding utilization from inception are summarized by category as
follows:
Personnel
Related
Facility
Related
Asset
Impairments
Total
2005 Restructuring initial charge
$
20
$
5
$
1
$
26
Cash payment
(15
)
(2
)
-
(17
)
Other reductions
(a)
(5
)
-
(1
)
(6
)
Balance as of December 31, 2005
-
3
-
3
2005 Restructuring charge
-
2
-
2
2006 Restructuring initial charge
(b)
4
4
-
8
2005 Restructuring cash payment
-
(2
)
-
(2
)
2006 Restructuring cash payment
-
(1
)
-
(1
)
Balance as of December 31, 2006
4
6
-
10
2005 Restructuring cash payment
-
(1
)
-
(1
)
2006 Restructuring cash payment
(4
)
(3
)
-
(7
)
Balance as of December 31, 2007
$
-
$
2
$
-
$
2
(a )
Other reductions to charges recorded for personnel-
related costs represents the accelerated vesting of restricted stock units previously
granted to individuals who were terminated and write-offs of leasehold improvements in connection with lease terminations.
F
-
24
(b)
The initial charge primarily represents severance benefits resulting from reductions in staff and costs incurred in connection with
facility closures and lease obligations resulting from the closure of the Truck Rental headquarters, consolidation of Truck Rental
operations and the closure of other facilities within the Company’s Domestic Car Rental operations. Prior to December 31, 2006, the
Company formally communicated the termination of employment to approximately 180 employees, representing a wide range of
employee groups. As of December 31, 2007, the Company had terminated substantially all of these employees.