Avis 2009 Annual Report Download - page 81

Table of Contents
2008 Restructuring Initiative
During 2008 and 2009, the Company implemented various strategic initiatives within the Company’s Domestic Car Rental, International
Car Rental and Truck Rental segments as part of its five-point cost-reduction and efficiency improvement plan announced in November
2008. These initiatives are targeted principally at reducing costs, enhancing organizational efficiency and consolidating and rationalizing
existing processes and facilities. As part of the five-point plan, during the years ended December 31, 2009 and 2008, the Company
eliminated approximately 2,250 and approximately 3,000 positions, respectively, resulting in the termination of approximately 1,750 and
approximately 2,300 employees, respectively, within the Company’s Domestic Car Rental, International Car Rental and Truck Rental
segments, and the closure and consolidation of certain facilities, including data center, back-office administrative locations and local market
vehicle rental locations. The Company recorded restructuring charges of $48 million in connection with these initiatives, $20 million in
2009 and $28 million in 2008, the majority of which is anticipated to be cash and $44 million of which has either been paid or utilized as of
December 31, 2009. These charges primarily represent severance, outplacement services and other costs associated with employee
terminations. At December 31, 2009, the remaining liability relating to this 2008 restructuring initiative amounted to $4 million, primarily
for lease obligation costs, which are expected to be paid through 2011. The Company anticipates that these initiatives will be completed
prior to December 31, 2010 and expects to incur additional restructuring costs of approximately $13 million during 2010, which will
effectively end activities under the 2008 restructuring initiative and five-point plan.
2006 Restructuring Initiative
In 2006, the Company committed to various strategic initiatives targeted principally at reducing costs, enhancing organizational efficiency
and consolidating and rationalizing existing processes and facilities within its Budget Truck Rental and Domestic Car Rental operations. The
more significant areas of cost reduction included the closure of the Budget Truck Rental headquarters and other facilities and reductions in
staff. The Company recorded $8 million of restructuring charges in connection with these initiatives, of which $6 million and $2 million was
incurred within the Company’s Truck Rental and Domestic Car Rental operations, respectively. The remaining liabilities related to the 2006
restructuring charges were paid in 2007.
2005 Restructuring Initiative
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. In 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,
2009, there is a remaining liability of approximately $1 million, relating to obligations under terminated leases which is expected to be
substantially completed by December 31, 2011.
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5.
Restructuring Charges