Avis 2012 Annual Report Download - page 70

F-14
Recently Issued Accounting Pronouncements
On January 1, 2013, as a result of the issuance of a new accounting pronouncement, the Company adopted ASU No.
2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”, which provides companies the option to first
assess qualitative factors to determine whether there are events or circumstances which would lead to a determination
that it is more likely than not that the indefinite-lived intangible asset is impaired, and it did not have a significant impact
on the Company’s financial statements.
3. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share (“EPS”):
Year Ended December 31,
2012
2011 (a)
2010
Net income (loss) for basic EPS
$
290
$
(29)
$
54
Convertible debt interest, net of tax
4
-
7
Net income (loss) for diluted EPS
$
294
$
(29)
$
61
Basic weighted average shares outstanding
106.6
105.2
103.1
Options, warrants and non-vested stock
2.5
-
2.4
Convertible debt
12.5
-
21.2
Diluted weighted average shares outstanding
121.6
105.2
126.7
Earnings (loss) per share:
Basic
$
2.72
$
(0.28)
$
0.53
Diluted
$
2.42
$
(0.28)
$
0.49
__________
(a) As the Company incurred a net loss in 2011, all outstanding stock options, restricted stock units, stock warrants and issuable
shares underlying the convertible notes have an anti-dilutive effect and therefore are excluded from the computation of diluted
weighted average shares outstanding. Accordingly, basic and diluted weighted average shares outstanding are equal for such
period.
The following table summarizes the Company’s outstanding common stock equivalents that were anti-dilutive and
therefore excluded from the computation of diluted EPS:
Year Ended December 31,
2012
2011
2010
Options (a)
0.2
3.4
1.4
Warrants (b)
7.9
21.2
21.2
Shares underlying convertible debt
-
21.2
-
__________
(a) Represents all outstanding stock options for 2011. The weighted average exercise price for anti-dilutive options for 2012 and
2010 was $17.12 and $23.28, respectively.
(b) Represents all outstanding warrants for 2012, 2011 and 2010. The exercise price for the warrants is $22.50.
4. Restructuring
During fourth quarter 2012, the Company initiated a strategic restructuring initiative to better position the business of its
Truck Rental segment, in which it will close certain rental locations and decrease the size of the rental fleet, which the
Company believes will increase fleet utilization and reduce costs. During the year ended December 31, 2012, as part of
this process, the Company recorded restructuring expense of $1 million. The Company expects further restructuring
expenses of approximately $12 million to be incurred in 2013 related to this initiative.
In fourth quarter 2011, subsequent to the acquisition of Avis Europe, the Company initiated a restructuring initiative,
identifying synergies across the Company, enhancing organizational efficiencies and consolidating and rationalizing
processes. During the years ended December 31, 2012 and 2011, as part of this process, the Company formally
communicated the termination of employment to approximately 550 and 50 employees, respectively. During 2012 and
2011, the Company recorded restructuring expenses in connection with these initiatives of $37 million and $3 million,
respectively, and the majority of which have been or are expected to be settled in cash. These expenses primarily
represent costs associated with severance, outplacement services and other costs associated with employee terminations.