Hertz 2007 Annual Report Download - page 63

• require us to dedicate a substantial portion of our cash flows from operations to make payments
on our debt, which would reduce the availability of our cash flows from operations to fund working
capital, capital expenditures or other general corporate purposes;
• increase our vulnerability to general adverse economic and industry conditions, including interest
rate fluctuations, because a portion of our borrowings, including under the agreements governing
our U.S. Fleet Debt and International Fleet Debt facilities and our Senior Credit Facilities, is at
variable rates of interest;
• place us at a competitive disadvantage to our competitors with proportionately less debt or
comparable debt at more favorable interest rates;
• limit our ability to refinance our existing indebtedness or borrow additional funds in the future;
• limit our flexibility in planning for, or reacting to, changing conditions in our business and industry;
and
• limit our ability to react to competitive pressures, or make it difficult for us to carry out capital
spending that is necessary or important to our growth strategy and our efforts to improve
operating margins.
Any of the foregoing impacts of our substantial indebtedness could have a material adverse effect on our
business, financial condition and results of operations.
Despite our current indebtedness levels, we and our subsidiaries may be able to incur substantially
more debt. This could further exacerbate the risks associated with our substantial indebtedness.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The
terms of the instruments governing our indebtedness do not prohibit us or fully prohibit our subsidiaries
from doing so. As of December 31, 2007, our Senior Credit Facilities provided us commitments for
additional aggregate borrowings (subject to borrowing base limitations) of approximately
$1,577.9 million, and permitted additional borrowings beyond those commitments under certain
circumstances. As of December 31, 2007, our U.S. Fleet Debt facilities, our Fleet Financing Facility,
International Fleet Debt facilities and our other fleet debt facilities (related to Brazil, Canada, Belgium and
the United Kingdom) provided us commitments for additional aggregate borrowings of approximately
$1,500.0 million, $103.0 million and the foreign currency equivalent of $885.6 million and $295.5 million,
respectively, subject to borrowing base limitations. If new debt is added to our current debt levels, the
related risks that we now face would increase. In addition, the instruments governing our indebtedness
do not prevent us or our subsidiaries from incurring obligations that do not constitute indebtedness. On
June 30, 2006, Hertz Holdings entered into a $1.0 billion loan facility in order to finance the payment of a
special cash dividend of $4.32 per share to its stockholders on June 30, 2006. Although this facility was
repaid in full with the proceeds from our initial public offering, we cannot assure you that Hertz Holdings
will not enter into similar transactions in the future.
We may not be able to generate sufficient cash to service all of our debt, and may be forced to take
other actions to satisfy our obligations under such indebtedness, which may not be successful.
Our ability to make scheduled payments on our indebtedness, or to refinance our obligations under our
debt agreements, will depend on the financial and operating performance of us and our subsidiaries,
which, in turn, will be subject to prevailing economic and competitive conditions and to the financial and
business risk factors, many of which may be beyond our control, as described under ‘‘—Risks Related to
Our Business’’ above.
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