Hertz 2008 Annual Report Download - page 60

ITEM 1A. RISK FACTORS (Continued)
Manufacturer safety recalls could create risks to our business.
Our cars may be subject to safety recalls by their manufacturers. Under certain circumstances, the
recalls may cause us to attempt to retrieve cars from renters or to decline to re-rent returned cars until we
can arrange for the steps described in the recalls to be taken. If a large number of cars are the subject of
simultaneous recalls, or if needed replacement parts are not in adequate supply, we may not be able to
re-rent recalled cars for a significant period of time. We could also face liability claims if recalls affect cars
that we have already sold. Depending on the severity of the recall, it could materially adversely affect our
revenues, create customer service problems, reduce the residual value of the cars involved and harm
our general reputation.
We face risks arising from our heavy reliance on communications networks and centralized
information technology systems.
We rely heavily on information technology systems to accept reservations, process rental and sales
transactions, manage our fleets of cars and equipment, account for our activities and otherwise conduct
our business. We have centralized our information technology systems in two redundant facilities in
Oklahoma City, Oklahoma, and we rely on communications service providers to link our systems with
the business locations these systems serve. A simultaneous loss of both facilities, or a major disruption
of communications between the systems and the locations they serve, could cause a loss of
reservations, interfere with our ability to manage our fleet, slow rental and sales processes and otherwise
materially adversely affect our ability to manage our business effectively. If we outsource key business
processes in the future, the outsourcing service providers may concentrate their activities on our behalf
at a small number of locations, entailing similar or potentially even greater risks. Our systems back-up
plans, business continuity plans and insurance programs are designed to mitigate such a risk, but they
do not eliminate it. In addition, because our systems contain information about millions of individuals
and businesses, our failure to maintain the security of the data we hold, whether the result of our own
error or the malfeasance or errors of others, could harm our reputation or give rise to legal liabilities
leading to lower revenues, increased costs and other material adverse effects on our results of
operations.
The concentration of our reservations, accounting and information technology functions at a
limited number of facilities in Oklahoma, Alabama and Ireland creates risks for us.
We have concentrated our reservations functions for the United States in two facilities, one in Oklahoma
City, Oklahoma, and one in Saraland (Mobile County), Alabama, and we have concentrated our
accounting functions for the United States in two facilities in Oklahoma City. We plan to close the
Saraland facility in mid-2009. We have concentrated reservations and accounting functions for our
European operations in a single facility near Dublin, Ireland. In addition, our major information
technology systems are centralized in two of our facilities in Oklahoma City. A disruption of normal
business at any of our principal facilities in Oklahoma City, Saraland or Dublin, whether as the result of
localized conditions (such as a fire or explosion) or as the result of events or circumstances of broader
geographic impact (such as an earthquake, storm, flood, epidemic, strike, act of war, civil unrest or
terrorist act), could materially adversely affect our business by disrupting normal reservations, customer
service, accounting and systems activities. If we outsource key business processes in the future, the
outsourcing service providers may concentrate their activities on our behalf at a small number of
locations, entailing similar or potentially greater risks. Our systems designs, business continuity plans
and insurance programs are designed to mitigate those risks, but do not eliminate them, and this is
particularly true with respect to events of broad geographic impact. In addition, there can be no
assurance such risks will be successfully mitigated.
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