Hertz 2009 Annual Report Download - page 52

ITEM 1A. RISK FACTORS (Continued)
2010 fuel prices will increase 20.8%. Significant increases in fuel prices, fluctuations in fuel supplies or
imposition of mandatory allocations or rationing of fuel, could negatively impact our car rental business
by directly discouraging consumers from renting cars or disrupting air travel, on which a significant
portion of our car rental business relies. In addition, significant increases in fuel prices and/or a reduction
in fuel supplies could negatively impact our equipment rental business by increasing the cost of buying
new equipment, since fuel is used in the manufacturing process and in delivering equipment to us, and
by reducing the mobility of our fleet, due to higher costs of transporting equipment between facilities or
regions. Accordingly, significant increases in fuel prices or a severe or protracted disruption in fuel
supplies could have a material adverse effect on our financial condition and results of operations.
Our foreign operations expose us to additional risks that may materially adversely affect our results
of operations.
A significant portion of our annual revenues are generated outside the United States, and we intend to
pursue additional international growth opportunities. Operating in a large number of different regions
and countries exposes us to varying risks, as well as multiple and often conflicting foreign regulatory
requirements that are also subject to change. Some of those risks include:
•Multiple foreign regulatory requirements and laws that are often much different than the domestic
laws in the United States, including laws relating to the protection of our trademarks and other
intellectual property;
•The effect of foreign currency translation risk, as well as limitations on our ability to repatriate
income;
•Varying tax regimes, including consequences from changes in applicable tax laws;
•Local ownership and/or investment requirements, as well as difficulties in obtaining financing in
foreign countries for local operations; and
• Political and economic instability, natural calamities, war, and terrorism.
The effects of these risks may, individually or in the aggregate, materially and adversely affect our results
of operations and ability to diversify internationally.
Manufacturer safety recalls could create risks to our business.
Our cars may be subject to safety recalls by their manufacturers. For example, in early 2010 Toyota
announced recalls. Under certain circumstances, the recalls may cause us to attempt to retrieve cars
from renters, and/or to decline to re-rent returned cars until we can arrange for the steps described in the
recalls to be taken. We could also face liability claims if recalls affect cars that we have already sold. 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. Those types
of disruptions could jeopardize our ability to fulfill existing contractual commitments and/or satisfy
demand for our vehicles, and could also result in the loss of business to our competitors. Depending on
the severity of any 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.
Our business is heavily reliant upon 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
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