Hertz 2012 Annual Report Download - page 60

ITEM 1A. RISK FACTORS (Continued)
policies and affairs for so long as the investment funds associated with or designated by the Sponsors
continue to hold a significant amount of Hertz Holdings’ common stock. There can be no assurance that
the interests of the Sponsors will not conflict with those of Hertz Holdings’ other stockholders. The
Sponsors currently have the ability to significantly influence the vote on any transaction that requires the
approval of stockholders, including many possible change in control transactions, and may discourage
or prevent any such transaction regardless of whether or not Hertz Holdings’ other stockholders believe
that such a transaction is in Hertz Holdings’ or their own best interests.
Additionally, the Sponsors may from time to time acquire and hold interests in businesses that compete
directly with us. One or more of the Sponsors may also pursue acquisition opportunities and other
corporate opportunities that may be complementary to our business and as a result, those opportunities
may not be available to us.
Risks Related to Our Substantial Indebtedness
Our substantial level of indebtedness could materially adversely affect our results of operations,
cash flows, liquidity and ability to compete in our industry.
As of December 31, 2012, we had debt outstanding of $15,448.6 million, which includes the
indebtedness incurred in connection with the acquisition of Dollar Thrifty. Our substantial indebtedness
could materially adversely affect us. For example, it could: (i) make it more difficult for us to satisfy our
obligations to the holders of our outstanding debt securities and to the lenders under our various credit
facilities, resulting in possible defaults on, and acceleration of, such indebtedness; (ii) be difficult to
refinance or borrow additional funds in the future; (iii) require us to dedicate a substantial portion of our
cash flows from operations and investing activities to make payments on our debt, which would reduce
our ability to fund working capital, capital expenditures or other general corporate purposes;
(iv) increase our vulnerability to general adverse economic and industry conditions (such as credit-
related disruptions), including interest rate fluctuations, because a portion of our borrowings are at
floating rates of interest and are not hedged against rising interest rates, and the risk that one or more of
the financial institutions providing commitments under our revolving credit facilities fails to fund an
extension of credit under any such facility, due to insolvency or otherwise, leaving us with less liquidity
than expected; (v) place us at a competitive disadvantage to our competitors that have proportionately
less debt or comparable debt at more favorable interest rates or on better terms; and (vi) 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. While the terms of the
agreements and instruments governing our outstanding indebtedness contain certain restrictions upon
our ability to incur additional indebtedness, they do not fully prohibit us from incurring substantial
additional indebtedness and do not prevent us from incurring obligations that do not constitute
indebtedness. If new debt or other obligations are added to our current liability levels without a
corresponding refinancing or redemption of our existing indebtedness and obligations, these risks
would increase. For a description of the amounts we have available under certain of our debt facilities,
see ‘‘Item 7—Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources—Credit Facilities’’ included in this annual report for the
year ended December 31, 2012 and ‘‘Note 5—Debt’’ to the consolidated financial statements included in
this Annual Report.
Our ability to manage these risks depends on financial market conditions as well as our financial and
operating performance, which, in turn, is subject to a wide range of risks, including those described
under ‘‘—Risks Related to Our Business’’ included in this Annual Report.
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