Hertz 2013 Annual Report Download - page 28

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Our foreign operations expose us to risks that may materially adversely affect our results of operations, liquidity and cash
flows.
A significant portion of our annual revenues are generated outside the United States, and we intend to pursue additional international growth
opportunities. Operating in many different countries exposes us to varying risks, which include: (i) multiple, and sometimes conflicting,
foreign regulatory requirements and laws that are subject to change and are often much different than the domestic laws in the United States,
including laws relating to taxes, automobile-related liability, insurance rates, insurance products, consumer privacy, data security,
employment matters, cost and fee recovery, and the protection of our trademarks and other intellectual property; (ii) the effect of foreign
currency translation risk, as well as limitations on our ability to repatriate income; (iii) varying tax regimes, including consequences from
changes in applicable tax laws; (iv) local ownership or investment requirements, as well as difficulties in obtaining financing in foreign
countries for local operations; and (v) political and economic instability, natural calamities, war, and terrorism. The effects of these risks may,
individually or in the aggregate, materially adversely affect our results of operations, liquidity, cash flows 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. A recall may cause us to retrieve cars from renters and decline to rent
recalled cars until we can arrange for the steps described in the recall to be taken. We could also face liability claims if a recall affects cars that
we have sold. If a large number of cars are the subject of a recall or if needed replacement parts are not in adequate supply, we may not be
able to rent recalled cars for a significant period of time. Those types of disruptions could jeopardize our ability to fulfill existing contractual
commitments 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 recalled
cars and harm our general reputation.
Our business is heavily reliant upon communications networks and centralized information technology systems and the
concentration of our systems creates risks for us.
We rely heavily on communication networks and information technology systems to accept reservations, process rental and sales
transactions, manage our fleets of cars and equipment, manage our financing arrangements, account for our activities and otherwise conduct
our business. Our reliance on these networks and systems exposes us to various risks that could cause a loss of reservations, interfere with
our ability to manage our fleet, slow rental and sales processes, comply with our financing arrangements and otherwise materially adversely
affect our ability to manage our business effectively. Our major information technology systems, reservations and accounting functions are
centralized in a few locations worldwide. Any disruption, termination or substandard provision of these services, whether as the result of
localized conditions (such as a fire, explosion or hacking) 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 information technology functions or by eliminating access to financing arrangements.
The misuse or theft of information we possess could harm our brand, reputation or competitive position and give rise to
material liabilities.
Because we regularly possess, store and handle non-public information about millions of individuals and businesses, our failure to maintain
the security of that data, whether as the result of our own error or the malfeasance or errors of others, could harm our reputation, result in
governmental investigations and give rise to a host of civil or criminal liabilities. Any such failure could lead to lower revenues, increased
remediation, prevention and other costs and other material adverse effects on our results of operations.
Maintaining favorable brand recognition is essential to our success, and failure to do so could materially adversely affect our
results of operations.
While our ''Hertz'', “Dollar” and “Thrifty” brand names have substantial brand recognition in the markets in which they participate, factors
affecting brand recognition are often outside our control, and our efforts to maintain or enhance favorable brand recognition, such as
marketing and advertising campaigns, may not have their desired effects. In addition, although our licensing partners are subject to
contractual requirements to protect our brands, it may be difficult to monitor or enforce such requirements, particularly in foreign jurisdictions.
Any decline in perceived favorable recognition of our brands could materially adversely affect our results of operations.
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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