Hertz 2013 Annual Report Download - page 33

Table of Contents
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arrangements. Therefore, we would need to raise refinancing indebtedness, which may not be available to us on favorable terms, on a
timely basis or at all. This could have serious consequences to our financial condition and results of operations and could cause us to become
bankrupt or insolvent. Additionally, such defaults could require us to sell assets, if possible, and otherwise curtail our operations in order to
pay our creditors. Such alternative measures could have a material adverse effect on our business, financial condition, cash flows and
results of operations.
An increase in interest rates or in our borrowing margin would increase the cost of servicing our debt and could reduce our
profitability.
A significant portion of our outstanding debt bears interest at floating rates. As a result, to the extent we have not hedged against rising
interest rates, an increase in the applicable benchmark interest rates would increase our cost of servicing our debt and could materially
adversely affect our liquidity and results of operations.
In addition, we regularly refinance our indebtedness. If interest rates or our borrowing margins increase between the time an existing
financing arrangement was consummated and the time such financing arrangement is refinanced, the cost of servicing our debt would
increase and our liquidity and results of operations could be materially adversely affected.
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Combining the businesses of Hertz and Dollar Thrifty may be more difficult, costly or time-consuming than expected, which
may adversely affect our results.
To realize the anticipated benefits and cost savings we contemplated as part of the acquisition of Dollar Thrifty, we must successfully combine
and integrate our business with Dollar Thrifty 's business in an efficient and effective manner. If we are not able to achieve these objectives
within the anticipated time frame, or at all, the anticipated benefits and cost savings of the acquisition may not be realized fully, or at all, or
may take longer to realize than expected. It is possible that the overall integration process could result in the loss of key employees, the
disruption of each company's ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect our
ability to maintain relationships with customers, employees, suppliers, lenders and franchisees or to achieve the anticipated benefits of the
acquisition.
Integration efforts between the two companies will also divert management attention and resources. An inability to realize the full extent of the
anticipated benefits of the acquisition, as well as any delays encountered in the integration process, could have an adverse effect upon the
revenues, level of expenses and operating results of Hertz after the completion of the acquisition.
In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may
not be realized. Actual synergies, if achieved at all, may be lower than what we expect and may take longer to achieve than anticipated. If we
are not able to adequately address these challenges, we may be unable to successfully integrate Dollar Thrifty.
We incurred significant transaction and acquisition-related costs in connection with the acquisition of Dollar Thrifty and expect
to incur additional costs in connection with the integration of Dollar Thrifty 's operations.
Hertz has incurred and expects to continue to incur a number of non-recurring costs associated with combining the operations of the two
companies. Most of these costs have been and will be comprised of transaction costs related to the Dollar Thrifty acquisition, facilities, fleet
and systems consolidation costs and employment-related costs. We also incurred transaction fees and costs related to formulating integration
plans. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of
the businesses, should allow us to offset the previously-incurred incremental transaction and acquisition-related costs over time, this net
benefit may not be achieved in the near term, or at all.
Future results of the combined company may differ materially from the Unaudited Pro Forma Financial Information of Hertz and
Dollar Thrifty presented in this annual report.
The future results of Hertz, as the combined company following the Dollar Thrifty acquisition, may be materially different from those shown
in the pro forma financial information presented in Note 4 to the Notes to our audited annual consolidated financial statements included in
this Annual Report under the caption “Item 8—Financial Statements and Supplementary Data" that reflect such results on a pro forma basis
after giving effect only to: (i) the acquisition of Donlen by Hertz in September 2011, (ii) the Dollar Thrifty acquisition in November 2012, (iii)
the divestiture of Advantage, (iv) the divestitures of the Initial airport locations and the Secondary airport locations (as defined herein), (v) the
issuance of the 2020 Notes and the 2022 Notes and (vi) the incurrance of $750.0 million in Incremental Term Loans; in each
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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