Hertz 2015 Annual Report Download - page 32

Table of Contents



We have moved aggressively to pursue opportunities to deliver cost savings, increase our efficiency and regain customer loyalty. If we are
unsuccessful in taking advantage of these opportunities, we may be unable to align our cost structure to lower levels of demand, which could
depress our margins and negatively impact our ability to effectively compete. In addition, some internet travel intermediaries use generic indicators
of the type of vehicle (such as “standard” or “compact”) at the expense of brand identification and some intermediaries have launched their own
loyalty programs to develop loyalties to their reservation system rather than to our brands. If the volume of sales made through internet travel
intermediaries increases significantly and consumers develop stronger loyalties to these intermediaries rather than to our brands, our business and
revenues could be harmed. If our market share suffers due to lower levels of customer loyalty, our financial results could suffer.


We review our goodwill and indefinite lived intangible assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of these assets may not be recoverable and at least annually. If economic deterioration occurs, then we may be required to record
charges for goodwill or indefinite lived intangible asset impairments in the future, which could have a material adverse non-cash impact on our
results of operations.

A significant portion of our annual revenues are generated outside the U.S., 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 U.S., 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. Operating in many different countries also increases the risk of a violation, or alleged violation, of the United States
Foreign Corrupt Practices Act. 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.

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. 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.
   

We rely heavily on communication networks and information technology systems to accept reservations, process rental and sales transactions,
manage our pricing, 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, adversely affect our ability to 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
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except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.