Thrifty Car Rental 2006 Annual Report Download - page 23

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requirements are met by the manufacturer except, on occasion, equipment failure requiring repair by the
Company.
Environmental legislation and regulations and related administrative policies have changed rapidly in
recent years. There is a risk that governmental environmental requirements, or enforcement thereof, may
become more stringent in the future and that the Company may be subject to additional legal proceedings
at other locations brought by government agencies or private parties for environmental matters. In
addition, with respect to cleanup of contamination, additional locations at which wastes generated by the
Company may have been released or disposed, and of which the Company is currently unaware, may in
the future become the subject of cleanup for which the Company may be liable, in whole or part.
Accordingly, while the Company believes that it is in substantial compliance with applicable requirements
of environmental laws, there can be no assurance that the Company’s future environmental liabilities will
not be material to the Company’s consolidated financial position or results of operations or cash flows.
Employees
As of December 31, 2006, the Company employed a total of approximately 8,500 full-time and part-time
employees. Approximately 260 of the Company’s employees were subject to collective bargaining
agreements as of December 31, 2006. The Company believes its relationship with its employees is good.
ITEM 1A. RISK FACTORS
Expanding upon the factors discussed in the Forward-Looking Statements section provided at the
beginning of this Annual Report on Form 10-K, the following are important factors that could cause actual
results or events to differ materially from those contained in any forward-looking statements that we
made. In addition, not all risks and uncertainties are described below. Risks that we do not know about
could arise and issues we now view as minor could become more important. If we are unable to
adequately respond to any of these risks, our financial condition and results of operations could be
materially adversely affected.
Economic Conditions
Our results are affected by general economic conditions in the United States and Canada. A poor
economy has historically led to a decline in both business and leisure travel and to lower demand for
rental vehicles resulting in lower industry revenues. We have the flexibility to reduce our rental fleet size
in the event of an unexpected reduction in rental demand, which partially offsets the related reduction in
revenues. The disposal of vehicles for which we retain the used car market value risk will be subject to
prevailing market prices.
Highly Competitive Nature of the Vehicle Rental Industry
There is intense competition in the vehicle rental industry, especially on price and service. The Internet
has increased brand exposure and gives more details on rental prices to consumers and increases price
competition. The vehicle rental industry primarily consists of eight major brands, all of which compete
strongly for rental customers. A significant increase in industry capacity or a reduction in overall demand
could adversely affect our ability to maintain or increase rental rates or market share.
Seasonality
Our business is subject to seasonal variations in customer demand, with the summer vacation period
representing the peak season for vehicle rentals. In 2006, the third quarter accounted for over 29% of our
vehicle rental revenues and over 32% of our operating income, while the second quarter accounted for
over 25% of our vehicle rental revenues and over 30% of our operating income. Any event that disrupts
rental activity during these quarters could have a disproportionately material adverse effect on our
liquidity, our cash flows and/or our results of operations.
Dependence on Air Travel
We get approximately 90% of our rental revenues from airport locations and airport arriving customers.
The number of airline passengers has a significant impact on our business. Mergers and acquisitions in
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