Avis 2006 Annual Report Download - page 26

Table of Contents
We require a significant amount of cash to service all of our indebtedness and our ability to generate sufficient cash depends on many
factors, some of which are beyond our control.
Our ability to make payments on and refinance our debt depends on our ability to generate cash flow. To some extent, this is subject to
prevailing economic and competitive conditions and to certain financial, business and other factors, some of which are beyond our control. Our
business may not generate cash flow from operations at levels sufficient to permit us to pay principal, premium, if any, and interest on our
indebtedness, and our cash needs may increase. If we are unable to generate sufficient cash flow from operations to service our debt and meet
our other cash needs, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure
or refinance our indebtedness. If we must sell our assets, it may negatively affect our ability to generate revenue.
Risks related to the separation
We have little recent operating history as a stand-alone vehicle rental company.
The financial information included in this annual report on Form 10-K does not reflect the financial condition, results of operations or cash
flows we would have achieved as a stand-alone vehicle rental company during the periods presented or those that we will achieve in the future.
This is primarily a result of the following factors:
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pay dividends or distributions or redeem or repurchase capital stock;
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prepay, redeem or repurchase debt;
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make loans, investments and capital expenditures;
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incur liens;
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make distributions from our subsidiaries;
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sell assets and capital stock of our subsidiaries; and
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consolidate or merge with or into, or sell substantially all of our assets to, another person.
• Prior to the completion of the Cendant Separation, the vehicle rental business was operated by Cendant as part of its broader
corporate organization, rather than as an independent company. Cendant or one of its affiliates performed various corporate functions
for our vehicle rental business, including, but not limited to, tax administration, certain governance functions (including compliance
with the Sarbanes-Oxley Act of 2002 and internal audit) and external reporting. Our financial results for all periods other than fourth
quarter 2006 for our operating segments reflect allocations of corporate expenses from Cendant for these and similar functions. These
allocations may be more or less than the comparable expenses we would have incurred had we operated as a stand-alone vehicle
rental company during those periods.
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Generally, prior to completion of the Cendant Separation, working capital requirements and capital for general corporate purposes for
the vehicle rental business, including acquisitions and capital expenditures, were historically satisfied as part of the corporate-wide
cash management policies of Cendant’s broader corporate organization. With the completion of the Cendant Separation, we will not
have access to the cash generated by the businesses of Realogy, Wyndham Worldwide or Travelport in order to finance our working
capital or other cash requirements (except for obligations of these entities to make payments to us for certain specified items).
Without access to the cash generated by these companies, we may need to obtain additional financing from banks, or through public
offerings or private placements of debt or equity securities, strategic relationships or other arrangements.