Avis 2007 Annual Report Download - page 25

Table of Contents
The exercise of our option to purchase a majority interest in Carey Holdings, Inc., or future acquisitions of existing Avis or Budget
franchisees or other businesses, could have an adverse impact on our results of operations.
We have an option to purchase additional interests which would increase our total ownership to approximately 80% of the common stock of
Carey Holdings, Inc., which option expires October 23, 2008. Our decision to exercise this option may involve numerous risks, including those
associated with integrating Carey’s operations, technology and personnel into our business, potential disruption of our ongoing business and
distraction of management, and exposure to existing as well as unknown liabilities, including litigation involving Carey. Exercise of the option
is subject to certain conditions, which would likely include assumption or repayment of Carey’s existing debt facility. Our acquisition of Carey
may not be accretive to our earnings and may negatively impact our balance sheet or results of operations. In the future, we may also decide to
acquire or invest in other businesses (including the acquisition of existing franchisees), some of which may be significant, and which
acquisitions or investments may involve the same or similar risks.
We face risks arising from our heavy reliance on communications networks and centralized information systems.
We rely heavily on information systems, including our reservation system, to accept reservations, process rental and sales transactions, manage
our fleet of vehicles, account for our activities and otherwise conduct our business. We have centralized our information systems, and we rely
on communications service providers to link our systems with the business locations these systems serve. A failure of a major system, or a
major disruption of communications between the system and the locations it serves, could cause a loss of reservations, interfere with our ability
to manage our fleet, slow rental and sales processes, and otherwise materially adversely affect our ability to manage our business effectively.
Our systems’ business continuity plans and insurance programs are designed to mitigate such a risk, not eliminate it.
In addition, because our systems contain personally identifiable non-public information about millions of individuals and businesses, our
failure to maintain the security of the data we hold, whether as a result of our own error or the actions of others, could harm our reputation, give
rise to legal liabilities leading to lower revenue and increased costs or otherwise adversely impact our results of operations.
We face risks related to liability and insurance.
Our businesses expose us to claims for personal injury, death and property damage related to the use of our vehicles and for workers’
compensation claims and other employment-related claims by our employees. We may become exposed to uninsured liability at levels in
excess of our historical levels resulting from unusually high losses or otherwise. In addition, liabilities in respect of existing or future claims
may exceed the level of our reserves and/or our insurance, and we may not have sufficient capital available to pay any uninsured claims.
Furthermore, insurance with unaffiliated carriers may not continue to be available to us on economically reasonable terms or at all.
Environmental regulations could subject us to liability for fines or damages.
We are subject to federal, state, local and foreign environmental laws and regulations in connection with our operations, including, among other
things, with respect to the ownership and operation of tanks for the storage of petroleum products, such as gasoline, diesel fuel and motor and
waste oils. We have established a compliance program for our tank systems that is intended to ensure that the tanks are properly registered with
the state or other jurisdiction in which the tanks are located and have been either replaced or upgraded to meet applicable leak detection and
spill, overfill, corrosion protection and vapor recovery requirements. These tank systems may not at all times remain free from undetected
leaks, and the use of these tanks may result in significant spills.
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