Avis 2011 Annual Report Download - page 20

14
Form 10-Q, Form 10-K and Form 11-K; proxy materials; ownership reports for insiders as required by Section 16 of the
Securities Exchange Act of 1934; registration statements and other forms or reports as required. Certain of the Company’s
officers and directors also file statements of changes in beneficial ownership on Form 4 with the SEC. The public may read
and copy any materials that the Company has filed with the SEC at the SEC’s Public Reference Room located at 100 F
Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by
calling the SEC at 800-SEC-0330. Such materials may also be accessed electronically on the SEC’s Internet site
(www.sec.gov). The Company maintains a website (avisbudgetgroup.com) and copies of our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 reports and any amendments to these reports filed
or furnished with the SEC are available free of charge in the Investor Relations section of our website, as soon as reasonably
practicable after filing with the SEC. Copies of our Codes of Conduct and Ethics, as defined under Item 406 of Regulation S-
K, including any amendments thereto or waivers thereof, Corporate Governance Guidelines, Director Independence Criteria
and Board Committee Charters are also available on our website. The information contained on the Company’s website is not
included in, or incorporated by reference into, this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
The following is a cautionary discussion of the most significant risks, uncertainties and assumptions that we believe are
significant to our business and should be considered carefully in conjunction with all of the other information set forth in this
Annual Report on Form 10-K. In addition to the factors discussed elsewhere in this report, the factors described in this item
could, individually or in the aggregate, cause our actual results to differ materially from those described in any forward-
looking statements. Should unknown risks or uncertainties materialize or underlying assumptions prove inaccurate, actual
results could materially differ from past results and/or those anticipated, estimated or projected. Achievement of future
results is subject to risks, uncertainties and potentially inaccurate assumptions. Past financial performance may not be a
reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future
periods.
Risks Related to Our Business
The high level of competition in the vehicle rental industry may lead to reduced rental volumes and increased pricing
pressure, which could have an adverse impact on our results of operations.
The vehicle rental industry in which we operate is highly competitive. We believe that price is one of the primary competitive
factors in the vehicle rental industry. Our competitors may seek to compete aggressively on the basis of pricing. We risk
losing rental volume to the extent that our competitors reduce their pricing and we do not match or remain within a
reasonably competitive margin of our competitors’ pricing, or if price increases we seek to implement make us less
competitive. We could be further impacted if we are unable to adjust the size of our rental fleet in response to fluctuations in
demand.
The risk of competition on the basis of pricing in the truck rental industry can be even more intense than in the car rental
industry because it can be more difficult to reduce the size of our truck rental fleet in response to reduced demand. The
Internet has increased pricing transparency among vehicle rental companies by enabling cost-conscious customers to more
easily obtain and compare the rates available from various vehicle rental companies for any given rental. This transparency
may increase the prevalence and intensity of price competition in the future.
We face risks of increased fleet costs, both generally and due to the possibility that manufacturers could change or
cease their repurchase or guaranteed depreciation programs.
Fleet costs, which represent our single largest expense, represented approximately 23% of our aggregate operating expenses
for 2011 and can vary from year to year based on the prices at which we are able to purchase and dispose of rental vehicles.
In 2011, on average approximately 47% of our rental car fleet was comprised of vehicles subject to agreements requiring
automobile manufacturers to repurchase them or guarantee the depreciation rate for a specified period of time. We refer to
such agreements as “programs” and to cars subject to such agreements as “program cars.” Under these programs, automobile
manufacturers agree to repurchase cars at a specified price during a specified time period or guarantee the rate of depreciation
for a specified period of time, typically subject to certain car condition and mileage requirements. These programs therefore
enable us to determine, in advance, our depreciation expense, which is a significant component of our fleet costs. These
programs also limit the risk to us that the market value of a car, at the time of its disposition, will be less than its estimated
residual (or depreciated) value; however, as discussed below, such programs result in additional exposure to the
manufacturers with whom we have such agreements.