Avis 2013 Annual Report Download - page 41

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deductions, which would adversely impact our financial condition or results of operations by reducing or
eliminating deferral of federal or state income taxes allowed for our U.S. vehicle rental fleet.
We face risks related to our protection of our intellectual property.
We have registered “Avis,” “Budget,” “Zipcar” and “Payless” and various related marks or designs, such as “We
try harder,” and “wheels when you want them,” as trademarks in the United States and in certain other countries.
At times, competitors may adopt service names similar to ours, thereby impeding our ability to build brand identity
and possibly leading to market confusion. In addition, there could be potential trade name or trademark
infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of
our registered trademarks. From time to time, we have acquired or attempted to acquire Internet domain names
held by others when such names have caused consumer confusion or had the potential to cause consumer
confusion.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names,
copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of
resources and could adversely impact our financial condition or results of operations.
We face risks related to our reliance on former subsidiaries to fulfill their obligations under the
agreements related to their disposition.
We continue to manage the administration of certain legacy items which remain following our sales and spin-offs
of several significant subsidiaries, including the spin-offs of Realogy Corporation (“Realogy”) and Wyndham
Worldwide Corporation (“Wyndham Worldwide”). Realogy and Wyndham Worldwide have agreed to take
responsibility or indemnify us for 62.5% and 37.5%, respectively, of certain contingent and other of our corporate
liabilities including those relating to unresolved tax and legal matters as well as 100% of certain liabilities that
relate to their respective businesses (the “Assumed Obligations”), including (i) all taxes imposed on us and certain
of our subsidiaries and (ii) certain of our contingent and other corporate liabilities and/or those of our subsidiaries
to the extent incurred prior to August 23, 2006. If either Realogy or Wyndham Worldwide were to default in its
payment, when due, of any such Assumed Obligations, each non-defaulting party, including us, would be required
to pay an equal portion of the defaulted amounts, and any such default may adversely impact our financial
condition or results of operations. In conjunction with such indemnification, Realogy effectively controls the
process for resolving disputes related to many of the Assumed Obligations. Realogy, Wyndham Worldwide and/or
other separated companies are also required to indemnify us in respect of certain liabilities that relate to their
respective businesses, including certain effective guarantees that result from either us or one of our subsidiaries
remaining a named lessee on real estate leases pertaining to properties occupied by the separated companies as
well as certain litigation that pertains to the businesses of such companies in which we are also named. Any
failure by the separated companies to pay any of their assumed liabilities when due or to indemnify us when
required may adversely impact our financial condition or results of operations.
RISKS RELATED TO OUR INDEBTEDNESS
We face risks related to our current and future debt obligations.
Our ability to satisfy and manage our debt obligations depends on our ability to generate cash flow and on overall
financial market conditions. To some extent, this is subject to prevailing economic and competitive conditions and
to certain financial, business and other factors, many of which are beyond our control. Our total debt as of
December 31, 2013, was $10.7 billion, requiring us to dedicate a significant portion of our cash flows to pay
interest and principal on our debt, which reduces the funds available to us for other purposes. Our business may
not generate sufficient cash flow from operations to permit us to service our debt obligations and meet our other
cash needs, which may force us to reduce or delay capital expenditures, sell or curtail assets or operations, seek
additional capital or seek to restructure or refinance our indebtedness. If we must sell or curtail our assets or
operations, it may negatively affect our ability to generate revenue. Certain of our indebtedness contains
restrictive covenants and provisions applicable to us and our subsidiaries that limit our ability to, among other
things:
• incur additional debt to fund working capital, capital expenditures, debt service requirements, execution of
our business strategy or acquisitions and other purposes;