Avis 2014 Annual Report Download - page 32

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Changes in our pricing agreements, commission schedules or arrangements with third-party distribution channels,
the termination of any of our relationships or a reduction in the transaction volume of such channels, or a GDS’s
inability to process and communicate reservations to us could have an adverse impact on our financial condition
or results of operations, particularly if our customers are unable to access our reservation systems through
alternate channels.
We face risks related to our leases and vehicle rental concessions.
We lease or have vehicle rental concessions at locations throughout the world, including at airports both in the
United States and internationally and train stations throughout Europe where vehicle rental companies are
frequently required to bid periodically for the available locations. If we were to lose any lease or vehicle rental
concession, particularly at an airport or a train station in a major metropolitan area, there can be no assurance
that we would be able to find a suitable replacement on reasonable terms and our business could be adversely
impacted.
We face risks related to the seasonality of our business.
In our business, the third quarter of the year has historically been our strongest quarter due to the increased level
of summer leisure travel and household moving activity. We vary our fleet size over the course of the year to help
manage seasonal variations in demand, as well as localized changes in demand that we may encounter in the
various regions in which we operate. In 2014, the third quarter accounted for 30% of our total revenue for the year
and was our most profitable quarter as measured by Adjusted EBITDA. Any circumstance or occurrence that
disrupts rental activity during the third quarter could have a disproportionately adverse impact on our financial
condition or results of operations.
We face risks related to acquisitions, including the acquisition of existing licensees or investments in
other related businesses.
We may engage in strategic transactions, including the acquisition of or investment in existing licensees and/or
other related businesses. The risks involved in engaging in these strategic transactions include the possible
failure to successfully integrate the operations of acquired businesses, or to realize the expected benefits of such
transactions within the anticipated time frame, or at all, such as cost savings, synergies or sales or growth
opportunities. In addition, the integration may result in material unanticipated challenges, expenses, liabilities or
competitive responses, including:
• inconsistencies between our standards, procedures and policies and those of the acquired business;
• the increased scope and complexity of our operations could require significant attention from
management and could impose constraints on our operations or other projects;
• unforeseen expenses, delays or conditions, including required regulatory or other third-party approvals or
consents;
• the costs of compliance with U.S. and international laws and regulations, including the acquisition or
assumption of unexpected liabilities, litigation, penalties or other enforcement actions;
• provisions in our and the acquired business’s contracts with third parties that could limit our flexibility to
take certain actions or our ability to retain customers;
• higher than expected costs may arise due to unforeseen changes in tax, trade, environmental, labor,
safety, payroll or pension policies;
• higher than expected investments may be required to implement necessary compliance processes and
related systems, including accounting systems and internal controls over financial reporting;
• limitations on, or costs associated with, workforce reductions;