Avis 2015 Annual Report Download - page 34

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• 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;
• a failure to implement our strategy for a particular acquisition, including successfully integrating the
acquired business;
• the possibility of other costs or inefficiencies associated with the integration and consolidation of
operational and administrative systems, processes and infrastructures of the combined company.
Any one of these factors could result in delays, increased costs or decreases in the amount of expected revenues
related to combining the companies and could adversely impact our financial condition or results of operations.
We face risks related to our derivative instruments.
We typically utilize derivative instruments to manage fluctuations in interest rates, foreign exchange rates and
gasoline prices. The derivative instruments we use to manage our risk are usually in the form of interest rate
swaps and caps and foreign exchange and commodity contracts. Periodically, we are required to determine the
change in fair value, called the “mark to market,” of some of these derivative instruments, which could expose us
to substantial mark-to-market losses or gains if such rates or prices fluctuate materially from the time the
derivatives were entered into. Accordingly, volatility in rates or prices may adversely impact our financial position
or results of operations and could impact the cost and effectiveness of our derivative instruments in managing our
risks.
We face risks related to fluctuations in currency exchange rates.
Our international operations generate revenue and incur operating costs in a variety of currencies. The financial
position and results of operations of many of our foreign subsidiaries are reported in the relevant local currency
and then translated to U.S. dollars at the applicable currency exchange rate for inclusion in our Consolidated
Financial Statements. Changes in exchange rates among these currencies and the U.S. dollar will affect the
recorded levels of our assets and liabilities in our financial statements. While we take steps to manage our
currency exposure, such as currency hedging, we may not be able to effectively limit our exposure to
intermediate- or long-term movements in currency exchange rates, which could adversely impact our financial
condition or results of operations.
We face risks related to liability and insurance.
Our businesses expose us to claims for bodily injury, death and property damage related to the use of our
vehicles, for having our customers on our premises 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, which could adversely impact our
financial condition and results of operations. Furthermore, insurance with unaffiliated insurers may not continue to
be available to us on economically reasonable terms or at all. Should we experience significant liability for which
we did not plan, our results of operations or financial position could be negatively impacted.
We reinsure certain insurance exposures as well as offer optional insurance coverages through unaffiliated third-
party insurers, which then reinsure all or a portion of their risks through our insurance company subsidiaries that
in turn subjects us to regulation under various insurance laws and statutes, in the jurisdictions in which our
insurance company subsidiaries are domiciled. Any changes in regulations that alter or impede our reinsurance
obligations or subsidiary operations in all or certain jurisdictions could adversely impact the economic benefits that
we rely upon to support our reinsurance efforts, which in turn would adversely impact our financial condition or
results of operations.
Optional insurance products that we offer to renters in the United States, including, but not limited to,
supplemental liability insurance, personal accident insurance and personal effects protection, are regulated under
state laws governing such products. Our car rental operations outside the United States must comply with certain