Hertz 2015 Annual Report Download - page 38

Table of Contents
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to purchase supplemental liability insurance products from us as a result of any changes in these laws or otherwise, our results of operations could
be materially adversely affected.
Changes in the U.S. legal and regulatory environment in the areas of customer privacy, data security and cross-border data flow could have a
material adverse effect on our business, primarily through the impairment of our marketing and transaction processing activities, and the resulting
costs of complying with such legal and regulatory requirements. It is also possible that we could face significant liability for failing to comply with
any such requirements.
We derive revenue through rental activities of the Hertz, Dollar, Thrifty and Firefly brands under franchise and license arrangements. These
arrangements are subject to a number of federal and state laws and regulations that impose limitations on our interactions with counter-parties. In
addition, the automotive retail industry, including our network of company-operated car sales locations, is subject to a wide range of federal, state
and local laws and regulations, such as those relating to motor vehicle sales, retail installment sales and related finance and insurance matters,
advertising, licensing, consumer protection and consumer privacy. Changes in these laws and regulations that impact our franchising
arrangements or our automotive retail sales could adversely impact our results.
In most places where we operate, we pass through various expenses, including the recovery of vehicle licensing costs and airport concession
fees, to our rental customers as separate charges. We believe that our expense pass throughs, where imposed, are properly disclosed and are
lawful. However, in the event of incorrect calculations or disclosures with respect to expense pass throughs, or a successful challenge to the
methodology we have used for determining our expense pass through treatment, we could be subject to fines or other liabilities. In addition, we
may in the future be subject to potential legislative, regulatory or administrative changes or actions which could limit, restrict or prohibit our ability
to separately state, charge and recover vehicle licensing costs and airport concession fees, which could result in a material adverse effect on our
results of operations
Certain new or proposed laws and regulations with respect to the banking and finance industries, including the Dodd-Frank Wall Street Reform and
Consumer Protection Act and amendments to Regulation AB, could restrict our access to certain financing arrangements and increase our
financing costs, which could have a material adverse effect on our financial position, results of operations, liquidity and cash flows.
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                  
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As of December 31, 2015, we had debt outstanding of $15.9 billion. Our substantial indebtedness could materially adversely affect us. For
example, it could: (i) make it more difficult for us to satisfy our obligations to the holders of our outstanding debt securities and to the lenders
under our various credit facilities, resulting in possible defaults on, and acceleration or early amortization of, such indebtedness; (ii) be difficult to
refinance or borrow additional funds in the future; (iii) require us to dedicate a substantial portion of our cash flows from operations and investing
activities to make payments on our debt, which would reduce our ability to fund working capital, capital expenditures or other general corporate
purposes; (iv) increase our vulnerability to general adverse economic and industry conditions (such as credit-related disruptions), including interest
rate fluctuations, because a portion of our borrowings are at floating rates of interest and are not hedged against rising interest rates, and the risk
that one or more of the financial institutions providing commitments under our revolving credit facilities fails to fund an extension of credit under
any such facility, due to insolvency or otherwise, leaving us with less liquidity than expected; (v) place us at a competitive disadvantage to our
competitors that have proportionately less debt or comparable debt at more favorable interest rates or on better terms; and (vi) limit our ability to
react to competitive pressures, or make it difficult for us to carry out capital spending that is necessary or important to our growth strategy and our
efforts to improve operating margins. While the terms of the agreements and instruments governing our outstanding indebtedness contain certain
restrictions upon our ability to incur additional indebtedness, they do not fully prohibit us from incurring substantial additional indebtedness and do
not prevent us from incurring obligations that do not constitute indebtedness. If new debt or other obligations are added to our current liability levels
without a corresponding refinancing or redemption of our existing indebtedness and obligations, these risks would increase. For a description of the
amounts we have available under certain of our debt facilities, see Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity and Capital Resources—Borrowing Capacity and Availability” included in this Annual Report and Note 6,
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.