American Home Shield 2015 Annual Report Download - page 40

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borrowing arrangement at SMAC. The payment of ordinary and extraordinary dividends by our home warranty and similar
subsidiaries (through which we conduct our American Home Shield business) are subject to significant regulatory restrictions under
the laws and regulations of the states in which they operate. Among other things, such laws and regulations require certain such
subsidiaries to maintain minimum capital and net worth requirements and may limit the amount of ordinary and extraordinary
dividends and other payments that these subsidiaries can pay to us. As of December 31, 2015, the total net assets subject to these third-
party restrictions was $169 million. Such limitations are expected to be in effect through the end of 2016.
Further, the terms of the agreements governing the Credit Facilities significantly restrict the ability of our subsidiaries to pay
dividends, make loans or otherwise transfer assets to ServiceMaster. Furthermore, our subsidiaries are permitted under the terms of the
Credit Facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions, the
payment of dividends or the making of loans by such subsidiaries to us. In addition, Delaware law may impose requirements that may
restrict our ability to pay dividends to holders of our common stock.
We do not currently expect to declare or pay dividends on our common stock for the foreseeable future. Payments of
dividends, if any, will be at the sole discretion of our board of directors after taking into account various factors, including general and
economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital
requirements, contractual, legal, tax and regulatory restrictions and implications of the payment of dividends by us to our stockholders
or by our subsidiaries to us, and such other factors as our board of directors may deem relevant. In addition, Delaware law may impose
requirements that may restrict our ability to pay dividends to holders of our common stock. To the extent that we determine in the
future to pay dividends on our common stock, none of our subsidiaries will be obligated to make funds available to us for the payment
of dividends.
The market price of our common stock may be volatile and could decline.
The market price of our common stock may fluctuate significantly. Among the factors that could affect our stock price are:
industry or general market conditions;
domestic and international economic factors unrelated to our performance;
lawsuits, enforcement actions and other claims by third parties or governmental authorities;
changes in our customers’ preferences;
new regulatory pronouncements and changes in regulatory guidelines;
actual or anticipated fluctuations in our quarterly operating results;
changes in securities analysts’ estimates of our financial performance or lack of research coverage and reports by
industry analysts;
action by institutional stockholders or other large stockholders (including the Equity Sponsors), including additional
future sales of our common stock;
failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance
practices;
announcements by us of significant impairment charges;
speculation in the press or investment community;
investor perception of us and our industry;
changes in market valuations or earnings of similar companies;
announcements by us or our competitors of significant contracts, acquisitions, dispositions or strategic partnerships;
war, terrorist acts and epidemic disease;
any future sales of our common stock or other securities; and
additions or departures of key personnel.
The stock markets have experienced extreme volatility in recent years that has been unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the market price of our common stock. In the past,
following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the
affected company. Any litigation of this type brought against us could result in substantial costs and a diversion of our management’s
attention and resources, which would harm our business, operating results and financial condition.
Future sales of shares by existing stockholders could cause our stock price to decline.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could
cause the market price of our common stock to decline. These sales, or the possibility that these sales may occur, also might make it
more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of February 19, 2016,
we had 135,575,559 outstanding shares of common stock. Of these shares, all of the 121,996,763 shares of common stock sold by us
in our initial public offering and in the secondary offerings in February 2015, May 2015 and November 2015 by certain of our
stockholders, including the CD&R Funds and the StepStone Funds, are freely transferable without restriction or further registration
under the Securities Act, except for any shares held by our “affiliates” as that term is defined in Rule 144 under the Securities Act.
In July 2014, we filed a registration statement on Form S-8 under the Securities Act to register the shares of common stock to
be issued under our equity compensation plans and, as a result, all shares of common stock acquired upon exercise of (i) stock options
38 2015 Annual Report