American Home Shield 2008 Annual Report Download - page 18

Table of Contents
We are subject to various restrictive covenants that could adversely impact our operations.
From time to time, we enter into noncompetition agreements that restrict us from entering into lines of business (e.g., heating, ventilation and air
conditioning repair and installation, electrical repair and installation, plumbing) or operating in certain areas into which we may desire to expand our business.
We also are subject to various non-solicitation and no hire covenants that may restrict our ability to solicit potential customers or employees. To the extent
that such restrictive covenants prevent us from taking advantage of business opportunities, or we fail to comply with them, our operations may be adversely
impacted.
Future acquisitions could affect our financial performance.
We plan to continue to pursue opportunities to expand through selective acquisitions. Our ability to make acquisitions at reasonable prices and to
integrate acquired businesses is an important factor in our future growth. We cannot ensure that we will be able to manage or integrate acquired businesses
successfully and/or retain customers of the acquired businesses. Any inability on our part to consolidate and manage growth from acquired businesses could
have an adverse effect on our financial performance, and there can be no assurance that any acquisition that we make in the future will provide us with the
benefits that were anticipated when entering into such acquisition. The process of integrating an acquired business may create unforeseen difficulties and
expenses, including the diversion of resources needed to integrate new businesses, technologies, products, personnel or systems; the inability to retain
employees, customers and suppliers; the assumption of actual or contingent liabilities; failure to follow internal processes; write-offs or impairment charges
relating to goodwill and other intangible assets; and unanticipated or unknown liabilities relating to acquired businesses.
Risks Related to Our Capital Structure and Our Debt
We are indirectly owned and controlled by the Equity Sponsors, and their interests as equity holders may conflict with the interests of holders of our
debt.
We are indirectly owned and controlled by the Equity Sponsors, who will have the ability to control our policies and operations. The directors appointed
by affiliates of the Equity Sponsors are able to make decisions affecting our capital structure, including decisions to issue or repurchase capital stock, pay
dividends and incur or repurchase debt. The interests of the Equity Sponsors may not in all cases be aligned with the interests of the holders of our debt. For
example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our Equity Sponsors might conflict with the
interests of holders of our debt. In addition, our Equity Sponsors may have an interest in pursuing acquisitions, divestitures, financings or other transactions
that, in their judgment, could enhance their equity investments, even though such transaction might involve risks to our business or the holders of our debt.
Furthermore, the Equity Sponsors may in the future own businesses that directly or indirectly compete with us. One or more of the Equity Sponsors also may
pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.
We have substantial debt and may incur substantial additional debt, which could adversely affect our financial health and our ability to obtain
financing in the future, react to changes in our business and satisfy our obligations.
As of December 31, 2008, we had $4,266 million of consolidated indebtedness and $319 million of available borrowings under our Revolving Credit
Facility. Our substantial debt could
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