American Home Shield 2009 Annual Report Download - page 69

Table of Contents
existing and future governmental regulation and the enforcement thereof, including regulation relating to restricting or banning of telemarketing,
direct mail or other marketing activities, the Termite Inspection Protection Plan, pesticides and/or fertilizers;
the success of and costs associated with our current restructuring initiatives, including the implementation of centers of excellence;
the number, type, outcomes and costs of legal or administrative proceedings;
possible labor organizing activities at the Company or its franchisees;
risks associated with acquisitions and dispositions;
risks associated with budget deficits at federal, state and local levels resulting from deteriorating economic conditions, which could result in
federal, state and local governments decreasing their purchasing of our products or services and/or increasing taxes on businesses to generate
more tax revenues, which could adversely impact our revenue, earnings, tax payments and cash flows, as applicable;
the timing and structuring of our business process outsourcing, including any current or future outsourcing of all or portions of our information
technology, call center and other corporate functions, and risks associated with such outsourcing; and
other factors described from time to time in documents that we file with the SEC.
You should read this report completely and with the understanding that actual future results may be materially different from expectations. All forward-
looking statements made in this report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this
report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking statements to reflect changes in
assumptions, the occurrence of events, unanticipated or otherwise, changes in future operating results over time or otherwise.
Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless
expressed as such, and should only be viewed as historical data.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The economy and its impact on discretionary consumer spending, labor wages, fuel prices, fertilizer and other material costs, home re-sales,
unemployment rates, insurance costs and medical costs could have a material adverse impact on future results of operations.
The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company has entered into specific
financial arrangements, primarily interest rate swaps and fuel hedges, in the normal course of business to manage certain market risks, with a policy of
matching positions and limiting the terms of contracts to relatively short durations. The effect of derivative financial instrument transactions could have a
material impact on the Company's financial statements.
In August 2007, the Company entered into three, three-year interest rate swap agreements, effective September 4, 2007. The total notional amount of the
agreements was $530.0 million. Under the terms of these agreements, the Company will pay a weighted average fixed rate of interest of 5.05% on the
$530.0 million notional amount and the Company will receive a floating rate of interest (based on one month LIBOR) on the notional amount. Therefore, the
effective interest
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