American Home Shield 2010 Annual Report Download - page 15

Table of Contents
Public perceptions that our products and services are not environmentally friendly or safe may adversely impact the demand for our services.
In providing our services, we use, among other things, fertilizers, herbicides and pesticides. Public perception that our products and services are not
environmentally friendly or safe or are harmful to humans or animals, whether justified or not, or our improper application of these chemicals, could reduce
demand for our services, increase regulation or government restrictions, impair our reputation, involve us in litigation, damage our brand names and otherwise
have a material adverse impact on our business, financial position, results of operations and cash flows.
Changes in the types or mix of our services or products could impact our reputation, business, financial position, results of operations and cash
flows.
Our financial performance is affected by changes in the types or mix of services and products we offer our customers. For example, when Terminix
transitioned from offering primarily bait termite services to providing both liquid and bait termite services, this transition required the purchase of additional
equipment and training. The bait and termite service lines also have different price points (for both the initial treatment and for renewals), different ongoing
service obligations and different revenue recognition policies. Such changes in mix can also affect the timing of our revenues. An unsuccessful rollout or
adjustment of our services or products could have a material adverse impact on our reputation, business, financial position, results of operations and cash
flows.
Laws and government regulations applicable to our businesses could increase our legal and regulatory expenses and impact our business, financial
position, results of operations and cash flows.
Our businesses are subject to significant international, federal, state and local laws and regulations. These international, federal, state and local laws and
regulations include laws relating to consumer protection, wage and hour requirements, franchising, the employment of immigrants, labor relations, permit and
licensing requirements, workers' safety, the environment, insurance and home service contracts, employee benefits, marketing (including telemarketing or
green marketing) and advertising, the application of fertilizers, herbicides, pesticides and other chemicals, noise and air pollution from power equipment and
water management techniques. In particular, we anticipate that various federal, state and local governing bodies may propose additional legislation and
regulation that may be detrimental to our business or may substantially increase our operating costs, including legislation relating to the Employee Free
Choice Act; environmental regulations related to water quality, water use, chemical use, climate change and other environmental matters; other consumer
protection laws or regulations; or "do-not-knock," "do-not-mail," "do-not-leave" or other marketing regulations. It is difficult to predict the future impact of
the broad and expanding legislative and regulatory requirements affecting our businesses but changes to such requirements may affect our operations and
financial performance. In addition, if we were to fail to comply with any applicable law or regulation, we could be subject to substantial fines or damages, be
involved in litigation, suffer losses to our reputation or suffer the loss of licenses or penalties that may affect how our business is operated, which, in turn,
could have a material adverse impact on our business, financial position, results of operations and cash flows.
The enactment of new federal or state legislation or the promulgation of new regulations or interpretations at any level of government may also expose
the Company to potential new liabilities or costs, or may require the Company to modify its business model or business practices. At this time the Company
does not expect any such changes in law or regulation to have a material effect on its reputation, business, financial position, results of operations or cash
flows; however, in March 2010, comprehensive health care reform legislation was enacted in the U.S. which, among other things, includes guaranteed
coverage requirements, including for dependents up to age 26;
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