American Home Shield 2010 Annual Report Download - page 21

Table of Contents
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, 2010, we had $3,948.5 million of consolidated indebtedness and, after amending the Revolving Credit Facility on February 2, 2011,
we have approximately $442.0 million of available borrowings under that facility. Our substantial debt could have important consequences to holders of our
debt and other stakeholders in the Company. Because of our substantial debt:
our ability to engage in acquisitions without raising additional equity or obtaining additional debt financing may be impaired in the future;
our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements or general corporate
purposes and our ability to satisfy our obligations with respect to our debt may be impaired in the future;
a large portion of our cash flow from operations must be dedicated to the payment of principal and interest on our debt, thereby reducing the
funds available to us for other purposes;
we are exposed to the risk of increased interest rates because a portion of our borrowings, including under the Credit Facilities, and certain
floating rate operating leases are at variable rates of interest;
it may be more difficult for us to satisfy our obligations to our creditors, resulting in possible defaults on, and acceleration of, such debt;
we may be more vulnerable to general adverse economic and industry conditions;
we may be at a competitive disadvantage compared to our competitors with proportionately less debt or with comparable debt on more favorable
terms and, as a result, they may be better positioned to withstand economic downturns;
our ability to refinance debt may be limited or the associated costs may increase; and
our flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or we may be prevented
from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins of our
businesses.
Despite our indebtedness levels, we and our subsidiaries may be able to incur substantially more debt, including secured debt. This could further
exacerbate the risks associated with our substantial debt.
While the terms of the instruments governing our outstanding indebtedness contain certain restrictions upon our ability to incur additional indebtedness,
they do not fully prohibit us or our subsidiaries from incurring additional indebtedness in the future and the indebtedness that we and our subsidiaries may
incur could be substantial. The Credit Facilities provide us with commitments for additional borrowings of approximately $442.0 million under the Revolving
Credit Facility, as of February 2, 2011, and permit additional borrowings beyond those commitments under certain circumstances. If new debt is added to our
current debt levels, the related risks we face would increase, and we may not be able to meet all of our debt obligations.
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