Annual Report 2006 ISS Global A/S

ISS may incur substantial liabilities for any failure
to meet applicable cleanliness or safety
standards, and adverse publicity relating to any
actual or alleged failure to meet such standards
could damage ISS’s reputation
ISS’s business is associated with public health and
safety, particularly its cleaning of food preparation
facilities, hospitals and abattoirs, as well as its
cleaning of aircrafts. As a result, ISS may be subject
to substantial liabilities if its failure to meet applicable
cleanliness or safety standards results in harm
to individuals or entities, including, for example,
through contamination of food products produced at
the facilities that ISS cleans or the outbreak of illness
within the hospitals that it services. In addition,
ISS could be held responsible for any breaches of
airport security by its employees. Although ISS
maintains insurance against product and service liability,
there can be no assurance that ISS will not
incur losses beyond the limits of, or outside the coverage
of, ISS’s insurance policies. In addition, ISS’s
reputation could be harmed by any actual or alleged
failure to meet appropriate cleanliness or safety
standards. Any publicity relating to incidents of this
kind could have a material adverse effect on ISS’s
reputation and, therefore, its business, results of
operations and financial condition.
ISS’s computer systems may fail or be interrupted,
which could potentially harm its business
ISS relies on numerous computer systems that allow
it to track and bill its services, communicate with
customers, manage its employees and gather information
upon which management makes decisions
regarding its business. The administration of
ISS’s business is increasingly dependent on the use
of these systems. As a result, system failures or disruptions
resulting from computer viruses, hackers or
other causes could have a material adverse effect
on ISS. In addition, pursuant to contracts with Computer
Sciences Corporation and other vendors, ISS
outsources the operation and maintenance of certain
of its information technology systems to seek to
ensure effective management of its information
technology resources, as well as to improve the cost
efficiency of ISS’s information technology infrastruc-
ANNUAL REPORT 2006 / Risk Factors
ture, systems and applications. ISS relies on the
ability of its outsourcing partners to deliver agreed
services. Their failure to perform satisfactorily could
have an adverse impact on ISS’s business, results
of operations and financial condition.
ISS’s plans include increased development and use
of computer systems in countries in which it operates.
These plans may be affected by incompatibility
of ISS’s computer systems and software applications
and the reliability of such systems and applications.
Currently, ISS does not integrate the computer
systems of all acquired businesses with its
own computer systems. Non-compatibility between
ISS’s computer systems and software applications
may require additional investment, and additional
investment may also be required if system reliability
is unsatisfactory. The levels of required investment
in and the expenses related to information technology
will also depend upon technological advancements
and opportunities, market demands, competitive
actions and other factors. To protect its competitiveness,
ISS may have to allocate further resources
to the development of information technology
infrastructure and related business processes,
which could have a material adverse effect on its
business, results of operations and financial condition.
ISS may incur liabilities in connection with past
divestments in excess of provisions made
ISS has made provisions in its accounts for claims
from purchasers or other parties in connection with
divestments. However, there can be no assurance
that ISS will not incur liabilities in excess of these
provisions, and these excess liabilities, if significant,
could have a material adverse effect on ISS’s business,
results of operations and financial condition.
ISS is subject to external events which are beyond
its control
The impact of natural disasters, fires, diseases, epidemics,
outbreaks of hostilities or war, acts of terror
or other external events is difficult to quantify. Thus,
there can be no assurance that such factors will not
have a material adverse effect on ISS’s business,
results of operations or financial condition.
Following the Acquisition, ISS depends on its parent, FS Funding, to provide sufficient financing for the Group’s
continued growth as set out in ISS’s strategy. Consequently, risk factors that could influence the financial standing
of FS Funding could have a material negative effect on ISS’s business and growth prospects. References to senior
facilities (“Senior Facilities”) and the senior facilities agreement (“Senior Facilities Agreement”) of FS Funding
refers to FS Funding’s senior credit facilities.
ISS’s business may be adversely affected as a
result of its substantial indebtedness
ISS and its subsidiaries have and will continue to
have a substantial amount of outstanding indebtedness
and obligations with respect to the servicing of
such indebtedness. The substantial indebtedness
could have important consequences, including:
� requiring ISS to dedicate a substantial portion
of cash flow to make payments on indebtedness,
thereby reducing the availability of cash
flow to fund working capital, capital expenditures,
new acquisitions and other general corporate
purposes;
� increasing the vulnerability of ISS to general
adverse economic and industry conditions;
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