American Home Shield 2015 Annual Report Download - page 69

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Contractual Obligations
The following table presents our contractual obligations and commitments as of December 31, 2015.
(In millions) Total Less than 1 Yr 1 - 3 Yrs 3 - 5 Yrs More than 5 Yrs
Principal repayments* $ 2,792 $ 36 $ 163 $ 61 $ 2,531
Capital leases* 51 18 24 9 1
Estimated interest payments(1) 901 136 255 235 275
N
on-cancelable operating leases(2) 67 20 31 11 5
Purchase obligations:
Supply agreements and other(3) 122 75 47 — —
Outsourcing agreements(4) 45 13 28 3 —
Insurance claims* 259 106 93 22 38
Other, including deferred compensation trust* 9 2 1 1 5
Total amount $ 4,246 $ 407 $ 641 $ 343 $ 2,854
* These items are reported in the consolidated statements of financial position.
(1) These amounts represent future interest payments related to existing debt obligations based on fixed and variable interest
rates and principal maturities specified in the associated debt agreements. As of December 31, 2015, payments related to
variable debt are based on applicable rates at December 31, 2015 plus the specified margin in the associated debt agreements
for each period presented. As of December 31, 2015, the estimated debt balance (including capital leases) as of each fiscal
year end from 2016 through 2020 is $2,789 million, $2,723 million, $2,602 million, $2,564 million and $2,532 million,
respectively. The weighted-average interest rate on the estimated debt balances at each fiscal year end from 2016 through
2020 is expected to be 4.8 percent. See Note 12 to the consolidated financial statements for the terms and maturities of
existing debt obligations.
(2) These amounts primarily represent future payments relating to real estate operating leases. A portion of our vehicle fleet and
some equipment are leased through cancelable operating leases and are therefore excluded in the table above.
(3) These obligations include commitments for various products and services including, among other things, inventory
purchases, telecommunications services, marketing and advertising services and other professional services. Arrangements
are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be
purchased, a pricing structure and approximate timing of the transactions. Most arrangements are cancelable without a
significant penalty and with short notice (usually 30-120 days) and amounts reflected above include our minimum contractual
obligation (inclusive of applicable cancellation penalties). For obligations with significant penalties associated with
termination, the minimum required expenditures over the term of the agreement have been included in the table above.
(4) Outsourcing agreements include commitments for the purchase of certain outsourced services from third-party vendors.
Because the services provided through these agreements are integral to our operations, we have concluded that it is
appropriate to include the total anticipated costs for services under these agreements in the table above.
Due to the uncertainty with respect to the timing of future cash flows associated with unrecognized tax benefits at
December 31, 2015, we are unable to reasonably estimate the period of cash settlement with the respective taxing authority.
Accordingly, $16 million of unrecognized tax benefits have been excluded from the contractual obligations table above. See the
discussion of income taxes in Note 5 to the consolidated financial statements.
Financial Position—Continuing Operations
The following discussion describes changes in our financial position from December 31, 2014 to December 31, 2015.
Receivables increased from prior year levels, primarily related to customer growth at American Home Shield.
Property and equipment increased from prior year levels, reflecting the purchases for recurring capital needs and information
technology projects and the acquisition of vehicles under the Fleet Agreement, offset, in part, by depreciation expense.
Goodwill increased from prior year levels due to several pest control and termite acquisitions, offset, in part, by reductions
due to the branch conversions. and foreign exchange rate adjustments. See Notes 4 and 6 to the consolidated financial statements for
more details.
Marketable securities decreased from prior year levels, primarily due to the sale of securities at American Home Shield.
Other assets increased from prior year levels, primarily due to an increase in insurance recoverables.
Accounts payable increased from prior year levels, primarily reflecting the change in the timing of payments to vendors.
Accrued interest payable decreased from prior year levels, reflecting the reduction in long-term debt.
Deferred revenue increased from prior year levels, primarily reflecting customer growth American Home Shield.
2015 Annual Report 67