American Home Shield 2008 Annual Report Download - page 110

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 15. Cash and Marketable Securities (Continued)
of certain investments. The unrealized gains in the investment portfolio were approximately $4.2 million and $8.4 million as of December 31, 2008 and 2007,
respectively. Unrealized losses were approximately $6.0 million and $1.4 million as of December 31, 2008 and 2007, respectively. The portion of unrealized
losses which had been in a loss position for more than one year at December 31, 2008 was $0.4 million. There were no unrealized losses which had been in a
loss position for more than one year at December 31, 2007. The portion of unrealized losses which had been in a loss position for more than one year at
December 31, 2006 was less than $2 million. The aggregate fair value of the investments with unrealized losses totaled $26.8 million and $20.4 million at
December 31, 2008 and 2007, respectively, and consist primarily of corporate bonds and common equity securities.
Note 16. Receivable Sales
The Company has entered into an accounts receivable securitization arrangement under which TruGreen LawnCare and Terminix sell certain eligible
trade accounts receivable to Funding, the Company's wholly-owned, bankruptcy-remote subsidiary which is consolidated for financial reporting purposes.
Funding, in turn, may transfer, on a revolving basis, an undivided percentage ownership interest of up to $50 million in the pool of accounts receivable to one
or both of the unrelated purchasers who are parties to the accounts receivable securitization arrangement ("Purchasers"). The amount of the eligible
receivables varies during the year based on seasonality of the business and could, at times, limit the amount available to the Company from the sale of these
interests.
The accounts receivable securitization arrangement is a 364-day facility that is renewable annually at the option of Funding, with a final termination date
of July 17, 2012. Only one of the Purchasers is required to purchase interests under the arrangement. If this Purchaser were to exercise its right to terminate its
participation in the arrangement, which it may do in the third quarter of each year, the amount of cash available to the Company may be reduced or
eliminated. This Purchaser did not exercise its right to terminate its participation in the arrangement during 2008.
During the third quarter of 2008, Funding transferred a $10 million interest in the pool of accounts receivable to a Purchaser to increase our cash position
to preserve our financial flexibility in light of the uncertainty in the credit and financial markets. During the Successor period from July 25, 2007 to
December 31, 2007 and the Predecessor period from January 1, 2007 to July 24, 2007, there were no transfers of interests in the pool of accounts receivables
to Purchasers under this arrangement. As of December 31, 2008, the Company had $26 million of remaining capacity available under the accounts receivable
securitization arrangement.
The Company has recorded its obligation to repay the third party for its interest in the pool of receivables as long-term debt in these consolidated
financial statements. The interest rates applicable to the Company's obligation are based on a fluctuating rate of interest measured based on the third party
purchaser's pooled commercial paper rate, as defined (1.28% at December 31, 2008). All obligations under the accounts receivable securitization arrangement
must be repaid by July 17, 2012, the final termination date of the arrangement.
Note 17. Comprehensive Income
Comprehensive income (loss), which encompasses net income, unrealized gains/(losses) on marketable securities, unrealized gains/(losses) on derivative
instruments and the effect of foreign
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