American Home Shield 2008 Annual Report Download - page 51

Table of Contents
The principal components (in millions) of the net decrease for the year ended December 31, 2008 were:
Decrease in net income before merger related charges, restructuring charges, and non-cash charges $ (80.6)
Decrease in restructuring payments 15.3
Increase in working capital requirements (35.5)
$(100.8)
The decrease in net income before merger related charges, restructuring charges, and non-cash charges for the year ended December 31, 2008 was driven
by increased interest expense offset by Comparable Operating Performance growth at Terminix, TruGreen LandCare and Other Operations and Headquarters
and reductions in current income tax expense. The increase in working capital requirements for the year ended December 31, 2008 was driven primarily by
reduced accruals for certain legal matters, bonuses and other compensation items, decreased customer prepayments and non-cash purchase accounting
adjustments recorded in connection with the Merger.
Cash Flows from Investing Activities from Continuing Operations
Net cash used for investing activities from continuing operations was $74.6 million for the year ended December 31, 2008 compared to $4,964.0 million
and $16.8 million in the Successor period from July 25, 2007 to December 31, 2007 and the Predecessor period from January 1, 2007 to July 24, 2007,
respectively. Net cash used for investing activities included $27.1 million, $4,906.5 million and $4.0 million paid in connection with the Merger for the year
ended December 31, 2008, the Successor period from July 25, 2007 to December 31, 2007 and the Predecessor period from January 1, 2007 to July 24, 2007,
respectively. Amounts paid in connection with the Merger in 2008 were primarily related to payments under change in control agreements.
Capital expenditures increased for the year ended December 31, 2008 from the prior year and included recurring capital needs and information
technology projects. In addition, the Company paid approximately $52.9 million to acquire assets in connection with exiting certain of its fleet leases. The
Company anticipates that capital expenditures, excluding vehicle fleet purchases, for the full year 2009 will total approximately $35 million to $45 million,
reflecting recurring needs and the continuation of investments in information systems and productivity enhancing operating systems. The Company's primary
vehicle fleet lessor has elected not to renew its agreement with the Company which expired December 21, 2008. We expect to fulfill our ongoing vehicle fleet
needs through direct purchases of vehicles. The Company's expected capital requirement for fleet vehicles in 2009 is expected to range from $30 million to
$40 million. The Company has no additional material capital commitments at this time.
Acquisitions, excluding the Merger, for the year ended December 31, 2008 totaled $60.8 million, compared with $14.9 million for the Successor period
from July 25, 2007 to December 31, 2007 and $25.5 million for the Predecessor period from January 1, 2007 to July 24, 2007. Consideration paid for tuck-in
acquisitions consisted of cash payments and seller financed debt. The Company expects to continue its tuck-in acquisition program at Terminix, TruGreen
LawnCare and Merry Maids.
The change in notes receivable, financial investments and securities for the year ended December 31, 2008 includes an increase in the net sale of
marketable securities at American Home Shield due in part to lowering the amount of excess reserves over minimum statutory reserve requirements in certain
states in accordance with our investment policy, reduced statutory reserve
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