American Home Shield 2008 Annual Report Download - page 56

Table of Contents
The following table presents the Company's contractual obligations and commitments as of December 31, 2008.
(In millions) Total
Less than
1 Yr 1-3 Yrs 3-5 Yrs
More than
5 Yrs
Principal repayments* $4,336.1 $ 219.4 $ 72.6 $ 59.0 $3,985.1
Capital leases 21.2 1.8 16.2 1.4 1.8
Estimated interest payments(1) 1,908.7 283.0 515.1 454.3 656.3
Non-cancelable operating leases 253.2 70.1 91.4 47.0 44.7
Purchase obligations:
Telecommunications 25.7 9.1 16.6 — —
IBM information technology services(2) 193.6 32.3 58.6 51.7 51.0
Supply agreements and other 82.1 55.2 17.7 7.3 1.9
Other long-term liabilities:*
Insurance claims 188.2 91.9 44.1 13.8 38.4
Discontinued Operations 8.9 4.9 1.9 0.6 1.5
Other, including deferred compensation trust 22.4 4.0 6.2 2.2 10.0
Total Amount $7,040.1 $ 771.7 $840.4 $637.3 $4,790.7
These items are reported in the Consolidated Statements of Financial Position
These amounts represent future interest payments related to the Company's existing debt obligations based on fixed and variable interest rates and
principal maturities specified in the associated debt agreements. Payments related to variable debt are based on applicable rates at December 31, 2008
plus the specified margin in the associated debt agreements for each period presented. The estimated debt balance (including capital leases) as of each
fiscal year end from 2009 through 2013 is $4,136 million, $4,083 million, $4,047 million, $4,016 million, and $3,987 million, respectively. The
weighted average interest rate (including interest rate swaps) on the estimated debt balances at each fiscal year end from 2009 through 2013 is expected
to be 6.8%, 6.2%, 5.9%, 5.6%, and 5.6%, respectively. See Note 14 of the consolidated financial statements for the terms and maturities of existing
debt obligations.
On December 11, 2008, the Company entered into an agreement with IBM pursuant to which IBM will provide information technology operations and
applications development services (collectively, the "IT Services") to the Company. ServiceMaster will pay IBM for the IT Services under the
agreement through a combination of fixed and variable charges, with variable charges fluctuating based on the Company's actual need for IT Services.
The minimum annual fixed charges for IT Services range between $12.45 million and $15.35 million. The Company estimates that the variable charges
for the IT Services will be in the range of $12.0 million to $16.0 million per year, which estimates are based on the current projected usage of IT
Services during the term of the agreement. The table above includes both the minimum annual fixed charges and an estimate of the variable charges.
ServiceMaster has the right to terminate the agreement both for cause and for its convenience. Upon termination of the agreement for convenience and
in the case of certain other termination events, ServiceMaster would be required to pay a termination charge to IBM, which charge may be material.
IBM has the right to terminate the agreement only in the event of a failure by the Company to make timely payment of any fees due and payable. In the
event of termination by either party and upon the Company's request, IBM is obligated to provide termination assistance services at agreed-upon
pricing for up to 24 months.
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*
(1)
(2)