American Home Shield 2009 Annual Report Download - page 106

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 8. Discontinued Operations (Continued)
obligations primarily relate to long-term self-insurance claims. The Company believes that the remaining reserves continue to be adequate and reasonable.
(In thousands)
Balance at
Dec. 31, 2008
Cash Payments
or Other
(Income)/
Expense
Balance at
Dec. 31, 2009
Remaining liabilities of discontinued operations:
ARS/AMS $ 2,331 $ (191) $ 781 $ 2,921
LandCare Construction 869 (186) 39 722
LandCare utility line clearing business 1,099 (188) — 911
Certified Systems, Inc. and other 3,558 (1,409) — 2,149
InStar 1,090 (842) — 248
Total liabilities of discontinued operations $ 8,947 $ (2,816) $ 820 $ 6,951
Note 9. Restructuring Charges
Concurrent with the completion of the Merger, the Company engaged in a reorganization and restructuring of certain of its businesses and support
functions known as Fast Forward. Among the purposes of Fast Forward was to eliminate layers and bureaucracy and simplify work processes in order to
better align the Company's work processes around its operational and strategic objectives. Fast Forward involved, among other things, a reduction in work
force and various process improvements, including the closing of American Home Shield's call center located in Santa Rosa, California, the organization of
certain corporate support functions into centers of excellence which are expected to deliver higher quality services to our business units at lower costs, the
outsourcing to third party vendors of business activities that were previously handled internally, as well as other employee workforce reductions expected to
result in cost-savings. The initiatives referred to as Fast Forward are substantially complete, and the Company has achieved its previously forecasted savings
of $60 million pre-tax on an annualized basis. Most of these savings benefit the selling and administrative expenses line in the Consolidated Statements of
Operations.
As part of Fast Forward, 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 to the Company. The initial term of the agreement is seven years. The agreement commenced on
December 11, 2008, and the services were phased in during the first half of 2009. In connection with the agreement, the Company eliminated approximately
275 positions. As a result of the elimination of positions and the transition of information technology services to IBM, the Company incurred charges related
to, among other things, employee retention and severance costs, transition fees paid to IBM and other consulting fees. Almost all charges related to the
agreement were cash charges and were expensed throughout the transition period. Such charges amounted to $9.9 million and $3.5 million, pre-tax, during
2009 and 2008, respectively. These charges were recorded as restructuring charges in the Consolidated Statements of Operations as incurred.
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