American Home Shield 2009 Annual Report Download - page 52

Table of Contents
Cash Flows from Investing Activities from Continuing Operations
Net cash used for investing activities from continuing operations was $87.5 million for the year ended December 31, 2009 compared to $74.6 million for
the year ended December 31, 2008 and included $1.7 million and $27.1 million paid in connection with the Merger for the years ended December 31, 2009
and 2008, respectively. Amounts paid in connection with the Merger in 2009 and 2008 were primarily related to payments under change in control severance
agreements.
Capital expenditures decreased to $62.5 million for the year ended December 31, 2009 from $88.1 million for the year ended December 31, 2008 and
included vehicle purchases of $30.8 million, recurring capital needs and information technology projects. Capital expenditures in 2008 included $52.9 million
to acquire assets in connection with exiting certain fleet leases. The Company anticipates that capital expenditures, excluding vehicle fleet purchases, for the
full year 2010 will range from $55.0 million to $65.0 million, reflecting recurring needs and the continuation of investments in information systems and
productivity enhancing operating systems. The Company's primary vehicle fleet lessor 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 capital requirement for fleet
vehicles in 2010 is expected to range from $50.0 million to $60.0 million. The Company expects to make cash payments of $65.2 million in 2010 in
connection with exiting certain real estate leases. The Company has no additional material capital commitments at this time.
Cash payment for acquisitions, excluding the Merger, for the year ended December 31, 2009 totaled $32.6 million, compared with $60.8 million for the
year ended December 31, 2008. Consideration paid for tuck-in acquisitions consisted of cash payments and debt payable to sellers. 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 years ended December 31, 2009 and 2008 reflects the decrease in net sales of
certain marketable securities. In 2008, sales of marketable securities included, among other things, the 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 requirements and the sale of certain marketable securities and the subsequent investment in repurchase agreements in an
effort to limit our exposure to changing market conditions.
Cash Flows from Financing Activities from Continuing Operations
Net cash used for financing activities from continuing operations was $253.3 million for the year ended December 31, 2009 compared to net cash
provided from financing activities from continuing operations of $89.0 million for the year ended December 31, 2008. During the first quarter of 2009, the
Company completed open market purchases of $89.0 million in face value of the Permanent Notes for a cost of $41.0 million. The Company also made
repayments of $165.0 million under the Revolving Credit Facility and made scheduled principal payments of long-term debt of $46.9 million during the year
ended December 31, 2009. During the year ended December 31, 2008, the Company had borrowings of $347.0 million and made repayments of
$182.0 million under our Revolving Credit Facility. In September 2008, the Company borrowed $165.0 million under the Revolving Credit Facility and
transferred $10.0 million of interests under its accounts receivable securitization arrangement to increase the Company's cash position to preserve its financial
flexibility in light of the uncertainty in the credit markets at that time. The Company also made scheduled principal payments of long-term debt of
$59.0 million and paid debt issuance costs of $27.0 million in the year ended December 31, 2008.
48