American Home Shield 2011 Annual Report Download - page 59

Table of Contents
the sale of the 2020 Notes, together with available cash, to redeem $400 million in aggregate principal amount of its outstanding 2015 Notes in February 2012
and intends to use the remainder of such proceeds, together with available cash, to redeem an additional $200 million aggregate principal amount of the 2015
Notes in March 2012. The following table presents the Company's contractual obligations and commitments as of December 31, 2011 as if the sale of the
2020 Notes and the redemption of the 2015 Notes had occurred on December 31, 2011, and includes the payment, as scheduled, of the regular interest
payment due in January 2012 for the redeemed 2015 Notes. This pro forma presentation impacts the Principal repayments, Estimated interest payments and
Total Amount rows only. No other changes have been made from the information presented in the contractual obligations table above.
(In millions) Total
Less than
1 Yr 1-3 Yrs 3-5 Yrs
More than
5 Yrs
Principal repayments $ 3,938.7 $ 47.7 $ 2,532.0 $ 401.9 $ 957.1
Capital leases 12.2 4.1 5.4 2.6 0.1
Estimated interest payments 1,238.5 219.2 352.9 201.2 465.2
Non-cancelable operating leases 143.8 42.6 56.0 24.4 20.8
Purchase obligations:
Supply agreements and other 115.3 76.7 24.6 14.0 —
Outsourcing agreements 133.6 52.1 39.0 20.7 21.8
Other long-term liabilities:
Insurance claims 154.8 73.1 28.8 10.7 42.2
Discontinued Operations 2.6 0.6 0.7 0.2 1.1
Other, including deferred compensation trust 10.8 0.2 1.5 1.5 7.6
Total Amount $ 5,750.3 $ 516.3 $ 3,040.9 $ 677.2 $ 1,515.9
Financial Position—Continuing Operations
Receivables increased from prior year levels, reflecting an increase in home service contracts written at American Home Shield.
There is seasonality in the lawn care operations. In the winter and spring, this business sells a series of lawn applications to customers, which are
rendered primarily in March through October. On an ongoing basis, these direct and incremental selling expenses which relate to successful sales will be
deferred and recognized over the production season and are not deferred beyond the calendar year-end. In addition, the Company will continue to capitalize
sales commissions and other direct contract acquisition costs relating to termite baiting, termite inspection and protection contracts and pest contracts, as well
as home service contracts. These costs vary with and are directly related to a new sale, and will be amortized over the life of the related contract.
Current deferred tax assets increased from prior year levels, reflecting the reclassification of certain net operating losses from long-term to current, a
decrease in the amount of prepaid items deductible for income tax purposes and an increase to the amount of accrued expenses not deductible for income tax
purposes.
Property and equipment increased from prior year levels, reflecting vehicle purchases, recurring capital needs and information technology projects.
Goodwill increased from prior year levels as a result of tuck-in acquisitions at TruGreen and Terminix.
Intangibles decreased from prior year levels due to amortization expense and a recorded trade name impairment.
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