American Home Shield 2005 Annual Report Download - page 44

SERVICEMASTER 2005 ANNUAL REPORT P.42
At December 31, 2005, the Company had tax effected
federal and state net operating loss carryforwards of
approximately $21 million, expiring at various dates up to
2025. The Company also had federal and state tax credit
carryforwards of approximately $4 million which expire at
various dates up to 2024.
In 2005, cash paid for income taxes were $146 million,
including a net payment of $86 million to the IRS and various
states pursuant to the Company’s agreement with the IRS.
In 2004, total tax payments were $13 million. In 2003, the
Company received net tax refunds of $1 million.
Acquisitions
Acquisitions have been accounted for using the purchase
method and, accordingly, the results of operations of the
acquired businesses have been included in the Company’s
consolidated financial statements since their dates of
acquisition. The assets and liabilities of these businesses
were recorded in the financial statements at their estimated
fair values as of the acquisition dates.
Current Year
Throughout 2005, the Company completed several small
tuck-in acquisitions, primarily in the pest control and lawn
care businesses. Additionally, in the third quarter of 2005,
ServiceMaster Clean acquired a distributorship. The net
purchase price of the 2005 acquisitions was $51 million.
The Company recorded goodwill of approximately $36
million and other intangible assets of $15 million related to
the 2005 acquisitions. The impact of these acquisitions
was not material to the Company’s Consolidated Financial
Statements.
In February 2006, the Company announced an agreement
to acquire InStar Services Group, Inc. InStar is a leading
direct provider of commercial disaster response and recon-
struction services in the United States with 2005 revenues
of approximately $130 million. InStar provides a continuum
of services, from planning prior to an event, to emergency
response following the event and continuing service
through cleaning, recovery and reconstruction. The InStar
acquisition is not significant to the Company’s consolidated
financial statements, therefore proforma financial information
has not been presented.
Prior Years
During 2004, the Company acquired the assets of
Greenspace Services Limited, Canada’s largest profes-
sional lawn care service company. In addition, the
Company acquired several small companies, primarily in
the pest control and lawn care businesses. The net
purchase price of the 2004 acquisitions was $59 million.
The Company recorded goodwill of approximately $52
million and other intangible assets of $10 million related to
the 2004 acquisitions.
During 2003, the Company acquired several small companies,
primarily in the lawn care business. The net purchase price
of these acquisitions was $38 million. The Company
recorded goodwill of $38 million and other intangible assets
of $4 million related to these acquisitions.
Cash Flow Information for Acquisitions
Supplemental cash flow information regarding the
Company’s acquisitions is as follows:
(In thousands) 2005 2004 2003
Purchase price $ 53,692 $ 66,841 $ 44,667
Less liabilities
assumed (2,425) (7,851) (6,315)
Net purchase price $ 51,267 $ 58,990 $ 38,352
Net cash paid
for acquisitions $ 33,719 $ 40,184 $ 28,875
Value of shares issued 1,191 3,475 —
Seller financed debt 16,357 15,331 9,477
Payment for
acquisitions $ 51,267 $ 58,990 $ 38,352
Businesses Held Pending Sale and Discontinued
Operations
Current Year
The Company intends to sell its American Residential
Services (ARS) and American Mechanical Services (AMS)
companies so it can concentrate resources on its main
growth businesses. The Company has retained an invest-
ment banking firm to serve as its financial advisor in this
process. The ARS/AMS operations provide heating,
ventilation, air conditioning (HVAC), plumbing and electrical
installation and repair services and were previously
disclosed as the Company’s ARS/AMS segment. Because
the Company intends to sell these companies, the results
of these operations are reported within the financial statement
caption “businesses held pending sale and discontinued
operations” for all periods.
2003 Dispositions
During the third quarter of 2003, the Company sold sub-
stantially all of the assets and related operational obligations
of Trees, Inc., the utility line clearing operations of TruGreen
LandCare, to an independent subsidiary of Asplundh
Subsidiary Holdings, Inc., for approximately $20 million in
cash. The impact of the sale was not material to the
Company’s Consolidated Financial Statements for 2003.
Financial Information for Businesses Held Pending Sale
and Discontinued Operations
Reported “Businesses held pending sale and discontinued
operations” for all periods presented include the operating
results of the businesses sold, discontinued, and held for
sale noted above. The operating results and financial
position of businesses held pending sale and discontinued
operations are as follows:
Notes to the Consolidated Financial Statements