American Home Shield 2006 Annual Report Download - page 59

Notes to the Consolidated Financial Statements
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 reconstruction 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 professional 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 investment 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 substantially 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:
(In thousands, except per share data)
Operating Results: 2005 2004 2003
Operating revenue $ 764,888 $ 691,552 $ 738,615
ARS/AMS operating income 11,695 5,534 10,023
Headquarter support and insurance costs previously allocated to ARS/AMS 10,294 6,714 4,879
Favorable conclusion of certain obligations related to international pest control operations 11,000 — —
Impairment charge — — (291,800)
Other discontinued operations (2,634) (3,793) (4,482)
Provision (benefit) for income taxes (1) 11,991 (6,149) (59,148)