American Home Shield 2007 Annual Report Download - page 68

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Notes to the Consolidated Financial Statements
of approximately $3 million which expire at various dates up to 2024.
In 2006, cash paid for income taxes was $46 million, including a payment of $3 million relating to the resolution of the 2003 and
2004 audits. In 2005, cash paid for income taxes was $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.
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
In February 2006, the Company acquired InStar, a leading provider of disaster response and reconstruction services, for
approximately $85 million in cash. The Company recorded $31 million of goodwill and other intangible assets of $20 million
related to the InStar acquisition.
During 2006, the Company completed several lawn care and pest control tuck-in acquisitions, including Safeguard Pest Control
(acquired in October 2006), for a total net purchase price of $82 million. Related to these acquisitions, the Company recorded
goodwill of approximately $69 million and other intangible assets of $10 million.
Prior Years
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.
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.
Cash Flow Information for Acquisitions
Supplemental cash flow information regarding the Company's acquisitions is as follows:
(In thousands) 2006 2005 2004
Purchase price $ 196,891 $ 53,692 $ 66,841
Less liabilities
assumed (29,955) (2,425) (7,851)
Net purchase price $ 166,936 $ 51,267 $ 58,990
Net cash paid
for acquisitions $ 143,406 $ 33,719 $ 40,184
Value of shares issued 9,270 1,191 3,475
Seller financed debt 14,260 16,357 15,331
Payment for
acquisitions $ 166,936 $ 51,267 $ 58,990
Discontinued Operations
Current Year Dispositions
In the third quarter of 2006, the Company completed the sales of American Residential Services (ARS) and American Mechanical
Services (AMS) generating gross cash proceeds of approximately $115 million, which was used to reduce outstanding debt
balances. The results of the ARS/AMS operations, which provide heating, ventilation, air conditioning (HVAC), plumbing and
electrical installation and repair, have been reported within the financial statement caption "discontinued operations" for all periods.
During the first quarter of 2006, the Company recorded a $25 million after-tax ($42 million pretax) impairment charge for expected
losses on the disposition of certain ARS/AMS properties held pending sale. Related to the sales of the ARS and AMS businesses,
the Company recorded an after-tax net loss of ($0.5) million. The sale of ARS resulted in the elimination of $56 million of goodwill
that had previously been included in the assets of discontinued operations.
Prior Year 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.