American Home Shield 2008 Annual Report Download - page 102

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 9. Restructuring Charges (Continued)
$4.1 million of recruiting and related costs. During the year ended December 31, 2008, the Company recorded additional expense of $0.4 million
($0.2 million after-tax) relating to this relocation, which includes additional severance and other costs.
The restructuring charges for the year ended December 31, 2008 and the Successor period from July 25, 2007 to December 31, 2007 also included
approximately $0.3 million ($0.2 million after-tax) and $7.9 million ($4.8 million after-tax), respectively, of charges, primarily severance costs, related to
organizational changes made within the TruGreen LandCare operations.
The 2006 aggregate restructuring charges totaled $21.6 million ($6.9 million after-tax). The after-tax impact of the restructuring charges includes
approximately $6 million of non-recurring net operating loss carryforward benefits which became realizable to the Company as a result of its decision to
consolidate its corporate headquarters in Memphis, Tennessee. The 2006 aggregate restructuring charges were comprised of the following:
Severance costs and third party professional fees and expenses resulting from the organizational changes made as part of Project Accelerate and
severance costs associated with the resignation in the second quarter of the Company's former Chief Executive Officer. These costs totaled
$11.2 million, substantially all of which was paid by the end of 2006.
Approximately $10.4 million of restructuring charges in the fourth quarter of 2006 related to the Company's consolidation of its corporate
headquarters into its operations support center in Memphis, Tennessee and closing of its headquarters in Downers Grove, Illinois.
The Company incurred Merger related expenses totaling $1.2 million ($0.6 million after-tax) for the year ended December 31, 2008, $0.8 million
($0.1 million after-tax) for the Successor period from July 25, 2007 to December 31, 2007, $41.4 million ($34.7 million after-tax) for the Predecessor period
from January 1, 2007 to July 24, 2007 and $1.0 million ($0.1 million after-tax) for the year ended December 31, 2006. These Merger related charges include
investment banking, accounting, legal and other costs associated with the Merger, which cannot be capitalized as part of the purchase cost for financial
reporting purposes.
The Company has change in control severance agreements with certain of its officers. These agreements generally provide, among other things, for
severance pay and other benefits to the officer if, within two years following a change in control of ServiceMaster, the officer's employment is terminated by
the Company other than for cause or is terminated by the officer for good reason. The consummation of the Merger constituted a change of control for
purposes of these agreements. The financial results for years ended December 31, 2008 and 2007 include severance and retention costs for certain officers in
the Company's Downers Grove, Illinois office whose employment was terminated due to the consolidation of the corporate headquarters into the Memphis,
Tennessee operations support center. The consummation of the Merger resulted in additional severance costs and other benefits that were due under the
change in control severance agreements for these officers. These additional costs, as well as change in control severance costs and other benefits due to certain
terminated officers of the Company's Memphis, Tennessee operations support center totaled $45.4 million pre-tax, which is not included in the statements of
operations and is reflected as a cost of the acquisition as presented in Notes 2 and 3. These costs are incremental to the costs described in the preceding
paragraph. Approximately $23.6 million and $21.8 million of change in control severance costs were paid in the year ended December 31, 2008 and the
Successor period from July 25, 2007 to December 31, 2007, respectively.
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