American Home Shield 2008 Annual Report Download - page 116

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Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 21. Fair Value of Financial Instruments (Continued)
A reconciliation of the beginning and ending fair values of financial instruments valued using significant unobservable inputs (Level 3) is presented as
follows:
(In thousands)
Fuel Swap
Contract
Assets (Liabilities)
Balance at December 31, 2007 $ —
Gains included in other comprehensive income 3,118
Balance at March 31, 2008 3,118
Total gains/(losses) (realized/unrealized)
Included in earnings(1) 3,913
Included in other comprehensive loss 7,753
Settlements, net (3,913)
Balance at June 30, 2008 10,871
Total gains/(losses) (realized/unrealized)
Included in earnings(1) 3,882
Included in other comprehensive income (15,303)
Settlements, net (3,882)
Balance at September 30, 2008 (4,432)
Total gains/(losses) (realized/unrealized)
Included in earnings(1) (2,692)
Included in other comprehensive loss (20,492)
Settlements, net 2,692
Balance at December 31, 2008 $ (24,924)
Gains included in earnings are reported in cost of services rendered and products sold.
The Company uses fuel swap contracts to mitigate the impact of fluctuations in fuel prices. The Company's exposure to market risk for changes in fuel
prices relates to the forecasted consumption of fuel by the Company's vehicle fleet in the delivery of services to customers. As of December 31, 2008, the
Company had fuel swap contracts, designated as cash flow hedges, to pay fixed prices for fuel with an aggregate notional amount of $84.9 million, maturing
through 2010.
Note 22. Condensed Consolidating Financial Statements of The ServiceMaster Company and Subsidiaries
The following condensed consolidating financial statements of the Company and its subsidiaries have been prepared pursuant to Rule 3-10 of
Regulation S-X. These condensed consolidating financial statements have been prepared from the Company's financial information on the same basis of
accounting as the condensed consolidated financial statements. Goodwill and other intangible assets have been allocated to all of the subsidiaries of the
Company based on management's estimates.
On July 24, 2008, outstanding amounts under the Interim Loan Facility converted into the Permanent Notes. The payment obligations of the Company
under the Permanent Notes are jointly and severally guaranteed on a senior unsecured basis by certain of the Company's domestic subsidiaries excluding
certain subsidiaries subject to regulatory requirements in various states ("Guarantors"). Each of the Guarantors is wholly-owned, directly or indirectly, by the
Company, and all guarantees are full and unconditional. All other subsidiaries of the Company, either directly or indirectly owned, do not guarantee the
Permanent Notes ("Non-Guarantors").
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