American Home Shield 2008 Annual Report Download - page 30

Table of Contents
respectively. The decrease in (loss) income from continuing operations before income taxes of $149.1 million primarily reflects the net effect of:
(In millions)
Non-cash purchase accounting adjustments(1) $ (49.0)
Increased interest expense(2) (137.7)
Decreased interest and net investment income(3) (35.1)
Decreased merger related charges(4) 41.0
Decreased restructuring charges(5) 31.7
Non-cash trade name impairment(6) (60.1)
Improved segment results(7) 60.1
$(149.1)
•
The net unfavorable impact of non-cash purchase accounting adjustments for the year ended December 31, 2008 of $49.0 million consists
primarily of increased amortization of intangible assets of $36.0 million and increased customer acquisition expense of $39.5 million
partially offset by a $26.5 million increase in revenue.
Represents an increase in interest expense as a result of the new debt structure entered into upon the completion of the Transactions.
As further described in "Operating and Non-Operating Expenses", represents a decrease in interest and net investment income, which
includes (1) the unfavorable impact to investment gains and income realized on the American Home Shield investment portfolio due to
realized losses on disposals of securities and other than temporary declines in the value of certain investments of $25.6 million and
(2) lower investment income of $6.9 million resulting from a decrease in the market value of investments within an employee deferred
compensation trust (for which there is a corresponding and offsetting decrease in compensation expense within loss (income) from
continuing operations before income taxes).
Represents a decrease in charges related to the Merger which cannot be capitalized as part of the purchase cost for financial reporting
purposes.
Represents a decrease in restructuring charges primarily resulting from completion of the consolidation of the Company's corporate
headquarters into its operations support center in Memphis, Tennessee and completion of significant aspects of Fast Forward prior to 2008.
Represents a non-cash impairment of trade names of $60.1 million to reduce the carrying value of trade names as a result of
ServiceMaster's annual impairment testing of goodwill and indefinite-lived intangible assets. See "Critical Accounting Policies and
Estimates" for further details.
Represents an increase in income from continuing operations before income taxes, non-cash purchase accounting adjustments, interest
expense, interest and net investment income, merger related charges and restructuring charges supported by the improved results at
Terminix, TruGreen LandCare, American Home Shield and Other Operations and Headquarters as described in our "Segment Review
(Year ended December 31, 2008 compared with the Successor period from July 25, 2007 to December 31, 2007 and the Predecessor period
from January 1, 2007 to July 24, 2007)."
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