American Home Shield 2008 Annual Report Download - page 39

Table of Contents
(in thousands)
TruGreen
LawnCare
TruGreen
LandCare Terminix
American
Home Shield
Other
Operations
and
Headquarters Total
Predecessor Year Ended Dec. 31, 2006
Operating income (loss)(1) $ 157,695 $ (587)$152,161 $ 62,780 $ (47,921)$324,128
Depreciation and amortization expense 14,462 6,209 14,433 8,222 11,010 54,336
EBITDA before adding back interest and net investment income 172,157 5,622 166,594 71,002 (36,911) 378,464
Interest and net investment income (2) — — — 20,358 5,584 25,942
Adjusted EBITDA 172,157 5,622 166,594 91,360 (31,327) 404,406
Non-cash option and restricted stock expense 10,869 10,869
Non-cash charges attributable to purchase accounting(3) — — — — — —
Comparable Operating Performance $ 172,157 $ 5,622 $ 166,594 $ 91,360 $ (20,458)$415,275
Memo: Items included in Comparable Operating Performance
Restructuring charges and merger related expenses(4) $ — $ — $ — $ — $ 22,640 $ 22,640
Management fee(5) $ — $ — $ — $ — $ — $ —
Memo: Items excluded from Comparable Operating Performance
Comparable Operating Performance of InStar $ — $ — $ — $ — $ 7,781 $ 7,781
Comparable Operating Performance of all other discontinued operations — — — — 17,837 17,837
Comparable Operating Performance of discontinued operations $ — $ — $ — $ — $ 25,618 $ 25,618
Presented below is a reconciliation of total segment operating income to net (loss) income.
Successor Predecessor
(In thousands)
Year Ended
Dec. 31, 2008
Jul. 25, 2007 to
Dec. 31, 2007
Jan. 1, 2007 to
July 24, 2007
Year Ended
Dec. 31, 2006
Segment operating income $ 197,762 $ 33,240 $ 143,932 $ 324,128
Non-operating expense (income):
Interest expense 347,231 177,938 31,643 61,341
Interest and net investment loss (income) 10,052 3,563 (28,624) (25,942)
Minority interest and other expense, net 652 233 3,532 8,240
(Loss) income from continuing operations before income taxes $ (160,173)$ (148,494) $ 137,381 $ 280,489
(Benefit) provision for income taxes (38,300) (52,182) 51,692 95,205
(Loss) income from continuing operations (121,873) (96,312) 85,689 185,284
(Loss) income from discontinued operations, net of income taxes (4,526) (27,208) (4,588) (15,585)
Net (loss) income $ (126,399)$ (123,520) $ 81,101 $ 169,699
Interest and net investment income is primarily comprised of investment income and realized gain (loss) on our American Home Shield segment investment portfolio. Cash, short-term
and long-term marketable securities associated with regulatory requirements in connection with American Home Shield and for other purposes totaled approximately $244 million as
of December 31, 2008. American Home Shield interest and investment income (loss) was ($8.2) million for the year ended December 31, 2008 compared to ($6.7) million for the
Successor period from July 25, 2007 to December 31, 2007 and $24.2 million for the Predecessor period from January 1, 2007 to July 24, 2007. The balance of interest and investment
income primarily relates to (i) a portion of the earnings generated by SMAC; (ii) investment income from our employee deferred compensation trust (for which there is a corresponding
and offsetting increase in compensation expense within operating income); and (iii) interest income on other cash balances.
The Merger was accounted for using purchase accounting. This adjustment represents the aggregate, non-cash adjustments (other than amortization and depreciation) attributable to the
application of purchase accounting.
Includes (i) restructuring charges for severance as well as costs associated with Project Accelerate, (ii) severance costs and costs related to the consolidation of our corporate
headquarters in Memphis, Tennessee, including the closing of our office in Downers Grove, Illinois, (iii) costs to exit leases and severance payments related to organizational changes
within the TruGreen LandCare operations, (iv) Merger related expenses and (v) charges related to Fast Forward.
The Company entered into the Consulting Agreement with CD&R under which CD&R provides the Company with on-going consulting and management advisory services in
exchange for a minimum annual management fee of $2 million. This fee is payable quarterly.
TruGreen LawnCare Segment
The TruGreen LawnCare segment, which includes lawn, tree and shrub care services, reported a 0.4 percent decrease in revenue, an 18.1 percent
decrease in operating income and a 1.1 percent decrease in Comparable Operating Performance for the year ended December 31, 2008 compared to the
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