American Home Shield 2008 Annual Report Download - page 43

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Table of Contents
The growth in revenue resulted from strong increases in disaster restoration services and other franchise revenues, offset in part by decreases in product sales.
The ServiceMaster Clean and Merry Maids operations reported a combined decrease in operating income of 45.6 percent and an increase in Comparable
Operating Performance of 13.5 percent for the year ended December 31, 2008 over 2007 levels. The increase in the segment's Comparable Operating
Performance for the year ended December 31, 2008 compared to the combined periods for the year ended December 31, 2007 primarily reflects the decrease
in restructuring and Merger related charges incurred in 2008, increased Comparable Operating Performance from the ServiceMaster Clean and Merry Maids
operations resulting from increased revenue and lower functional support costs.
Discontinued Operations
The components of (loss) income from discontinued operations, net of income taxes and the reconciliation of operating (loss) income to Adjusted
EBITDA and Comparable Operating Performance for the year ended December 31, 2008, the Successor period from July 25, 2007 to December 31, 2007 and
the Predecessor period from January 1, 2007 to July 24, 2007 are as follows:
Successor
Predecessor
(In thousands)
Year Ended
Dec. 31, 2008
Jul. 25, 2007 to
Dec. 31, 2007
Jan. 1, 2007 to
Jul. 24, 2007
Year Ended
Dec. 31, 2006
Operating (loss) income $ (215)$ (8,833) $ (7,617)$ 16,509
Interest expense (73) (34) (38) (55)
Impairment charge (6,317) (31,006) — (42,000)
Pre-tax loss (6,605) (39,873) (7,655) (25,546)
Benefit for income taxes (2,618) (12,665) (3,067) (10,456)
Loss on sale, net of tax (539) — — (495)
Loss from discontinued operations, net of income taxes $ (4,526)$ (27,208) $ (4,588)$ (15,585)
Operating (loss) income $ (215) $ (8,833) $ (7,617) $ 16,509
Depreciation and amortization expense — 2,286 2,204 9,109
EBITDA before adding back interest and net investment income (215) (6,547) (5,413) 25,618
Interest and net investment income — — — —
Adjusted EBITDA (215) (6,547) (5,413) 25,618
Non-cash option and restricted stock expense — — — —
Non-cash charges attributable to purchase accounting — — — —
Comparable Operating Performance $ (215)$ (6,547) $ (5,413)$ 25,618
During the third quarter of 2008, the Company completed the sale of InStar for $22.0 million, with the payment of $3.0 million of that amount deferred
until November 2011. During the second quarter of 2008, the Company recorded a pre-tax impairment charge of $6.3 million as a result of a change in our
fair value estimate of InStar's net assets based on changing market conditions and the ongoing sales process. Upon the sale of InStar the Company recorded a
loss on sale, net of tax, of $0.5 million.
In the fourth quarter of 2007, management of the Company concluded that InStar did not fit within the long-term strategic plans of the Company and
committed to a plan to sell the business. InStar provides disaster response and reconstruction services to primarily commercial customers and was previously
reported as part of the Company's Other Operations and Headquarters segment. As a result of the decision to sell this business, an $18.1 million impairment
charge ($12.3 million, net of tax) was recorded in "loss from discontinued operations, net of income taxes"
39