American Home Shield 2008 Annual Report Download - page 47

Table of Contents
Restructuring and Merger Related Charges
The Company recognized restructuring charges of $16.9 million for the Predecessor period from January 1, 2007 to July 24, 2007 and $26.0 million for
the Successor period from July 25, 2007 to December 31, 2007. Approximately $16.9 million and $8.3 million of charges for the Predecessor period from
January 1, 2007 to July 24, 2007 and the Successor period from July 25, 2007 to December 31, 2007, respectively, are 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. Such costs
include employee retention and severance costs, lease termination costs, temporary employee staffing, recruiting costs and training of replacement employees.
Almost all such costs were cash expenditures. In accordance with GAAP, these costs were expensed over the transition period.
The restructuring charges for the Successor period from July 25, 2007 to December 31, 2007 also included approximately $7.9 million of charges,
primarily severance costs, related to organizational changes made within the TruGreen LandCare operations.
In connection with the implementation of Fast Forward, the Company incurred costs of approximately $9.8 million for the Successor period from
July 25, 2007 to December 31, 2007. Such costs include lease termination and other costs related to closing the Santa Rosa call center of approximately
$3.7 million; and severance and other costs of approximately $6.1 million.
The 2006 aggregate restructuring charges totaled $21.6 million pre-tax. The after-tax impact of the restructuring charges including 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, totaled $6.9 million. 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 2006 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 $41.4 million for the Predecessor period from January 1, 2007 to July 24, 2007 and $0.8 million
for the Successor period from July 25, 2007 to December 31, 2007 compared to $1.0 million for the year ended December 31, 2006. These Merger related
costs 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.
Segment Review (The Successor period from July 25, 2007 to December 31, 2007 and the Predecessor period from January 1, 2007 to July 24, 2007
compared with the year ended December 31, 2006)
The following business segment reviews should be read in conjunction with the required footnote disclosures presented in the Notes to the Consolidated
Financial Statements. This disclosure provides a reconciliation of segment operating income to income from continuing operations before income taxes, with
net non-operating expenses as the only reconciling item.
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