American Home Shield 2008 Annual Report Download - page 50

Table of Contents
9.6 percent increase for the combined periods for the year ended December 31, 2007. The growth in revenue resulted from strong increases in product sales
and disaster restoration services, as well as the impact of acquisitions at Merry Maids. The ServiceMaster Clean and Merry Maids operations reported a
combined decrease in operating income of 0.7 percent and an increase in Comparable Operating Performance of 10.0 percent for the combined periods for the
year ended December 31, 2007 compared to the year ended December 31, 2006. The decrease in the segment's Comparable Operating Performance for the
combined periods for the year ended December 31, 2007 compared to the year ended December 31, 2006 primarily reflects the Merger related expenses
incurred in 2007 and an increase in restructuring charges in 2007 over 2006 levels, offset, in part, by increased Comparable Operating Performance from the
ServiceMaster Clean and Merry Maids operations resulting from increased revenues.
Discontinued Operations
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) income from discontinued operations, net of income taxes" in the fourth quarter of 2007 to reduce
the carrying value of InStar's long-lived assets to their fair value less cost to sell in accordance with the provisions of SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This charge was in addition to a $12.9 million ($8.8 million, net of tax) goodwill impairment charge.
In the third quarter of 2006, the Company completed the sales of American Residential Services (ARS) and American Mechanical Services (AMS)
generating gross cash proceeds of approximately $115 million, which was used to reduce outstanding debt balances. During the first quarter of 2006, the
Company recorded a $42 million ($25 million net of tax) impairment charge for expected losses on the disposition of certain ARS/AMS properties held
pending sale. The Company recorded a loss on sale, net of tax, of $0.5 million related to the sales of the ARS and AMS businesses in the third quarter of
2006.
FINANCIAL POSITION AND LIQUIDITY
As a result of the Merger, the 2007 cash flow results have been separately presented in the consolidated statements of cash flows for the Predecessor
period, covering the period January 1, 2007 to July 24, 2007 and the Successor period, covering the period July 25, 2007 to December 31, 2007.
Cash Flows from Operating Activities from Continuing Operations
Net cash provided from operating activities from continuing operations was $162.1 million for the year ended December 31, 2008 compared to
$67.4 million and $195.5 million in the Successor period from July 25, 2007 to December 31, 2007 and the Predecessor period from January 1, 2007 to
July 24, 2007, respectively.
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