American Home Shield 2008 Annual Report Download - page 87
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Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 3. Purchase Accounting (Continued)
The following table summarizes the estimated useful lives of the finite lived intangible assets and the amortization expense recorded in the year ended
December 31, 2008 and the Successor period July 25, 2007 to December 31, 2007:
Amortization Expense
(In thousands)
Estimated
useful life
Year Ended
Dec. 31, 2008
Jul. 25, 2007 to
Dec. 31, 2007
Trade names(1) 5 to 10 years $ 2,720 $ 1,185
Customer relationships 1 to 8 years(2) 145,049 64,437
Franchise agreements 23 to 25 years(2) 11,147 5,121
Backlog 6 months 8,787 59,313
Sub-contractor and realtor network 7 to 10 years 1,252 545
Favorable lease commitments 5 years 2,247 1,005
Software 7 years 2,424 1,056
$ 173,626 $ 132,662
•
Trade names with indefinite lives amounted to approximately $2,408 million and $2,468 million at December 31, 2008 and 2007,
respectively. Trade names with finite lives amounted to approximately $10 million and $12 million, net of accumulated amortization, at
December 31, 2008 and 2007, respectively.
Customer relationships and franchise agreements are amortized in proportion to the amount and timing of cash flows expected to be
received over the anticipated period of the customer relationship or duration of the franchise agreement.
The following pro forma results of operations assume that the Transactions had occurred at the beginning of the respective periods and include the
impact of certain acquisition related items, such as: additional amortization of identified intangible assets, increased interest expense on acquisition debt, and
the related income tax effects. Merger related charges are not included as they would have been incurred prior to the Transaction closing. This unaudited pro
forma information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the Transactions had
actually occurred on that date, or of the results that may be obtained in the future.
(In thousands) 2007 2006
Operating revenue $3,332,636 $3,238,028
Operating income 190,588 161,542
Interest expense, net (399,789) (402,640)
Net loss $ (139,695)$ (138,180)
Note 4. Business Segment Reporting
The business of the Company is conducted through five reportable segments: TruGreen LawnCare, TruGreen LandCare, Terminix, American Home
Shield and Other Operations and Headquarters.
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