American Home Shield 2008 Annual Report Download - page 91

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 4. Business Segment Reporting (Continued)
The 2008 and 2007 results also include merger charges related to the purchase of ServiceMaster by a group of investors led by Clayton, Dubilier & Rice, Inc.
The merger related charges totaled $1.2 million for the year ended December 31, 2008, $0.8 million for the Successor period from July 25, 2007 to
December 31, 2007, $41.4 million for the Predecessor period from January 1, 2007 to July 24, 2007 and $1.0 million for the year ended December 31, 2006.
All merger charges are included in the Other Operations and Headquarters segment.
Assets of discontinued operations are not included in the business segment table.
There are no adjustments necessary to reconcile total depreciation and amortization as presented in the business segment table to the consolidated
totals. Amortization of debt issue costs is not included in the business segment table.
The Other Operations and Headquarters segment includes the operations of ServiceMaster Clean and Merry Maids, as well as the Company's
headquarters function. The ServiceMaster Clean and Merry Maids franchise operations reported combined revenue of $212 million for the year ended
December 31, 2008, $92 million for the Successor period from July 25, 2007 to December 31, 2007, $114 million for the Predecessor period from January 1,
2007 to July 24, 2007 and $189 million for the year ended December 31, 2006. The ServiceMaster Clean and Merry Maids franchise operations reported
combined operating income of $30 million for the year ended December 31, 2008, $21 million for the Successor period from July 25, 2007 to December 31,
2007, $33 million for the Predecessor period from January 1, 2007 to July 24, 2007 and $55 million for the year ended December 31, 2006.
See Note 5 for information relating to segment goodwill.
Note 5. Goodwill and Intangible Assets
In accordance with SFAS 142, goodwill and intangible assets that are not amortized are subject to assessment for impairment by applying a fair-value
based test on an annual basis or more frequently if circumstances indicate a potential impairment. As described in Note 1, the 2008 results include a non-cash
impairment of trade names of $60.1 million to reduce the carrying value of trade names as a result of ServiceMaster's annual impairment testing of goodwill
and indefinite-lived intangible assets. No impairment of goodwill was recorded as a result of this review.
During the year ended December 31, 2008, the increase in goodwill and other intangible assets relates primarily to tuck-in acquisitions completed
throughout the period by Terminix and TruGreen LawnCare. During the Successor period from July 25, 2007 to December 31, 2007, the increase in goodwill
and other intangible assets resulted principally from the Merger as discussed in Notes 2 and 3. The remaining increase in goodwill and other intangible assets
in the Successor period from July 25, 2007 to December 31, 2007 relates primarily to tuck-in acquisitions completed throughout the period by Terminix and
TruGreen LawnCare. During the fourth quarter of 2007, a goodwill impairment charge of $12.9 million ($8.8 million after-tax) was recorded in the Other
Operations and Headquarters segment associated with the InStar reporting unit, which was disposed of in 2008 as further discussed in Note 8.
During the Predecessor period from January 1, 2007 to July 24, 2007, the increase in goodwill and other intangibles relates primarily to tuck-in
acquisitions completed throughout the period by Terminix and TruGreen LawnCare.
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