American Home Shield 2008 Annual Report Download - page 99
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Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 8. Discontinued Operations
Current Year Dispositions
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" 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. This charge was in addition to a
$12.9 million ($8.8 million, net of tax) goodwill impairment charge recorded in 2007.
The assets of discontinued operations balance at December 31, 2007 includes approximately $42.0 million of InStar receivables.
Prior Year Dispositions
In the third quarter of 2006, the Company completed the sales of ARS and AMS generating gross cash proceeds of approximately $115 million, which
was used to reduce outstanding debt balances. The results of the ARS/AMS operations, which provide HVAC, plumbing and electrical installation and repair,
have been reported within the financial statement caption "loss from discontinued operations, net of income taxes" for all periods. 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. Related to the sales of the ARS and AMS businesses, the Company recorded a loss on sale, net of tax, of $0.5 million.
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