American Home Shield 2009 Annual Report Download - page 64

Table of Contents
As a result of the trade name impairment taken in 2009, the carrying values of the Company's impaired trade names were re-set to their estimated fair
values as of October 1, 2009. Consequently, any further decline in the estimated fair values of these trade names could result in additional trade name
impairments. Management has no reason to believe that any one business segment is more likely than any other to incur further impairments of its trade
names. It is possible that such impairments, if required, could be material and may need to be recorded prior to the fourth quarter of 2010 (i.e., during an
interim period) if the Company's results of operations or other factors require such assets to be tested for impairment at an interim date.
The Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company has entered into specific
financial arrangements in the normal course of business to manage certain market risks, with a policy of matching positions and limiting the terms of contracts
to relatively short durations.
The Company has historically hedged a significant portion of its annual fuel consumption of approximately 25 million gallons. The Company has also
hedged the interest payments on a portion of its variable rate debt through the use of interest rate swap agreements. In accordance with accounting standards
for derivative instruments and hedging activities, the Company's fuel hedges and interest rate swap agreements are classified as cash flow hedges and as such,
the hedging instruments are recorded on the balance sheet as either an asset or liability at fair value, with the effective portion of changes in the fair value
attributable to the hedged risks recorded in other comprehensive income.
Newly Issued Accounting Statements and Positions:
Accounting Standards Codification ("ASC")
In June 2009, the Financial Accounting Standards Board ("FASB") issued guidance under ASC Topic 105, "Generally Accepted Accounting Principles",
which established the "FASB Accounting Standards Codification". The Codification became the source of authoritative GAAP recognized by the FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative
GAAP for SEC registrants. On the effective date of this standard, the Codification superseded all then-existing non-SEC accounting and reporting standards.
All other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative. This standard was effective for
financial statements issued for interim and annual periods ending after September 15, 2009. The Company adopted this standard during the third quarter of
2009. The adoption of this standard did not have a material effect on the Company's Consolidated Financial Statements.
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