American Home Shield 2009 Annual Report Download - page 90

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 1. Significant Accounting Policies (Continued)
products or services in multiple-deliverable arrangements. This standard establishes a selling price hierarchy for determining the selling price of a deliverable,
eliminates the residual method of allocation, and requires that total arrangement consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method. In addition, this standard significantly expands required disclosures related to a vendor's multiple-
deliverable revenue arrangements. This standard is effective prospectively for revenue arrangements entered into or materially modified in fiscal years
beginning on or after June 15, 2010 (calendar year 2011). The Company is currently evaluating the impact of this standard on its Consolidated Financial
Statements.
In December 2009, the FASB issued ASU No. 2009-17, "Accounting by Enterprises Involved with Variable Interest Entities" ("ASU No. 2009-17").
ASU No. 2009-17 formally incorporates into the FASB Codification amendments to FASB Interpretation No. 46(R) made by SFAS No. 167 to require that a
comprehensive qualitative analysis be performed to determine whether a holder of variable interests in a variable interest entity also has a controlling financial
interest in that entity. In addition, the amendments require that the same type of analysis be applied to entities that were previously designated as qualifying
special-purpose entities. This standard applies prospectively for fiscal years beginning on or after November 15, 2009. The Company will apply the provisions
of this standard in the first quarter of 2010. The Company does not expect that the adoption of this standard will have a material effect on its Consolidated
Financial Statements.
In January 2010, the FASB issued ASU No. 2010-6, "Fair Value Measurements and Disclosures" ("ASU No. 2010-6"). ASU No. 2010-6 will expand the
level of fair value disclosures by an entity, requiring information to be provided about movements of assets between levels 1 and 2, a reconciliation of
purchases, sales, issuance and settlements for all level 3 instruments and fair value measurement disclosures for each class of assets and liabilities. This
standard is effective for fiscal years beginning after December 15, 2010 (calendar year 2011). The Company is currently evaluating the impact of this standard
on its Consolidated Financial Statements.
Note 2. Acquisition of ServiceMaster
As discussed in Note 1, the Merger was completed on July 24, 2007.
Immediately following the completion of the Merger, all of the outstanding capital stock of Holdings, the ultimate parent company of ServiceMaster, was
owned by investment funds sponsored by or affiliated with the Equity Sponsors.
Equity contributions totaling $1,431.1 million from the Equity Sponsors, together with (i) borrowings under the Interim Loan Facility, (ii) borrowings
under a new $2,650.0 million senior secured term loan facility, and (iii) cash on hand at ServiceMaster, were used, among other things, to finance the
aggregate Merger Consideration, to make payments in satisfaction of other equity-based interests in ServiceMaster under the Merger Agreement, to settle
existing interest rate swaps, to redeem or provide for the repayment of certain of the Company's existing indebtedness and to pay related transaction fees and
expenses. In addition, letters of credit issued under a new $150.0 million pre-funded letter of credit facility were used to replace and/or secure letters of credit
previously issued under a ServiceMaster credit facility that was terminated as of the Closing Date. On the Closing Date, the Company also entered into, but
did not then draw under, the Revolving Credit Facility.
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