American Home Shield 2010 Annual Report Download - page 27

Table of Contents
The 2010, 2009 and 2008 results include restructuring and Merger related charges of $12.2 million, $26.9 million and $12.5 million,
respectively, as described in Note 8 to the Consolidated Financial Statements.
The 2007 results include restructuring and Merger related charges of $26.8 million for the Successor period from July 25, 2007 to
December 31, 2007 and $58.4 million for the Predecessor period from January 1, 2007 to July 24, 2007. These charges include lease
termination and other costs related to the closing of the Santa Rosa call center; severance and other costs related to organizational
changes made within the TruGreen LandCare operations; employee retention, severance and other costs related to the Company's
consolidation of its corporate headquarters into its operations support center in Memphis, Tennessee and the closing of its headquarters
in Downers Grove, Illinois; consulting, severance and other costs related to prior initiatives; and Merger charges related to the purchase
of ServiceMaster by a group of investors led by CD&R.
The 2006 results include restructuring charges for severance, as well as costs associated with the Company's initiative to improve the
effectiveness and efficiency of its functional support areas, and accruals for employee retention and severance to be paid in future
periods that are related to the Company's decision to consolidate its corporate headquarters into its operations support center in
Memphis, Tennessee and close its former headquarters in Downers Grove, Illinois. The restructuring charges totaled $21.6 million pre-
tax and $6.9 million after-tax. The after-tax impact of the restructuring charges includes approximately $6 million of non-recurring net
operating loss carry forward benefits which became realizable to the Company as a result of its decision to consolidate its corporate
headquarters in Memphis, Tennessee.
In accordance with applicable accounting standards, 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.
During 2010, 2009 and 2008, the Company recorded non-cash impairment charges of $46.9 million, $28.0 million and $60.1 million,
respectively, to reduce the carrying value of goodwill and trade names as a result of the Company's interim and annual impairment
testing of goodwill and indefinite-lived intangible assets. These charges are included in the results of continuing operations for 2010,
2009 and 2008.
In the fourth quarter of 2007, the Company recorded a non-cash impairment charge associated with the goodwill at its InStar business
in the amount of $12.9 million. This charge is classified within the financial statement caption "loss from discontinued operations, net
of income taxes." In the first quarter of 2006, the Company recorded a $42.0 million impairment charge for expected losses on the
disposition of American Residential Services and American Mechanical Services. This charge is classified within the financial
statement caption "loss from discontinued operations, net of income taxes."
In addition to the impairment charges noted above, the Company also recorded impairment charges of $6.3 million and $18.1 million
for the year ended December 31, 2008 and the Successor period from July 25, 2007 to December 31, 2007, respectively, related to the
long-lived assets (other than goodwill) at its InStar business in connection with the decision to sell the InStar business. This charge is
classified within the financial statement caption "loss from discontinued operations, net of income taxes."
The 2009 results include a $46.1 million ($29.6 million, net of tax) gain on extinguishment of debt related to the completion of open
market purchases of $89.0 million in face value of the Company's Permanent Notes.
In the third and fourth quarters of 2009, the Company recorded a reduction in income tax expense of $12.1 million and $3.1 million,
respectively, related to changes in state tax rates used to measure deferred taxes. In the fourth quarter of 2008, the Company recorded a
reduction in income tax benefit of $8.3 million resulting from the establishment of a valuation allowance related to certain deferred tax
assets for which the realization in future years is not more likely than not. In the fourth quarter of 2006, the Company recorded a
reduction in income tax expense of $7.0 million resulting from the favorable resolution of state tax items related to a prior non-
recurring transaction.
(2)
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(4)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Year ended December 31, 2010 compared with the year ended December 31, 2009
The Company reported revenue of $3,365.9 million for the year ended December 31, 2010, a $125.8 million or 3.9 percent increase compared to the year
ended December 31, 2009. The revenue increase was driven by the results of our business units as described in our "Segment Review (Year ended
December 31, 2010 compared with the year ended December 31, 2009)."
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