American Home Shield 2005 Annual Report Download - page 41

P. 3 9 SERVICEMASTER 2005 ANNUAL REPORT
Segment information for the years ended December 31, 2005, 2004, and 2003 is as follows:
Business Segment Table
(In thousands) 2005 % Change 2004 % Change 2003
Operating Revenue:
TruGreen ChemLawn $ 1,024,641 4% $ 980,816 8% $ 908,351
TruGreen LandCare 453,323 3 438,833 0 439,049
Terminix 1,056,285 6 996,900 5 945,258
American Home Shield 528,687 8 487,395 8 450,264
Other Operations 176,542 8 164,124 8 152,106
Total Operating Revenue $ 3,239,478 6% $ 3,068,068 6% $ 2,895,028
Operating Income (Loss):(1, 2)
TruGreen ChemLawn $ 171,758 (2%) $ 175,666 9% $ 161,767
TruGreen LandCare (2) 4,317 N/M (4,482) N/M (195,784)
TruGreen LandCare without impairment charge (2) 4,317 N/M (4,482) 35 (6,914)
Terminix 145,568 10 132,827 1 131,044
American Home Shield 70,959 (1) 71,986 24 58,154
Other Operations (52,519) (2) (51,689) (16) (44,526)
Total Operating Income $ 340,083 5% $ 324,308 N/M $ 110,655
Capital Employed: (3)
TruGreen ChemLawn $ 812,873 2% $ 795,254 2% $ 777,880
TruGreen LandCare 33,900 1 33,720 (23) 43,532
Terminix 652,230 3 631,370 6 596,535
American Home Shield 207,864 24 168,223 25 134,372
American Home Shield without cash
and marketable securities (3) (75,026) 16 (89,561) (3) (86,574)
Other Operations 105,923 (60) 268,056 46 183,778
Total Capital Employed $ 1,812,790 (4%) $ 1,896,623 9% $ 1,736,097
Identifiable Assets:
TruGreen ChemLawn $ 885,153 2% $ 870,209 6% $ 821,121
TruGreen LandCare 92,694 6 87,474 (4) 90,837
Terminix 862,270 2 843,272 3 822,407
American Home Shield 530,486 12 474,326 12 422,765
Other Operations 658,267 (24) 864,921 8 799,296
Total Identifiable Assets $ 3,028,870 (4%) $ 3,140,202 6% $ 2,956,426
Depreciation & Amortization Expense:
TruGreen ChemLawn $ 12,611 2% $ 12,383 21% $ 10,263
TruGreen LandCare 8,411 (17) 10,163 (19) 12,501
Terminix 11,778 3 11,441 11 10,328
American Home Shield 8,492 8 7,860 15 6,829
Other Operations 8,475 24 6,839 (8) 7,418
Total Depreciation & Amortization Expense $ 49,767 2% $ 48,686 3% $ 47,339
Capital Expenditures:
TruGreen ChemLawn $ 11,724 51% $ 7,756 (5%) $ 8,192
TruGreen LandCare 3,659 (29) 5,132 (15) 6,005
Terminix 11,417 2 11,202 117 5,169
American Home Shield 5,343 (3) 5,490 (17) 6,619
Other Operations 9,628 (39) 15,766 122 7,098
Total Capital Expenditures $ 41,771 (8%) $ 45,346 37% $ 33,083
N/M = Not meaningful
(1) Presented below is a reconciliation of segment operating income to income from continuing operations before income taxes.
(In thousands) 2005 2004 2003
Segment Operating Income $ 340,083 $ 324,308 $ 110,655
Non-operating expense (income):
Interest expense 56,999 60,708 65,255
Interest and investment income (19,832) (15,469) (15,012)
Minority interest and other expense, net 8,218 8,225 8,151
Income from Continuing Operations before Income Taxes $ 294,698 $ 270,844 $ 52,261
(2) In the third quarter of 2003, the Company recorded in continuing operations a non-cash, pre-tax impairment charge of $189 million related to the goodwill and intangible assets of its
TruGreen LandCare operations. In order to facilitate comparisons of ongoing operating performance of continuing operations, the Company also has presented the TruGreen LandCare
segment results after adjusting for the impact of the impairment charge.
(3) Capital employed is a non-U.S. GAAP measure that is defined as the segment’s total assets less liabilities, exclusive of debt balances. The Company believes this information is useful to
investors in helping them compute return on capital measures and therefore better understand the performance of the Company’s business segments. The calculation of capital
employed for the American Home Shield segment includes approximately $283 million, $258 million and $221 million of cash and marketable securities at December 31, 2005, 2004 and
2003, respectively. The investment income and realized gains/losses on these assets are reported below operating income in non-operating income/expense. In order to facilitate the
comparison of return on invested capital for the American Home Shield segment, the Company has also presented capital employed for this segment excluding cash and marketable
securities. The negative capital employed balances primarily result from deferred revenue and amounts payable to subcontractors. Presented below is a reconciliation of total segment
capital employed to the most comparable U.S. GAAP measure.
(In thousands) 2005 2004 2003
Total Assets $ 3,028,870 $ 3,140,202 $ 2,956,426
Less:
Current liabilities, excluding current portion
of long-term debt 936,449 1,004,680 784,459
Long-term liabilities 279,631 238,899 435,870
Total Capital Employed $ 1,812,790 $ 1,896,623 $ 1,736,097
Notes to the Consolidated Financial Statements