American Home Shield 2009 Annual Report Download - page 42

Table of Contents
TruGreen LandCare's Comparable Operating Performance increased $2.3 million for the year ended December 31, 2009 compared to 2008, which
reflects improved materials management, reduced branch administrative and corporate overhead spending, reduced sales and marketing expenses and a
$3.7 million reduction in vehicle lease expense driven by lower vehicle fleet counts and the favorable impact of acquiring assets in connection with exiting
certain fleet leases in 2008. These factors were offset, in part, by unfavorable trending in health care costs and increased fuel costs.
Terminix Segment
The Terminix segment, which includes termite and pest control services, reported comparable revenue for the year ended December 31, 2009 compared
to 2008. Revenue for the year ended December 31, 2008 was reduced by $3.3 million (non-cash) as a result of recording deferred revenue at its fair value in
connection with purchase accounting. Excluding this impact of purchase accounting, revenue for the year ended December 31, 2009 reflected a 0.7 percent
decrease as compared to 2008. Despite the decline in revenue, Terminix reported an 18.0 percent increase in operating income and a 7.5 percent increase in
Comparable Operating Performance for the year ended December 31, 2009 compared to 2008. The segment's overall revenue results, excluding the impact of
purchase accounting, reflected modest growth in pest control revenues offset by a decline in revenue from termite contract renewals and termite completions.
Pest control revenues increased 1.6 percent for the year ended December 31, 2009 compared to 2008, reflecting improved price realization, offset, in part, by
a decline in customer counts. The decline in customer counts was driven by a decline in new unit sales and a 30 basis point decline in customer retention. A
2.4 percent decrease in termite renewal revenues for the year ended December 31, 2009 compared to 2008 was due to a 110 basis point decline in termite
customer retention. Revenue from termite completions declined 4.9 percent for the year ended December 31, 2009 compared to 2008, due to reduced average
pricing on new termite treatments. Trends in retention and new unit sales were adversely impacted by soft consumer demand.
Terminix's Comparable Operating Performance increased $16.4 million for the year ended December 31, 2009 compared to 2008, which includes the
impact of $3.3 million of restructuring charges in 2009 related to a branch optimization program. Terminix's Comparable Operating Performance also reflects
favorable termite damage claims trends, effective management of seasonal staffing of production and sales labor, reduced fuel costs and overhead spending
and a $5.9 million reduction in vehicle lease expense driven by lower vehicle fleet counts and the favorable impact of acquiring assets in connection with
exiting certain fleet leases in 2008. The factors were offset, in part, by unfavorable trending in health care costs.
American Home Shield Segment
The American Home Shield segment, which provides home service contracts to consumers that cover heating, ventilation, air conditioning ("HVAC"),
plumbing and other systems and appliances, reported a 7.2 percent increase in revenue for the year ended December 31, 2009 compared to 2008. Revenue for
the year ended December 31, 2008 was reduced by $30.8 million (non-cash) as a result of recording deferred revenue at its fair value in connection with
purchase accounting. Excluding this impact of purchase accounting, revenue for the year ended December 31, 2009 reflected a 1.8 percent increase as
compared to 2008. American Home Shield reported a 168.8 percent increase in operating income and a 21.4 percent increase in Comparable Operating
Performance for the year ended December 31, 2009 compared to 2008. Trends in revenue reflect improved price realization. Customer counts are comparable
to 2008, reflecting a 2.1 percent decline in new unit sales, offset by a 200 basis point improvement in customer retention. American Home Shield's sales in the
real estate market in the first and second quarter were significantly impacted by the continued softness in the
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