American Home Shield 2009 Annual Report Download - page 50

Table of Contents
excluding the impact of purchase accounting, reflected modest growth in pest control revenues, offset by declines in revenue from termite completions and
termite contract renewals. Pest control revenues increased 2.5 percent for the year ended December 31, 2008 as compared to the combined periods for the year
ended December 31, 2007, as the impact of acquisitions and price realization more than offset a decrease in new unit sales. A 0.2 percent decrease in termite
renewal revenues for the year ended December 31, 2008 was due to an 80 basis point reduction in termite customer retention, offset, in part, by improved
price realization. Revenue from termite completions declined 4.3 percent for the year ended December 31, 2008, due to softer consumer demand for services
and due to reduced average pricing on new termite treatments.
The growth in operating income and Comparable Operating Performance reflects lower termite materials costs, effective management of seasonal
staffing of production and sales labor, lower vehicle fleet counts and reduced overhead spending, offset, in part, by increased fuel costs.
American Home Shield Segment
The American Home Shield segment reported an 8.7 percent increase in revenue for the year ended December 31, 2008 compared to the combined
periods for the year ended December 31, 2007. Revenue for the year ended December 31, 2008 and for the Successor period from July 25, 2007 to
December 31, 2007 was reduced by $30.8 million (non-cash) and $55.3 million (non-cash), respectively, as a result of recording deferred revenue at its fair
value in connection with purchase accounting. Excluding this impact of purchase accounting, revenue increased 3.8 percent for the year ended December 31,
2008 over the combined periods for the year ended December 31, 2007. The annual value of service contracts written increased 2.5 percent, which is
comprised of a 3.8 percent increase in average price per contract, offset, in part, by a 1.3 percent decline in total new contract and renewal sales units. New
contract and renewal sales units are reported as earned revenue over the subsequent twelve-month contract period. This decline in sales units is primarily
comprised of a 17.9 percent decrease in sales in the real estate market, offset, in part, by a 4.8 percent increase in renewal sales. American Home Shield's sales
in the real estate market were significantly impacted by the continued softness in the home resale market throughout most of the country.
American Home Shield reported a 60.7 percent increase in operating income and a 15.7 percent decrease in Comparable Operating Performance for the
year ended December 31, 2008 over the combined periods for the year ended December 31, 2007. The decrease in Comparable Operating Performance for the
year ended December 31, 2008 is primarily due to a $25.6 million decrease in interest and investment income from the American Home Shield investment
portfolio (primarily reflecting the unfavorable impact of realized losses on disposals of securities and other than temporary declines in the value of certain
investments) as compared to the combined periods for the year ended December 31, 2007 and increased provisions for certain legal matters.
ServiceMaster Clean Segment
The ServiceMaster Clean segment reported a 5.0 percent increase in revenue, a 7.0 percent increase in operating income and a 17.6 percent increase in
Comparable Operating Performance for the year ended December 31, 2008 compared to the combined periods for the year ended December 31, 2007. Trends
in revenue reflect increases in franchise revenues, offset, in part, by declines in disaster restoration services and product sales, primarily to franchisees.
ServiceMaster Clean's Comparable Operating Performance increased $8.2 million for the year ended December 31, 2008 compared to the combined
periods for the year ended December 31,
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