American Home Shield 2010 Annual Report Download - page 32

Table of Contents
indefinite-lived intangible assets. See Note 1 to the Consolidated Financial Statements for further details.
Key Performance Indicators
The table below presents selected operating metrics related to customer counts and customer retention for the three largest profit businesses in the
Company. These measures are presented on a rolling, twelve-month basis in order to avoid seasonal anomalies.
Key Performance Indicators as of December 31,
2010 2009 2008
TruGreen LawnCare—
(Reduction) Growth in Full Program Accounts (1.7)% 0.7% 1.4%
Customer Retention Rate 66.0% 68.1% 66.0%
Terminix—
Growth (Reduction) in Pest Control Customers 3.6% (0.9)% 2.9%
Pest Control Customer Retention Rate 79.9% 78.5% 78.8%
Growth (Reduction) in Termite Customers 0.3% (1.5)% 0.2%
Termite Customer Retention Rate 86.0% 85.7% 86.8%
American Home Shield—
Growth (Reduction) in Home Service Contracts 0.1% 0.1% (0.8)%
Customer Retention Rate 66.1% 63.8% 61.8%
Segment Review (Year ended December 31, 2010 compared with the year ended December 31, 2009)
The following business segment reviews should be read in conjunction with the required footnote disclosures presented in the Notes to the Consolidated
Financial Statements. This disclosure provides a reconciliation of segment operating income to income (loss) from continuing operations before income taxes,
with net non-operating expenses as the only reconciling item.
The Company uses Adjusted EBITDA and Comparable Operating Performance to facilitate operating performance comparisons from period to period.
Adjusted EBITDA and Comparable Operating Performance are supplemental measures of the Company's performance that are not required by, or presented
in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). Adjusted EBITDA and Comparable Operating
Performance are not measurements of the Company's financial performance under GAAP and should not be considered as alternatives to net income or any
other performance measures derived in accordance with GAAP or as alternatives to net cash provided by operating activities or any other measures of the
Company's cash flow or liquidity. "Adjusted EBITDA" means net income (loss) before net loss from discontinued operations; (benefit) provision for income
taxes; other expense; gain on extinguishment of debt; interest expense and interest and net investment (income) loss; and depreciation and amortization
expense; as well as adding back interest and net investment (income) loss, residual value guarantee charge and non-cash goodwill and trade name impairment.
"Comparable Operating Performance" is calculated by adding back to Adjusted EBITDA an amount equal to the non-cash stock-based compensation expense
and non-cash effects on Adjusted EBITDA attributable to the application of purchase accounting in connection with the Merger.
The Company believes Adjusted EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences
caused by variations in capital structures (affecting net interest income and expense), taxation and the age and book depreciation of facilities and equipment
(affecting relative depreciation expense), which may vary for different
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