American Home Shield 2010 Annual Report Download - page 46

Table of Contents
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.
TruGreen LawnCare Segment
The TruGreen LawnCare segment reported a 4.2 percent decrease in revenue, a 39.2 percent decrease in operating income and an 8.3 percent decrease in
Comparable Operating Performance for the year ended December 31, 2009 compared to 2008. The revenue results were adversely impacted by soft consumer
demand and $14.3 million of incremental discounts offered on full program accounts in 2009 designed to offset the impacts of a difficult economic
environment. Customer counts increased 0.9 percent compared to 2008 due primarily to a 210 basis point improvement in the customer retention rate, offset,
in part, by a decline in new unit sales in the first and second quarter.
TruGreen LawnCare's Comparable Operating Performance declined $16.2 million for the year ended December 31, 2009 compared to 2008, which
includes the impact of $8.4 million of restructuring charges related to a reorganization of field leadership and a restructuring of branch operations. TruGreen
LawnCare's Comparable Operating Performance also reflects increased sales and marketing expenses, unfavorable trending in health care costs, and increased
overhead expenses, offset, in part, by improved management of seasonal staffing of production labor, reduced fuel and fertilizer costs and a $15.7 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.
TruGreen LandCare Segment
The TruGreen LandCare segment reported a 17.1 percent decrease in revenue, a 39.5 percent increase in operating income and a 17.9 percent increase in
Comparable Operating Performance for the year ended December 31, 2009 compared to 2008. The decline in revenue included a 12.4 percent decline in base
contract maintenance revenue and a 26.9 percent decline in enhancement revenue. Revenue in the first quarter of 2009 was adversely impacted by TruGreen
LandCare's continued efforts to improve the quality of its customer mix by pruning less profitable jobs, implementing stricter pricing on new sales and
increasing the average size of new proposals and sales. In addition, revenue trends were adversely impacted by soft consumer demand and pricing
concessions.
TruGreen LandCare's Comparable Operating Performance increased $3.7 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 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 18.6 percent increase in operating income and an 8.4 percent increase in Comparable Operating Performance for the year ended
December 31, 2009 compared
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