American Home Shield 2011 Annual Report Download - page 34

Table of Contents
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
In the first quarter of 2011, ServiceMaster concluded that TruGreen LandCare did not fit within the long-term strategic plans of the Company and
committed to a plan to sell the business. On April 21, 2011, the Company entered into a purchase agreement to sell the TruGreen LandCare business, and the
disposition was effective as of April 30, 2011. As a result of the decision to sell this business, a $34.2 million impairment charge ($21.0 million, net of tax)
was recorded in loss from discontinued operations, net of income taxes, in the first quarter of 2011 to reduce the carrying value of TruGreen LandCare's assets
to their estimated fair value less cost to sell in accordance with applicable accounting standards. Upon completion of the sale, a $6.2 million loss on sale
($1.9 million, net of tax) was recorded. The loss on the disposition of the TruGreen LandCare business continues to be subject to certain post-closing
adjustments and disputes, and such adjustments could be significant to the sale price. The financial results, as well as the assets and liabilities, of the TruGreen
LandCare business are reported in discontinued operations for all periods presented in this Annual Report on Form 10-K.
The Company reported operating revenue of $3.206 billion for the year ended December 31, 2011, $3.127 billion for the year ended December 31, 2010
and $2.978 billion for the year ended December 31, 2009. The operating revenue changes from year to year were driven by the results of our business units as
described in our "Segment Review."
Operating income was $375.5 million for the year ended December 31, 2011, $306.7 million for the year ended December 31, 2010 and $243.8 million
for the year ended December 31, 2009. Income from continuing operations before income taxes was $111.7 million for the year ended December 31, 2011
and $28.4 million for the year ended December 31, 2010. Loss from continuing operations before income taxes was $3.1 million for the year ended
December 31, 2009. The increase in income from continuing operations before income taxes for 2011 compared to 2010 and 2010 compared to 2009 of
$83.4 million and $31.4 million, respectively, primarily reflect the net effect of year over year changes in the following items:
(In thousands)
2011
Compared
to 2010
2010
Compared
to 2009
Segment results(1) $ 59,423 $ 11,555
Depreciation and amortization expense(2) 33,189 18,167
Interest expense(3) 13,810 12,400
Residual value guarantee charges(4) 10,449 (4,988)
Restructuring and Merger related charges(5) 3,286 15,234
Non-cash trade name impairments(6) (36,700) 26,600
Loss/gain on extinguishment of debt(7) (774) (46,106)
Other 682 (1,416)
$ 83,365 $ 31,446
Represents an improvement in income from continuing operations before income taxes, as adjusted for the specific items
included in the table above. Includes an increase in key executive transition charges, reflecting the net effect of (i) $6.6 million
recorded in the year ended December 31, 2011, which include recruiting costs and signing bonuses related to the hiring in 2011
of our Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO") and President of ServiceMaster Clean and Merry
Maids and separation charges related to the resignations of our former CFO and the former
(1)
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