American Home Shield 2011 Annual Report Download - page 49

Table of Contents
Shield's sales in the real estate channel were negatively impacted by softness in the home resale market and elimination of the government housing incentive
program, which was extended through the first quarter of 2011. This decline was offset, in part, by growth in consumer sales.
American Home Shield's Comparable Operating Performance as a percentage of revenue increased to 19.2 percent for the year ended December 31, 2011
compared to 17.8 percent for the year ended December 31, 2010. American Home Shield's Comparable Operating performance included interest and net
investment income from the American Home Shield investment portfolio of $9.8 million and $6.2 million in 2011 and 2010, respectively, which contributed
47 bps to the increase in the segment's Comparable Operating Performance as a percentage of revenue. The remaining 93 basis point increase primarily
reflects a reduction in legal related expense and cost reductions realized through ongoing initiatives, offset, in part, by an increase in contract claims costs and
technology related costs driven by our new CRM system and other ongoing initiatives.
The American Home Shield segment reported a 4.2 percent increase in operating revenue, a 2.7 percent decrease in operating income and a 2.6 percent
increase in Comparable Operating Performance for the year ended December 31, 2010 compared to 2009. The revenue results reflect a 2.9 percent increase in
average price on home service contracts written and a 2.8 percent increase in average customer counts. Absolute customer counts as of December 31, 2010
were comparable to 2009, reflecting a 3.8 percent decline in new unit sales, offset by an 80 bps improvement in the customer retention rate. American Home
Shield's sales in the real estate channel were negatively impacted by softness in the home resale market, offset, in part, by growth in consumer sales.
American Home Shield's Comparable Operating Performance as a percentage of revenue decreased to 17.8 percent for the year ended December 31,
2010 compared to 18.0 percent for the year ended December 31, 2009. American Home Shield's Comparable Operating performance included interest and net
investment income from the American Home Shield investment portfolio of $6.2 million and $2.0 million in 2010 and 2009, respectively, which contributed
64 bps to the increase in the segment's Comparable Operating Performance as a percentage of revenue. The remaining 84 bps decrease primarily reflects an
increase in contract claims costs, offset, in part, by cost reductions realized through ongoing initiatives.
ServiceMaster Clean Segment
The ServiceMaster Clean segment, which provides residential and commercial disaster restoration and cleaning services through franchises primarily
under the ServiceMaster and ServiceMaster Clean brand names, on-site furniture repair and restoration services primarily under the Furniture Medic brand
name and home inspection services primarily under the AmeriSpec brand name, reported a 5.0 percent increase in operating revenue, a 4.0 percent increase in
operating income and a 0.5 percent increase in Comparable Operating Performance for the year ended December 31, 2011 compared to 2010. Domestic
royalty fees, which were 54 percent of the segment's operating revenue in 2011, increased 6.4 percent in 2011 compared to 2010, driven by increases in
disaster restoration services. Revenue from janitorial national accounts, which was 9 percent of the segment's revenue in 2011, increased 32.4 percent in 2011
compared to 2010, driven by strong sales activity. Sales of products to franchisees, which were 12 percent of the segment's revenue in 2011, decreased
8.4 percent in 2011 compared to 2010.
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