American Home Shield 2011 Annual Report Download - page 50

Table of Contents
ServiceMaster Clean's Comparable Operating Performance as a percentage of revenue decreased to 46.1 percent for the year ended December 31, 2011
compared to 48.2 percent for the year ended December 31, 2010. Key executive transition charges of $0.4 million were incurred in 2011, which represented a
signing bonus related to the hiring of the new President of ServiceMaster Clean and Merry Maids. These charges negatively impacted the change in the
segment's Comparable Operating Performance as a percentage of revenue by 30 bps. The remaining 180 basis point reduction primarily reflects an increase in
support services, sales and marketing expense, technology and other costs, all driven by ongoing initiatives to increase share primarily in the commercial, fire
remediation and janitorial market segments.
The ServiceMaster Clean segment reported a 5.2 percent increase in operating revenue, a 9.9 percent increase in operating income and a 7.2 percent
increase in Comparable Operating Performance for the year ended December 31, 2010 compared to 2009. Domestic royalty fees, which were 53 percent of
the segment's operating revenue in 2010, decreased 0.3 percent in 2010 compared to 2009, driven by reductions in disaster restoration services. Revenue from
janitorial national accounts, which was 7 percent of the segment's operating revenue in 2010, increased 46.8 percent in 2010 compared to 2009, driven by
strong sales activity. Sales of products to franchisees, which were 14 percent of the segment's operating revenue in 2010, increased 8.3 percent in 2010
compared to 2009.
ServiceMaster Clean's Comparable Operating Performance as a percentage of revenue increased to 48.2 percent for the year ended December 31, 2010
compared to 47.3 percent for the year ended December 31, 2009. The 90 bps increase in Comparable Operating Performance as a percentage of revenue
primarily reflects cost reductions realized through ongoing initiatives.
Other Operations and Headquarters Segment
This segment includes the operations of Merry Maids, SMAC and the Company's headquarters functions. The segment reported a 2.3 percent increase in
operating revenue, a 1.7 percent improvement in operating loss and a 1.7 percent improvement in Comparable Operating Performance for the year ended
December 31, 2011 compared to 2010.
Merry Maids, which accounted for 93.5 percent of the segment's operating revenue for 2011, reported a 3.0 percent increase in operating revenue, a
7.0 percent increase in operating income and a 1.9 percent increase in Comparable Operating Performance for the year ended December 31, 2011 compared to
2010. Revenue from company-owned branches, which was 75 percent of Merry Maids' revenue in 2011, increased 0.7 percent in 2011 compared to 2010,
driven by a 1.7 percent increase in the average service price, offset, in part, by a 0.3 percent decline in average customer counts. Absolute customer counts as
of December 31, 2011 compared to 2010 declined 3.6 percent driven by the sale of certain company-owned branches to existing and new franchisees in the
fourth quarter of 2011, offset, in part, by a 630 bps increase in the customer retention rate. Royalty fees, which were 19 percent of Merry Maids' revenue in
2011, increased 6.3 percent in 2011 compared to 2010, primarily driven by market expansion.
Merry Maids' Comparable Operating Performance as a percentage of revenue decreased to 25.9 percent for the year ended December 31, 2011 compared
to 26.2 percent for the year ended December 31, 2010. Key executive transition charges of $0.6 million were incurred in 2011, which included separation
charges related to the resignation of the former President of Merry Maids in the first quarter of 2011. These charges negatively impacted the change in
Comparable Operating Performance as a percentage of revenue by 72 bps. The remaining 42 bps increase reflects the gain resulting from the sale of certain
branches, offset, in part, by an increase in sales and marketing expense, fuel costs and incentive compensation expense.
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