ServiceMaster Announces First Quarter Revenues

DOWNER'S GROVE, Ill. - The ServiceMaster Company today announced first quarter 2005 revenues of $782 million, a 3 percent increase compared to the prior year. First quarter earnings per share from continuing operations were $.04, comparable to 2004. Increased securities gains at American Home Shield helped offset the effects of off-season sales and operating investments and unfavorable March weather.

"As we entered 2005, our Company remained focused on revenue growth, pricing, improved retention and consistently delivering a satisfied service experience to our residential and commercial customers," said Jonathan Ward, Chairman and Chief Executive Officer. "In order to enhance our ability to achieve these objectives, during the first and continuing into the second quarter, we continued to make key investments in salespeople and marketing programs. These investments combined with our technology pilots and ongoing process improvement developments should enable us to create a sustainable growth profile for our shareholders."

Terminix reported first quarter revenues of $248 million, up 5 percent compared to the prior year. Revenues from sales of initial termite treatments were supported by a sharp increase in renewable unit sales from an expanded sales force, despite lower swarm activity from cooler seasonal temperatures. The favorable impact on revenues of this increased volume was partially offset by a shift in mix to lower priced services. Termite renewal revenue increased modestly reflecting improved pricing, partially offset by a slight decrease in customer retention. The pest control operations experienced solid growth in customers and revenues, reflecting double-digit increases in unit sales, partially offset by a decline in customer retention. Operating income for the quarter was $31 million compared to $36 million in the prior year. Operating results benefited from the increased revenues but were adversely impacted by planned incremental investments to increase the size of the sales force and to reorganize field operations, as well as a $3 million unfavorable correction of reserve levels established for termite damage claims in prior years.