American Home Shield 2005 Annual Report Download - page 40

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SERVICEMASTER 2005 ANNUAL REPORT P.38
Business Segment Reporting
The business of the Company is conducted through five
operating segments: TruGreen ChemLawn, TruGreen
LandCare, Terminix, American Home Shield and Other
Operations. The Company intends to sell its American
Residential Services (ARS) and American Mechanical
Services (AMS) companies so it can concentrate resources
on its main growth businesses. The Company has retained
an investment banking firm to serve as its financial advisor
in this process. The ARS/AMS operations provide heating,
ventilation, air conditioning (HVAC), plumbing and electrical
installation and repair services and were previously disclosed
as the Company’s ARS/AMS segment. Because the
Company intends to sell these businesses, their operating
results are reported within the financial statement caption
“businesses held pending sale and discontinued opera-
tions” for all periods presented.
The Company has also expanded its business segment
reporting to allow for better ongoing visibility into the com-
ponents of the business. The companies that previously
were reported within the TruGreen segment have been
further broken out into the TruGreen ChemLawn segment
and the TruGreen LandCare segment. TruGreen LandCare
is an important part of the Company’s continuing operations
and presenting its results as a separate segment recognizes
the importance of this business to the continued growth of
the enterprise while also enhancing overall disclosure. All
previously reported segment financial information reflects
the aforementioned changes in segment reporting.
In accordance with Statement of Financial Accounting
Standards 131, “Disclosures About Segments of an
Enterprise and Related Information”, the Company’s
reportable segments are strategic business units that offer
different services. The TruGreen ChemLawn segment
provides residential and commercial lawn care services.
The TruGreen LandCare segment provides landscaping
services to commercial customers. The Terminix segment
provides termite and pest control services to residential
and commercial customers. The American Home Shield
segment provides home warranties to consumers that
cover HVAC, plumbing and other home systems and appli-
ances. This segment also includes home inspection services
provided by AmeriSpec. The Other Operations segment
includes the franchised and company-owned operations of
ServiceMaster Clean, Furniture Medic and Merry Maids,
which provide disaster restoration, commercial cleaning,
carpet and upholstery cleaning, furniture repair and maid
services. This segment also includes the Company’s head-
quarters operations, which provide various technology,
marketing, finance, legal and other support services to the
business units.
Information regarding the accounting policies used by the
Company is described in the Significant Accounting
Policies Note. The Company derives substantially all of its
revenue from customers in the United States with less than
two percent generated in foreign markets. Operating
expenses of the business units consist primarily of direct
costs. Identifiable assets are those used in carrying out the
operations of the business unit and include intangible
assets directly related to its operations.
Notes to the Consolidated Financial Statements