American Home Shield 2006 Annual Report Download - page 52

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Notes To The Consolidated Financial Statements
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 operations" for all periods presented.
The Company has also expanded its business segment reporting to allow for better ongoing visibility into the components 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 appliances. 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 headquarters 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.
Segment information for the years ended December 31, 2005, 2004, and 2003 is presented below.
31