American Home Shield 2007 Annual Report Download - page 5

PART I
ITEM 1. BUSINESS
The ServiceMaster Company ("ServiceMaster") is a national company serving both residential and commercial customers. Its
services include lawn care, landscape maintenance, termite and pest control, home warranty, disaster response and reconstruction,
cleaning and disaster restoration, house cleaning, furniture repair, and home inspection. As of December 31, 2006, ServiceMaster
provided these services through a network of approximately 5,500 company-owned locations and franchise licenses operating under
the following leading brands: TruGreen LawnCare, TruGreen LandCare, Terminix, American Home Shield, InStar, Merry Maids,
ServiceMaster Clean, Furniture Medic and AmeriSpec. Incorporated in Delaware in 1991, ServiceMaster is the successor to various
entities dating back to 1947.
ServiceMaster is organized into five principal operating segments: TruGreen LawnCare, TruGreen LandCare; Terminix; American
Home Shield; and Other Operations and Headquarters. All ServiceMaster subsidiaries are wholly owned, except for The Terminix
International Company L.P., in which a third party is a Class B limited partner. The financial information for each operating
segment for 2006, 2005 and 2004 is contained in Part II, Item 8 of this Form 10-K.
STRATEGIC ALTERNATIVES
On November 28, 2006, ServiceMaster announced that its Board of Directors has decided to explore strategic alternatives designed
to maximize value for shareholders. The Board has retained Morgan Stanley and Goldman Sachs as its financial advisors and Sidley
Austin as its legal advisor to facilitate the process. There can be no assurance that any particular alternative will be pursued or any
transaction will occur, or on what terms. ServiceMaster does not plan to release additional information about the status of the
review of strategic alternatives until a definitive agreement is entered into or the process is otherwise completed.
SERVICES
The following table shows the percentage of ServiceMaster's consolidated revenue from continuing operations derived from each of
ServiceMaster's reportable segments in the years indicated:
Segment 2006 2005 2004
TruGreen LawnCare 31% 32% 32%
TruGreen LandCare 13% 14% 14%
Terminix 31% 33% 33%
American Home Shield 16% 16% 16%
Other Operations and
Headquarters 9% 5% 5%
TruGreen LawnCare Segment
The TruGreen LawnCare segment provides lawn care services primarily under the TruGreen LawnCare brand name. Revenues
derived from the TruGreen LawnCare segment constituted 31%, 32% and 32% of the revenue from continuing operations of the
consolidated ServiceMaster enterprise in 2006, 2005 and 2004, respectively. The TruGreen LawnCare business is seasonal in
nature. Weather conditions, such as a drought, or snow in the late spring or fall, can affect the demand for lawn care services and
may result in a decrease in revenues or an increase in costs.
TruGreen LawnCare is the leading provider of lawn care services in the United States serving both residential and commercial
customers. As of December 31, 2006, TruGreen LawnCare provided these services in 43 states and the District of Columbia
through 209 company-owned locations and 55 franchised locations. As of December 31, 2006, TruGreen LawnCare also provided
lawn care services through a subsidiary in Canada and has licensing arrangements with licensees who provide these services in
Japan and the United Kingdom.
TruGreen LandCare Segment
The TruGreen LandCare segment provides landscape maintenance services primarily under the TruGreen LandCare brand name.
Revenues derived from the TruGreen LandCare segment constituted 13%, 14% and 14% of the revenue from continuing operations
of the consolidated ServiceMaster enterprise in 2006, 2005 and 2004, respectively. The TruGreen LandCare business is seasonal in
nature. Weather conditions such as a drought can affect the demand for landscape maintenance services, or declines in the volume
of snow fall can affect the level of snow removal services, and may result in a decrease in revenues or an increase in costs.
TruGreen LandCare is a leading provider of landscape maintenance services in the United States serving primarily commercial
customers. As of December 31, 2006, TruGreen LandCare provided these services in 43 states and the District of Columbia through
102 company-owned locations and had no international operations.
Terminix Segment
The Terminix segment provides termite and pest control services primarily under the Terminix brand name. Revenues derived from
the Terminix segment constituted 31%, 33% and 33% of the revenue from continuing operations of the consolidated ServiceMaster
enterprise in 2006, 2005 and 2004, respectively. The Terminix business is seasonal in nature. The termite swarm season, which
generally occurs in early spring but varies by region depending on climate, leads to the highest demand for termite control services
and therefore the highest level of revenues. Similarly, increased pest activity in the warmer months leads to the highest demand for
pest control services and, therefore, the highest level of revenues.