American Home Shield 2007 Annual Report Download - page 7

these services in 10 other countries, primarily in Japan, the Caribbean and the Middle East.
American Home Shield Segment
The American Home Shield segment provides home warranty contracts for systems and appliances primarily under the American
Home Shield brand name and home inspection services primarily under the AmeriSpec brand name. Revenues derived from the
American Home Shield segment constituted 16%, 16% and 16% of the revenue from continuing operations of the consolidated
ServiceMaster enterprise in 2006, 2005 and 2004, respectively. The American Home Shield and AmeriSpec businesses are seasonal
in nature. Sales volume in the American Home Shield segment depends, in part, on the number of home resale closings, which
historically has been highest in the spring and summer months. American Home Shield's costs related to service call volume are
highest in the summer months, especially during periods of unseasonably warm temperatures.
American Home Shield. American Home Shield is the leading provider of home warranty contracts for systems and
appliances in the United States. It provides residential customers with contracts to repair or replace electrical, plumbing, central
heating and central air conditioning systems, hot water heaters and other covered appliances that break down due to normal wear
and tear and services those contracts through independent repair contractors. As of December 31, 2006, American Home Shield
issued and administered home warranty contracts in 49 states and the District of Columbia and had no international operations.
AmeriSpec. AmeriSpec is a leading provider of home inspection services in the United States serving residential
customers. As of December 31, 2006, AmeriSpec provided these services in 46 states and the District of Columbia through one
company-owned location and 210 franchised locations. AmeriSpec also provided home inspection services through a subsidiary in
Canada.
Other Operations and Headquarters Segment
The Other Operations and Headquarters segment provides disaster response and reconstruction services under the InStar brand
name, residential and commercial disaster restoration and cleaning services primarily under the ServiceMaster and ServiceMaster
Clean brand names, domestic house cleaning services primarily under the Merry Maids brand name and on-site furniture repair and
restoration services primarily under the Furniture Medic brand name. The Other Operations segment also includes ServiceMaster's
headquarters functions. Revenues derived from the Other Operations and Headquarters segment constituted 9%, 5% and 5% of the
revenue from continuing operations of the consolidated ServiceMaster enterprise in 2006, 2005 and 2004, respectively.
InStar. InStar is a leading direct provider of disaster response and reconstruction services for customers in the United
States. As of December 31, 2006, InStar provided these services in 33 states and the District of Columbia through 21 company-
owned locations and had no international operations.
ServiceMaster Clean. ServiceMaster Clean is a leading franchisor in the residential and commercial disaster restoration
and cleaning field in the United States. As of December 31, 2006, ServiceMaster Clean provided these services in all 50 states and
the District of Columbia through 3,211 franchise licenses. As of December 31, 2006, ServiceMaster Clean also provided disaster
restoration and cleaning services through subsidiaries in Canada, Ireland, the United Kingdom and Spain and had entered into
licensing arrangements to provide these services in seven other countries, primarily in Asia and the Middle East.
Merry Maids. Merry Maids is a leading provider of domestic house cleaning services in the United States. As of
December 31, 2006, these services were provided in 48 states and the District of Columbia through 72 company-owned locations
and 767 franchise licenses. As of December 31, 2006, Merry Maids also provided domestic house cleaning services through
subsidiaries in Canada, Denmark, Ireland and the United Kingdom and had entered into licensing arrangements to provide these
services in six other countries, primarily in Asia.
Furniture Medic. Furniture Medic is a leading provider of on-site furniture repair and restoration services in the United
States serving residential customers. As of December 31, 2006, Furniture Medic provided these services in 49 states and the District
of Columbia through 318 franchise licenses. As of December 31, 2006, Furniture Medic also provided on-site furniture repair and
restoration services through subsidiaries in Canada and the United Kingdom and had entered into licensing arrangements to provide
these services in Saudi Arabia.
ACQUISITIONS AND DISPOSITIONS
Purchase of InStar Services Group. In February 2006, ServiceMaster acquired InStar, a leading provider of disaster
response and reconstruction services for approximately $85 million in cash.
Sales of American Residential Services ("ARS") and American Mechanical Services ("AMS"). In the third quarter
of 2006, ServiceMaster completed the sales of ARS and AMS generating gross cash proceeds of approximately $115 million, which
was used to reduce outstanding debt balances. The ARS and AMS operations provided heating, ventilation, air conditioning
(HVAC), plumbing and electrical installation and repair services.
MARKETING AND DISTRIBUTION
ServiceMaster markets its services primarily through yellow pages advertisements, direct mail, television and radio advertising,
print advertisements, door-to-door solicitation and telemarketing. Additionally, American Home Shield markets its home service
contracts through participating real estate brokerage offices in conjunction
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