WOW!!!!

It doesn't happen that often to have somebody posting a question as perfect as you did!!!

There's nothing more to say than GREAT JOB!!

And here's how I'd do it:

SELECT

city,

zip,

SUM(CASE WHEN LOB='PW' THEN ServiceCount ELSE 0 END) AS PW,

SUM(CASE WHEN LOB='CWS' THEN ServiceCount ELSE 0 END) AS CWS,

SUM(CASE WHEN LOB='IMG' THEN ServiceCount ELSE 0 END) AS IMG

FROM @t1

GROUP BY city,zip

ORDER BY city,zip DESC

The concept is based on the CrossTab article referenced in my signature. Once you're familiar with the concept I recommend to have a look at the DynamicCrossTab article also referenced in my sig. It might come in handy if you ever need to make that query using a flexible number of LOB values....