Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 25, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SERVICEMASTER GLOBAL HOLDINGS INC | |
Entity Central Index Key | 1,428,875 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 135,557,854 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | serv |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract] | ||||
Revenue | $ 874 | $ 807 | $ 1,549 | $ 1,450 |
Cost of services rendered and products sold | 467 | 415 | 829 | 761 |
Selling and administrative expenses | 225 | 206 | 422 | 392 |
Amortization expense | 7 | 7 | 12 | 14 |
Fumigation related matters | 1 | 2 | ||
Impairment of software and other related costs | 2 | |||
Restructuring charges | 1 | 1 | 12 | 3 |
American Home Shield spin-off charges | 8 | 15 | ||
Interest expense | 37 | 38 | 75 | 75 |
Interest and net investment income | (1) | (1) | (2) | (1) |
Loss on extinguishment of debt | 3 | 3 | ||
Income from Continuing Operations before Income Taxes | 130 | 137 | 185 | 199 |
Provision for income taxes | 34 | 52 | 48 | 76 |
Income from Continuing Operations | 96 | 85 | 137 | 123 |
Gain from discontinued operations, net of income taxes | 1 | |||
Net Income | 96 | 85 | 136 | 124 |
Total Comprehensive Income | $ 99 | $ 84 | $ 149 | $ 124 |
Weighted-average common shares outstanding - Basic | 135.5 | 133.7 | 135.4 | 134.1 |
Weighted-average common shares outstanding - Diluted | 135.8 | 135 | 135.7 | 135.5 |
Basic Earnings Per Share: | ||||
Income from Continuing Operations (in dollars per share) | $ 0.71 | $ 0.64 | $ 1.01 | $ 0.92 |
Gain from discontinued operations, net of income taxes (in dollars per share) | ||||
Net Income (in dollars per share) | 0.71 | 0.64 | 1.01 | 0.92 |
Diluted Earnings Per Share: | ||||
Income from Continuing Operations (in dollars per share) | 0.71 | 0.63 | 1.01 | 0.91 |
Gain from discontinued operations, net of income taxes (in dollars per share) | ||||
Net Income (in dollars per share) | $ 0.71 | $ 0.63 | $ 1 | $ 0.91 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Position - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 449 | $ 475 |
Marketable securities | 25 | 25 |
Receivables, less allowances of $22 and $23, respectively | 202 | 570 |
Inventories | 46 | 41 |
Prepaid expenses and other assets | 92 | 94 |
Deferred customer acquisition costs | 36 | |
Total Current Assets | 814 | 1,242 |
Other Assets: | ||
Property and equipment, net | 245 | 237 |
Goodwill | 2,396 | 2,256 |
Intangible assets, primarily trade names, service marks and trademarks, net | 1,743 | 1,692 |
Restricted cash | 89 | 89 |
Notes receivable | 43 | 41 |
Long-term marketable securities | 21 | 22 |
Deferred customer acquisition costs | 94 | |
Other assets | 86 | 68 |
Total Assets | 5,530 | 5,646 |
Current Liabilities: | ||
Accounts payable | 159 | 115 |
Accrued liabilities: | ||
Payroll and related expenses | 58 | 63 |
Self-insured claims and related expenses | 142 | 117 |
Accrued interest payable | 13 | 15 |
Other | 68 | 56 |
Net contract liability | 290 | 663 |
Current portion of long-term debt | 61 | 144 |
Total Current Liabilities | 791 | 1,174 |
Long-Term Debt | 2,675 | 2,643 |
Other Long-Term Liabilities: | ||
Deferred taxes | 529 | 493 |
Other long-term obligations, primarily self-insured claims | 188 | 169 |
Total Other Long-Term Liabilities | 717 | 662 |
Commitments and Contingencies (Note 6) | ||
Stockholders' Equity: | ||
Common stock $0.01 par value (authorized 2,000,000,000 shares with 147,079,375 shares issued and 135,557,005 outstanding at June 30, 2018 and 146,662,232 shares issued and 135,141,048 outstanding at December 31, 2017) | 2 | 2 |
Additional paid-in capital | 2,336 | 2,321 |
Accumulated deficit | (745) | (895) |
Accumulated other comprehensive income | 20 | 5 |
Less common stock held in treasury, at cost (11,522,370 shares at June 30, 2018 and 11,521,184 shares at December 31, 2017) | (267) | (267) |
Total Stockholders' Equity | 1,347 | 1,167 |
Total Liabilities and Stockholders' Equity | $ 5,530 | $ 5,646 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Statements of Financial Position [Abstract] | ||
Allowance for receivables (in dollars) | $ 22 | $ 23 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, shares issued (in shares) | 147,079,375 | 146,662,232 |
Common stock, shares outstanding (in shares) | 135,557,005 | 135,141,048 |
Treasury stock (in shares) | 11,522,370 | 11,521,184 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Condensed Consolidated Statements of Cash Flows [Abstract] | ||
Cash and Cash Equivalents and Restricted Cash at Beginning of Period | $ 563 | $ 386 |
Cash Flows from Operating Activities from Continuing Operations: | ||
Net Income | 136 | 124 |
Adjustments to reconcile net income to net cash provided from operating activities: | ||
Gain from discontinued operations, net of income taxes | (1) | |
Depreciation expense | 40 | 37 |
Amortization expense | 12 | 14 |
Amortization of debt issuance costs | 3 | 3 |
Fumigation related matters | 2 | |
Payments on fumigation related matters | (1) | |
Impairment of software and other related costs | 2 | |
Loss on extinguishment of debt | 3 | |
Deferred income tax (benefit) provision | 10 | (2) |
Stock-based compensation expense | 8 | 9 |
Restructuring charges | 12 | 3 |
Payments for restructuring charges | (8) | (3) |
American Home Shield spin-off charges | 15 | |
Payments for American Home Shield spin-off charges | (7) | |
Other | (4) | 7 |
Change in working capital, net of acquisitions: | ||
Receivables | (6) | (24) |
Inventories and other current assets | (24) | (13) |
Accounts payable | 37 | 18 |
Deferred revenue | 12 | 28 |
Accrued liabilities | 21 | 18 |
Accrued interest payable | (2) | (1) |
Current income taxes | 22 | 37 |
Net Cash Provided from Operating Activities from Continuing Operations | 279 | 260 |
Cash Flows from Investing Activities from Continuing Operations: | ||
Property additions | (49) | (34) |
Government grant fundings for property additions | 7 | |
Sale of equipment and other assets | 1 | 1 |
Business acquisitions, net of cash acquired | (149) | (12) |
Purchases of available-for-sale securities | (9) | (7) |
Sales and maturities of available-for-sale securities | 10 | 2 |
Origination of notes receivable | (54) | (54) |
Collections on notes receivable | 49 | 50 |
Other investments | (1) | |
Net Cash Used for Investing Activities from Continuing Operations | (194) | (56) |
Cash Flows from Financing Activities from Continuing Operations: | ||
Payments of debt | (116) | (46) |
Repurchase of common stock | (85) | |
Issuance of common stock | 6 | 7 |
Net Cash Used for Financing Activities from Continuing Operations | (110) | (124) |
Cash Flows from Discontinued Operations: | ||
Cash provided from operating activities | 1 | |
Net Cash Provided from Discontinued Operations | 1 | |
Cash (Decrease) Increase During the Period | (25) | 81 |
Cash and Cash Equivalents and Restricted Cash at End of Period | $ 538 | $ 467 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation ServiceMaster Global Holdings, Inc. and its majority-owned subsidiary partnerships, limited liability companies and corporations (collectively, “ServiceMaster,” the “Company,” “we,” “us, and “our”) is a leading provider of essential residential and commercial services. The Company’s services include termite and pest control, home service plans, disaster restoration, janitorial, residential cleaning, cabinet and wood furniture repair and home inspection. The Company provides these services through an extensive service network of company-owned, franchised and licensed locations operating primarily under the following leading brands: Terminix, American Home Shield, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. All consolidated Company subsidiaries are wholly-owned. Intercompany transactions and balances have been eliminated. The unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The Company recommends that the quarterly unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC (the “2017 Form 10-K”). The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for any interim period are not indicative of the results that might be achieved for a full year. American Home Shield Spin-off On July 26, 2017, the Company announced that it intends to separate its American Home Shield business from its Terminix and Franchise Services Group businesses by means of a spin-off of the American Home Shield business to Company stockholders, resulting in two publicly traded companies. The spin-off is designed to create two independent companies, each with an enhanced strategic focus, simplified operating structure, distinct investment identity and strong financial profile. The transaction is expected to be completed late in the third quarter of 2018, subject to satisfaction of customary conditions, including the effectiveness of a Registration Statement on Form 10 and final approval by the Company’s board of directors. The Company has received a favorable private letter ruling from the IRS regarding the tax-free treatment of the distribution to the Company’s stockholders. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Company’s 2017 Form 10-K. There have been no material changes to the significant accounting policies for the three and six months ended June 30, 2018, other than those described below. Adoption of New Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” to provide a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. On January 1, 2018, the Company adopted FASB Accounting Standards Codification (“ASC”) 606 using the modified retrospective method to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, “ Revenue Recognition .” The Company implemented internal controls and system functionality where necessary to enable the preparation of financial information on adoption. See Note 3 to the condensed consolidated financial statements for more details. In January 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-01, “ Recognition and Measurement of Financial Assets and Financial Liabilities ” to change how entities measure certain equity investments, to require the disclosure of changes in the fair value of financial liabilities measured under the fair value option that are attributable to a company’s own credit, and to change certain other disclosure requirements. The changes in ASU 2016-01 specifically require that the changes in fair value of all investments in equity securities be recognized in net income. In March 2018, the FASB issued an amendment to this standard (ASU 2018-03), which provides further clarification regarding this standard. The Company adopted this ASU on January 1, 2018. As a result of the adoption, less than $1 million of gains and less than $1 million of losses related to the Company’s equity investments were recognized in Net income for the three and six months ended June 30, 2018, respectively, and approximately $2 million was reclassified from Accumulated other comprehensive income (“AOCI”) to Accumulated deficit related to unrealized gains on available-for-sale equity securities upon adoption. Additionally, the Company holds minority interests in several strategic investments which do not have readily determinable fair values. The carrying amount of these investments at June 30, 2018 is approximately $4 million. These investments are recorded at cost and will be remeasured upon the occurrence of observable price changes or impairments. No adjustments to the carrying amount were made during the period. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business .” The ASU clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by providing a screen to determine when an integrated set of assets or activities is not a business. The Company adopted this ASU on January 1, 2018. The consolidated financial statements may be impacted if an acquisition does not qualify as a business combination under the ASU. Such acquisitions would be accounted for as asset purchases. In May 2017, the FASB issued ASU 2017-09, “ Stock Compensation – Scope of Modification Accounting .” The ASU clarifies the scope of modification accounting for share-based payment arrangements. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The Company adopted this ASU on January 1, 2018 and will apply the guidance prospectively to awards modified on or after the adoption date. In February 2018, the FASB issued ASU 2018-02, “ Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ” allowing a reclassification from AOCI to Retained Earnings for stranded tax effects resulting from the corporate income tax rate change in the Tax Cuts and Jobs Act (the “Act” or “U.S. Tax Reform”). It is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. As allowed by the ASU, the Company elected to early adopt the amendments of this ASU on January 1, 2018 and reclassified approximately $4 million of unrealized losses from AOCI to Accumulated deficit. Following are the results of the adoption of these standards on the Company’s consolidated statements of stockholders’ equity previously reported: (In millions) Accumulated other comprehensive income Accumulated deficit As reported, December 31, 2017 $ 5 $ (895) Impact of adopting ASC 606 (Note 3) — 16 Impact of adopting ASU 2016-01 (2) 2 Impact of adopting ASU 2018-02 4 (4) As revised, January 1, 2018 $ 7 $ (881) Accounting Standards Issued But Not Yet Effective In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ” which is the final standard on accounting for leases. While both lessees and lessors are affected by the new guidance, the effects on lessees are much more significant. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. Entities are required to use a modified retrospective approach to adopt the guidance. The amendments in ASU 2016-02 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. To date, the Company has performed the following: A transition team has been established to implement the required changes; the Company has substantially completed its inventory of all leases; an initial assessment of the Company’s leases and embedded leases is underway; and the Company has begun the process of implementing new controls to assist in the measurement of right-of-use assets and lease liabilities and related disclosures. The Company plans to adopt the new lease standard in the first quarter of 2019. The Company expects the adoption will increase the amount of total assets and total liabilities that is reported relative to such amounts prior to adoption and is currently evaluating the impact of adoption on its consolidated statements of operations and comprehensive income. In August 2017, the FASB issued ASU 2017-12, “Der ivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities .” The ASU simplifies certain aspects of hedge accounting and improves disclosures of hedging arrangements through the elimination of the requirement to separately measure and report hedge ineffectiveness. The ASU generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item in order to align financial reporting of hedging relationships with economic results. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. The Company is currently evaluating the impact of the adoption of ASU 2017-12, including transition elections and required disclosures, on the Company’s consolidated financial statements and plans to adopt the new standard in the first quarter of 2019. In July 2018, the FASB issued ASU 2018-09, “ Codification Improvements. ” This ASU does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. The Company has reviewed all other recently issued, but not yet effective, accounting pronouncements and does not expect the future adoption of any such pronouncements will have a material impact on its financial condition or the results of its operations. |
Revenues
Revenues | 6 Months Ended |
Jun. 30, 2018 | |
Revenues[Abstract] | |
Revenues | Note 3. Revenues The following table presents the Company’s reportable segment revenues, disaggregated by revenue source. T he Company disaggregates revenue from contracts with customers into major product lines. The Company has determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in the business segment reporting information in Note 15, the Company’s reportable segments are Terminix, American Home Shield and Franchise Services Group. Terminix American Home Shield Franchise Services Group Total Three months ended June 30, Three months ended June 30, Three months ended June 30, Three months ended June 30, (In millions) 2018 2017 2018 2017 2018 2017 2018 2017 Major service line Pest Control $ 254 $ 229 $ — $ — $ — $ — $ 254 $ 229 Termite and Other Services 178 177 — — — — 178 177 Home Service Plans — — 355 326 — — 355 326 Royalty Fees — — — — 35 32 35 32 Janitorial National Accounts — — — — 16 12 16 12 Sales of Products and Other 24 23 — — 12 8 36 31 Corporate — — — — — — — 1 Total $ 456 $ 428 $ 355 $ 326 $ 64 $ 52 $ 874 $ 807 Terminix American Home Shield Franchise Services Group Total Six months ended June 30, Six months ended June 30, Six months ended June 30, Six months ended June 30, (In millions) 2018 2017 2018 2017 2018 2017 2018 2017 Major service line Pest Control $ 456 $ 430 $ — $ — $ — $ — $ 456 $ 430 Termite and Other Services 328 326 — — — — 328 326 Home Service Plans — — 602 553 — — 602 553 Royalty Fees — — — — 68 63 68 63 Janitorial National Accounts — — — — 31 23 31 23 Sales of Products and Other 39 37 — — 24 16 63 53 Corporate — — — — — — 1 1 Total $ 823 $ 794 $ 602 $ 553 $ 123 $ 102 $ 1,549 $ 1,450 At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good or service (or a bundle of goods and services) that is distinct. To identify the performance obligation, the Company considers all of the goods and services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Terminix segment Pest control services Pest control services can be for one-time or recurring services. Revenues from pest control services are recognized at the agreed-upon contractual amount over time as the services are provided, most of which are started and completed within one day, as the customer simultaneously receives and consumes the benefits of the services as they are performed. Upon completion of service, a receivable is recorded related to this revenue as the Company has an unconditional right to invoice and receive payment. Payments are typically received shortly after services have been rendered. Termite and other services The Company eradicates termites through the use of baiting systems and non-baiting methods (e.g., fumigation or liquid treatments). Termite services using liquid and baiting systems are sold through annual renewable contracts. The Company also performs other termite and other related services, including wildlife exclusion, crawl space encapsulation and attic insulation, which may be one-time or renewable services. Revenue for termite services are recognized at the agreed-upon contractual amount upon the completion of the service. All termite services are generally started and completed within one day. Upon completion of the service, a receivable is recorded related to this revenue as the Company has an unconditional right to invoice and receive payment. Payments are typically received shortly after services have been rendered. Most termite services can be renewed after the initial year. Revenue on renewal contracts is recognized upon completion of an annual inspection and receipt of payment from the customer which evidences the extension of the contract into a renewal period. Advanced r enewal payments generate a contract liability and are deferred until the related renewal period. Termite inspection and protection contracts are frequently sold through annual contracts. For these contracts, the Company has a stand ready obligation of which the customer receives and consumes the benefits over the annual period. Associated service costs are expensed as incurred. The Company measures progress toward satisfaction of its stand ready obligation over time using costs incurred as the measure of progress under the input method, which results in straight-line recognition of revenue. Payments are received at the commencement of the contract, which generates a contract liability, or in installments over the contract period. Sales of products and other Product revenues are generated from selling products to distributors and franchisees. Revenues from product sales are generally recognized once control of the products transfers to the customer. A receivable is recorded related to these sales as the Company has an unconditional right to invoice and receive payment. Payments are typically received shortly after a customer is invoiced. American Home Shield segment Home service plans Home service plan contracts are sold through annual renewable contracts and customer payments are received at the commencement of the contract or in installments over the contract period, which generates a contract liability. The Company recognizes revenue related to these contracts at the agreed-upon contractual amount over time using the input method in proportion to the costs expected to be incurred in performing services under the contracts. As the costs to fulfill the obligations of the service plan contracts are incurred on an other than straight-line basis, the Company utilizes historical evidence to estimate the expected claims expense and related timing of such costs. This adjustment to the straight-line revenue creates a contract asset or contract liability. The Company regularly reviews its estimates of claims costs and adjusts the estimates when appropriate. Franchise Services Group segment Royalty fees The Company has franchise agreements in its ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec businesses. Royalty fee revenue consists principally of sales-based royalties received as part of the consideration for the franchise right and is calculated as a percentage of customer level revenue. Revenue is recognized by the Company at the agreed-upon contractual rates over time as the customer level revenue is generated by the franchisees. A receivable is recognized for an estimate of the unreported royalty fees, which are reported and remitted to the Company in arrears. Janitorial national accounts National account revenues are recognized at the agreed-upon contractual amounts over time as services are completed based on contractual arrangements to provide services at the customers’ locations. The Company engages either a franchisee or non-franchisee business to perform the services. Under these agreements, the Company is directly responsible for providing the services and receives payment directly from the customer. A receivable is recorded related to this revenue as the Company has an unconditional right to invoice and receive payment. Payments are typically received shortly after services have been rendered. Sales of products and other Product revenues are generated from selling products to franchisees. Revenues from product sales are generally recognized once control of the products transfers to the customer. A receivable is recorded related to these sales as the Company has an unconditional right to invoice and receive payment. Payments are typically received shortly after a customer is invoiced. Initial franchise fees result from the sale of a franchise license, which includes the use of the name, trademarks and proprietary methods. The franchise license is considered symbolic intellectual property and revenue related to the sale of this right is recognized at the agreed-upon contractual amount over the term of the initial franchise agreement. Franchisees contribute a percentage of customer level revenue into a national advertising fund managed by the Company. In cases where the Company has ultimate control of the marketing and advertising, the Company recognizes both revenue and expense for the amount earned. Prior to the adoption of ASC 606, this revenue was recorded net of the advertising expense incurred. The impact to revenues as a result of applying ASC 606 was an increase of $4 million and $7 million for the three and six months ended June 30, 2018, respectively. In addition, the Company has contractual arrangements with several national insurance companies to maintain a call center which receives and provides non-recurring disaster recovery and restoration referrals from the insurers to qualifying franchisees. The Company receives a referral fee from the franchisee. The Company recognizes the referral fee at the agreed-upon contractual amount as revenue in the month the referral is issued. Costs to obtain a contract with a customer Terminix and American Home Shield The Company capitalizes the incremental costs of obtaining a contract with a customer, primarily commissions, and recognizes the expense on a straight-line basis over the expected customer relationship period. As of January 1, 2018, the date the Company adopted ASC 606, the Company capitalized a total of $61 million at Terminix and $21 million at American Home Shield in deferred customer acquisition costs related to contracts that were not completed. As of June 30, 2018, the Company had capitalized a total of $71 million at Terminix and $21 million at American Home Shield in deferred customer acquisition costs related to contracts that were not completed. In the three and six months ended June 30, 2018, the amount of amortization was $16 million and $32 million, respectively, at Terminix and $6 million and $11 million, respectively, at American Home Shield. There was no impairment loss in relation to costs capitalized. Franchise Services Group The Company capitalizes the incremental costs of selling a new franchise license, primarily commissions, and recognizes the expense over the term of the initial franchise agreement. As of January 1, 2018, the date the Company adopted ASC 606, the Company capitalized a total of $1 million in deferred customer acquisition costs related to contracts that were not completed. As of June 30, 2018, the Company had capitalized a total of $1 million in deferred customer acquisition costs related to contracts that were not completed. In the three and six months ended June 30, 2018, the amount of amortization was less than $1 million. There was no impairment loss in relation to costs capitalized. Contract balances Timing of revenue recognition may differ from the timing of invoicing to customers. Contracts with customers are generally for a period of one year or less, and are generally renewable. The Company records a receivable related to revenue recognized on services once the Company has an unconditional right to invoice and receive payment in the future related to the services provided. All accounts receivables are recorded within Receivables, less allowances, on the condensed consolidated statements of financial position. The current portion of Notes receivable, which represent amounts financed for customers through the Company’s financing subsidiary, are included within Receivables, less allowances, on the condensed consolidated statement of financial position and totaled $45 million as of June 30, 2018. Deferred revenue represents a contract liability and is recognized when cash payments are received in advance of the performance of services, including when the amounts are refundable. For Terminix, amounts are recognized as revenue upon completion of services. For American Home Shield, amounts are recognized as revenue in proportion to the costs expected to be incurred in performing services under the Company’s contracts. Deferred revenue by segment was as follows (in millions): As of As of (In millions) June 30, 2018 December 31, 2017 Terminix $ 97 $ 90 American Home Shield (1) 188 573 Franchise Services Group (2) 11 — Total $ 297 $ 663 ___________________________________ (1) Includes a net contract liability of $8 million as of June 30, 2018 related to the recognition of American Home Shield monthly pay customer revenue on an other than straight-line basis to match the timing of cost recognition . (2) Includes approximately $7 million of Franchise Services Group Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of June 30, 2018. Changes in deferred revenue for the six months ended June 30, 2018 were as follows (in millions): (In millions) Deferred revenue Balance, January 1, 2018 $ 284 Deferral of revenue 303 Recognition of deferred revenue (299) Contract liability (1) 8 Balance, June 30, 2018 $ 297 There was approximately $93 million and $196 million of revenue recognized in the three and six months ended June 30, 2018, that was included in the deferred revenue balance as of January 1, 2018. Arrangements with Multiple Performance Obligations The Company’s contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. Any discounts given are allocated to the services to which the discounts relate. Practical Expedients and Exemptions The Company offers certain interest-free contracts to customers where payments are received over a period not exceeding one year. Additionally, certain Terminix customers may pay in advance for services and American Home Shield customers have the option to pay for an annual home service plan in advance. The Company does not adjust the promised amount of consideration for the effects of these financing components. At contract inception, the period of time between the performance of services and the customer payment is one year or less. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to taxing authorities. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Certain non-commission related incremental costs to obtain a contract with a customer are expensed as incurred because the amortization period would have been one year or less. These costs are included in Selling and administrative expenses on the condensed consolidated statements of operations and comprehensive income. The Company utilizes the portfolio approach to recognize revenue in situations where a portfolio of contracts have similar characteristics. The revenue recognized under the portfolio approach is not materially different than if every individual contract in the portfolio was accounted for separately. Impact of ASC 606 on the Condensed Consolidated Financial Statements The Company recorded a net reduction to opening retained earnings of $16 million, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606. Changes to the condensed consolidated statements of operations and comprehensive income include: i) c osts of obtaining a contract that would have been incurred regardless of whether the contract was obtained, such as direct mail and digital advertising, are now expensed as incurred; ii) initial fees and the related commissions from sales of franchise licenses, previously recognized in the year of the sale, are now recognized over the term of the initial franchise agreement; iii) Franchise Services Group national advertising fund income, previously recorded net of advertising expense incurred for the Company’s advertising programs, will now be reported gross, generally with offsetting increases to both revenue and expense such that there will not be a significant, if any, impact on net income; and iv) commissions costs at Terminix and American Home Shield incremental to a successful sale are deferred and recognized over the expected customer relationship period. Previously, commissions and other sales-related costs were deferred and recognized over the initial contract period. Changes to the condensed consolidated statements of financial position include: i) the reclassification of Receivables to contract assets which are presented net of contract liabilities within Deferred revenue and ii) the reclassification of Deferred customer acquisition costs to long-term assets as costs are recognized over the expected customer relationship period , which is in excess of one year. Previously, when a customer elected to pay for their home service plan contract on a monthly basis, Receivables and Deferred revenue were recorded based on the total amount due from the customer. Receivables were reduced as amounts were paid, and the Deferred revenue was amortized over the life of the contract. Currently, only the portion of the contract that is due in the current month will be recorded within Receivables. The following tables compare affected lines of the condensed consolidated financial statements as prepared under the provisions of ASC 606 to a presentation of these financial statements under the prior revenue recognition guidance (in millions): As of June 30, 2018 Condensed Consolidated Statement of Financial Position As reported Under Prior Revenue Recognition Guidance Current Assets: Receivables $ 202 $ 612 Prepaid expenses and other assets 92 104 Deferred customer acquisition costs — 41 Other Assets: Deferred customer acquisition costs 94 — Total Assets $ 5,530 $ 5,901 Current Liabilities: Deferred revenue $ 290 $ 696 Other Long-Term Liabilities: Deferred taxes 529 521 Other long-term obligations, primarily self-insured claims 188 181 Total Liabilities 4,184 4,575 Accumulated deficit (745) (761) Accumulated other comprehensive income 20 20 Net Income 136 132 Liabilities and Equity $ 5,530 $ 5,901 Three months ended June 30, 2018 Condensed Consolidated Statement of Operations and Comprehensive Income As reported Under Prior Revenue Recognition Guidance Revenue $ 874 $ 870 Cost of services rendered and products sold 467 467 Selling and administrative expenses 225 227 Provision for income taxes 34 32 Net Income $ 96 $ 89 Six months ended June 30, 2018 Condensed Consolidated Statement of Operations and Comprehensive Income As reported Under Prior Revenue Recognition Guidance Revenue $ 1,549 $ 1,542 Cost of services rendered and products sold 829 829 Selling and administrative expenses 422 419 Provision for income taxes 48 47 Net Income $ 136 $ 132 The adoption of ASC 606 had no significant impact on the Company’s cash flows. The aforementioned impacts resulted in offsetting shifts in cash flows from operations between net income and various change in working capital line items. |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring Charges [Abstract] | |
Restructuring Charges | Note 4. Restructuring Charges The Company incurred restructuring charges of less than $1 million (less than $1 million, net of tax) and $1 million ( $1 million, net of tax) in the three months ended June 30, 2018 and 2017, respectively, and $12 million ( $10 million, net of tax) and $3 million ( $2 million, net of tax) in the six months ended June 30, 2018 and 2017, respectively Restructuring charges were comprised of the following: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Terminix (1) $ (1) $ — $ 2 $ 1 Corporate (2) — — 3 — Leadership transition (3) — — — 1 Global Service Center relocation (4) 1 1 7 1 Total restructuring charges $ — $ 1 $ 12 $ 3 ___________________________________ (1) For the three and six months ended June 30, 2018, restructuring charges included a $1 million reserve adjustment associated with previous restructuring initiatives and $2 million of severance and other costs. For the six months ended June 30, 2017, these charges included $1 million of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of June 30, 2018, which includes amounts previously accrued as of December 31, 2017. (2) The Company has historically made changes on an ongoing basis to enhance capabilities and reduce costs in its corporate functions that provide company-wide administrative services to support operations. In 2017, the Company began taking actions to enhance capabilities and align corporate functions with those required to support the strategic needs as two stand-alone companies in anticipation of the American Home Shield spin-off. For the six months ended June 30, 2018 these charges included $3 million of severance and other costs. Severance and other costs of $ 1 million were unpaid and accrued as of June 30, 2018. (3) For the six months ended June 30, 2017, these charges include $1 million of severance costs as part of the severance agreement with the former Chief Financial Officer. Severance and other costs of $3 million were unpaid and accrued as of June 30, 2018, which includes amounts previously accrued as of December 31, 2017. (4) For the three months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $1 million and $1 million, respectively, related to the relocation of the Company’s headquarters, which is referred to as the Company’s Global Service Center. For the six months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $7 million and $1 million, respectively, related to the relocation of the Company’s headquarters. Of this amount, $5 million was unpaid and accrued as of June 30, 2018. The pretax charges discussed above are reported in Restructuring charges in the unaudited condensed consolidated statements of operations and comprehensive income. Certain restructuring comparative figures in the condensed consolidated statements of cash flows have been reclassified to conform to the current year presentation. A reconciliation of the beginning and ending balances of accrued restructuring charges, which are included in Accrued liabilities—Other on the unaudited condensed consolidated statements of financial position, is presented as follows: Accrued Restructuring (In millions) Charges Balance as of December 31, 2017 $ 6 Costs incurred 12 Costs paid or otherwise settled (9) Balance as of June 30, 2018 $ 10 Balance as of December 31, 2016 $ 3 Costs incurred 3 Costs paid or otherwise settled (4) Balance as of June 30, 2017 $ 2 The company expects substantially all of its accrued restructuring charges to be paid by December 31, 2019. |
American Home Shield Spin-Off
American Home Shield Spin-Off | 6 Months Ended |
Jun. 30, 2018 | |
American Home Shield Spin-Off [Abstract] | |
American Home Shield Spin-Off | Note 5. American Home Shield Spin-Off The Company’s financial statements include nonrecurring costs incurred to evaluate, plan and execute the spin-off of the American Home Shield business to Company stockholders. These costs are primarily related to third-party consulting and other incremental costs directly associated with the spin-off process. At December 31, 2017, the Company had $1 million of American Home Shield spin-off charges accrued, and $2 million of prepaid spin-off charges which were recognized during the six months ended June 30, 2018. The Company’s results for the three and six months ended June 30, 2018 include American Home Shield spin-off charges of $8 million ( $6 million, net of tax) and $15 million ( $12 million, net of tax), respectively. Of this amount, $7 million was unpaid and accrued at June 30, 2018 in Accrued liabilities – Other and Accounts payable on the condensed consolidated statements of financial position. The Company expects substantially all of the American Home Shield spin-off charges to be paid within one year. The Company expects to incur aggregate charges related to the spin-off of $35 million to $45 million in 2018. In addition, incremental capital expenditures will be required to effect the spin-off in 2018 and will range from $20 million to $30 million, principally reflecting costs to replicate information technology systems historically shared by the Company’s business units. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 6. Commitments and Contingencies The Company carries insurance policies on insurable risks at levels that it believes to be appropriate, including workers’ compensation, automobile and general liability risks. The Company purchases insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. The Company is responsible for all claims that fall below the retention limits, exceed our coverage limits or are otherwise not covered by our insurance policies. In determining the Company’s accrual for self-insured claims, the Company uses historical claims experience to establish both the current year accrual and the underlying provision for future losses. This actuarially determined provision and related accrual include known claims, as well as incurred but not reported claims. The Company adjusts its estimate of accrued self-insured claims when required to reflect changes based on factors such as changes in health care costs, accident frequency and claim severity. A reconciliation of beginning and ending accrued self-insured claims, which are included in Accrued liabilities—Self-insured claims and related expenses and Other long-term obligations, primarily self-insured claims on the condensed consolidated statements of financial position, net of insurance recoverables, which are included in Prepaid expenses and other assets and Other assets on the condensed consolidated statements of financial position, is presented as follows: Accrued Self-insured (In millions) Claims, Net Balance as of December 31, 2017 $ 115 Provision for self-insured claims 17 Cash payments (18) Balance as of June 30, 2018 $ 114 Balance as of December 31, 2016 $ 120 Provision for self-insured claims 18 Cash payments (17) Balance as of June 30, 2017 $ 122 The Company also accrues for home service plan claims and termite damage claims in Accrued liabilities-Self-insured claims and related expenses. Accruals for home service plan claims in the American Home Shield business are made based on the Company’s claims experience and actuarial projections. The Company’s actuary performs a reserve analysis utilizing generally accepted actuarial methods that incorporates cumulative historical claims experience and information provided by the Company. The Company regularly reviews its estimates of claims costs and adjust the estimates when appropriate. Reserves are established based on the ultimate cost to settle claims. Home service plan claims take about three months to settle, on average, and substantially all claims are settled within six months. The amount of time required to settle a claim can vary based on a number of factors, including whether a replacement is ultimately required. During the quarter ended June 30, 2018, the Company revised its previous estimate of contract claims and increased contract claims accruals by $12 million. Termite damage claim accruals in the Terminix business are recorded based on both the historical rates of claims incurred within a contract year and the cost per claim. Current activity could differ causing a change in estimates. The Company has certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues for these liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified. On December 16, 2016, the U.S. Virgin Islands Department of Justice filed a civil complaint in the Superior Court of the Virgin Islands related to a fumigation incident in a matter styled Government of the United States Virgin Islands v. The ServiceMaster Company, LLC, The Terminix International Company Limited Partnership, and Terminix International USVI, LLC. The amount and extent of any potential penalties, fines sanctions, costs and damages that the federal or other governmental authorities may yet impose, investigation or other costs and reputational harm, as well as the impact of any additional civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands fumigation matter, which could be material, is not currently known, and any such further penalties, fines, sanctions, costs or damages would not be covered under the Company’s general liability policies. In the ordinary course of conducting business activities, the Company and its subsidiaries become involved in judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured matters that are brought on an individual, collective, representative and class action basis, or other proceedings involving regulatory, employment, general and commercial liability, automobile liability, wage and hour, environmental and other matters. The Company has entered into settlement agreements in certain cases, including with respect to putative collective and class actions, which are subject to court or other approvals. If one or more of the Company’s settlements are not finally approved, the Company could have additional or different exposure, which could be material. Subject to the paragraphs above, the Company does not expect any of these proceedings to have a material effect on its reputation, business, financial position, results of operations or cash flows; however, the Company can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position, results of operations and cash flows. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Note 7. Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate a potential impairment. The Company’s annual assessment date is October 1. There were no goodwill or trade name impairment charges recorded in the three and six months ended June 30, 2018 and 2017. There were no accumulated impairment losses recorded as of June 30, 2018. The table below summarizes the goodwill balances for continuing operations by reportable segment: American Franchise (In millions) Terminix Home Shield Services Group Total Balance as of December 31, 2017 $ 1,605 $ 476 $ 176 $ 2,256 Acquisitions 142 — — 142 Impact of foreign exchange rates (1) — — (1) Balance as of June 30, 2018 $ 1,745 $ 476 $ 175 $ 2,396 The table below summarizes the other intangible asset balances for continuing operations: As of June 30, 2018 As of December 31, 2017 Accumulated Accumulated (In millions) Gross Amortization Net Gross Amortization Net Trade names (1) $ 1,608 $ — $ 1,608 $ 1,608 $ — $ 1,608 Customer relationships 634 (562) 72 589 (555) 34 Franchise agreements 88 (71) 17 88 (70) 18 Other 100 (53) 47 81 (49) 32 Total $ 2,430 $ (686) $ 1,743 $ 2,366 $ (674) $ 1,692 ___________________________________ (1) Not subject to amortization. For the existing intangible assets, the Company anticipates amortization expense for the remainder of 2018 and each of the next five years of $15 million, $24 million , $21 million, $ 17 million, $14 million and $12 million, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 8. Stock-Based Compensation For the three months ended June 30, 2018 and 2017, the Company recognized stock-based compensation expense of $4 million ( $ 3 million, net of tax) and $4 million ( $2 million, net of tax), respectively. For the six months ended June 30, 2018 and 2017, the Company recognized stock-based compensation expense of $8 million ( $6 million, net of tax) and $9 million ( $5 million, net of tax), respectively. These charges are recorded within Selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income. As of June 30, 2018 there was $ 32 million of total unrecognized compensation costs related to non-vested stock options, restricted stock units (“RSUs”) and performance shares granted under the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). These remaining costs are expected to be recognized over a weighted-average period of 2.41 years. |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income [Abstract] | |
Comprehensive Income | Note 9. Comprehensive Income Comprehensive income, which primarily includes net income (loss), unrealized gain (loss) on derivative instruments and the effect of foreign currency translation gain, is disclosed in the condensed consolidated statements of operations and comprehensive income. Unrealized gains on marketable securities of $3 million ( $2 million, net of tax) were included in other comprehensive income prior to the Company’s adoption of ASU 2016-01 on January 1, 2018. Subsequent to the adoption, these unrealized gains have been reclassified to retained earnings. Additionally, stranded tax effects of approximately $4 million resulting from the corporate income tax rate change in U.S. Tax Reform were reclassified upon the Company’s adoption of ASU 2018-02 on January 1, 2018. The income tax effects remaining in AOCI will be released into earnings as the related pre-tax amounts are reclassified to earnings. The following tables summarize the activity in accumulated other comprehensive income, net of the related tax effects. Unrealized Gains (Losses) Unrealized on Available Foreign Gains (Losses) -for-Sale Currency (In millions) on Derivatives Securities Translation Total Balance as of December 31, 2017 $ 16 $ 2 $ (12) $ 5 Reclassification of unrealized gain/loss on equity securities — (2) — (2) Reclassification of tax rate change 3 1 — 4 As revised, January 1, 2018 19 — (12) 7 Other comprehensive income before reclassifications: Pre-tax amount 20 — (2) 18 Tax provision (5) — — (5) After-tax amount 14 — (2) 13 Amounts reclassified from accumulated other comprehensive income (1) — — — — Net current period other comprehensive income 15 — (2) 13 Balance as of June 30, 2018 $ 34 $ — $ (13) $ 20 Balance as of December 31, 2016 $ 12 $ 1 $ (15) $ (3) Other comprehensive income before reclassifications: Pre-tax amount (9) 2 2 (5) Tax benefit (3) — — (3) After-tax amount (6) 2 2 (2) Amounts reclassified from accumulated other comprehensive income (1) 3 — — 3 Net current period other comprehensive income (3) 2 2 1 Balance as of June 30, 2017 $ 9 $ 2 $ (13) $ (2) ___________________________________ (1) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated. Amounts Reclassified from Accumulated Other Comprehensive Income Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Gains (losses) on derivatives: Fuel swap contracts $ 1 $ — $ 1 $ 1 Interest rate swap contracts — (4) (2) (5) Net gains (losses) on derivatives — (3) — (4) Impact of income taxes — 1 — 1 Total reclassifications related to derivatives $ — $ (2) $ — $ (3) Gains on available-for-sale securities $ — $ — $ — $ — Impact of income taxes — — — — Total reclassifications related to securities $ — $ — $ — $ — Total reclassifications for the period $ — $ (2) $ — $ (3) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 10. Supplemental Cash Flow Information Supplemental information relating to the condensed consolidated statements of cash flows is presented in the following table: Six Months Ended June 30, (In millions) 2018 2017 Cash paid for or (received from): Interest expense $ 70 $ 67 Income taxes, net of refunds 16 41 As of June 30, 2018 and December 31, 2017, Cash and cash equivalents of $449 million and $475 million, respectively, and Restricted cash of $89 million and $89 million, respectively, as presented on the condensed consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and restricted cash of $538 million and $ 563 million, respectively, on the condensed consolidated statement of cash flows. As of June 30, 2017, Cash and cash equivalents of $3 78 million and Restricted cash of $89 million as presented on the condensed consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and restricted cash of $ 467 million on the condensed consolidated statement of cash flows. The Company acquired $10 million and $ 23 million of property and equipment through capital leases and other non-cash financing transactions in the six months ended June 30, 2018 and 2017, respectively, which have been excluded from the condensed consolidated statements of cash flows as non-cash investing and financing activities. |
Cash and Marketable Securities
Cash and Marketable Securities | 6 Months Ended |
Jun. 30, 2018 | |
Cash and Marketable Securities [Abstract] | |
Cash and Marketable Securities | Note 11. Cash and Marketable Securities Cash, money market funds and certificates of deposits with maturities of three months or less when purchased are included in Cash and cash equivalents on the condensed consolidated statements of financial position. As of June 30, 2018 and December 31, 2017, the Company’s investments consisted primarily of treasury bills (“Debt securities”) and common equity securities (“Equity securities”). The amortized cost, fair value and gross realized and unrealized gains and losses of the Company’s short- and long-term investments in Debt and Equity securities are as follows: Gross Realized Gross Realized Amortized and Unrealized and Unrealized Fair (In millions) Cost Gains Losses Value June 30, 2018: Debt securities $ 29 $ — $ — $ 29 Equity securities 15 2 — 17 Total securities $ 44 $ 2 $ — $ 46 December 31, 2017: Debt securities $ 29 $ — $ — $ 29 Equity securities 15 3 — 18 Total securities $ 44 $ 3 $ — $ 47 Following the adoption of ASC 2016-01, the Company accounts for equity securities at fair value with adjustments to fair value recognized in Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. Upon adoption, approximately $3 million ( $2 million, net of tax) of unrealized gains were reclassified from Accumulated other comprehensive income to Accumulated deficit. For the three and six months ended June 30, 2018, less than $1 million of unrealized gains and less than $1 million of unrealized losses, respectively, were recorded within Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. The Company periodically reviews its debt securities to determine whether there has been an other than temporary decline in value. There were no impairment charges due to declines in the value of these investments for the three and six months ended June 30, 2018. Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Proceeds from sale of securities $ 1 $ — $ 1 $ — Maturities of securities — — 9 — Gross realized (gains) losses — — — — |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | Note 12. Long-Term Debt Long-term debt is summarized in the following table: As of As of June 30, December 31, (In millions) 2018 2017 Senior secured term loan facility maturing in 2023 (1) $ 1,608 $ 1,615 Revolving credit facility maturing in 2021 — — 5.125% notes maturing in 2024 (2) 740 739 7.10% notes maturing in 2018 (3) — 79 7.45% notes maturing in 2027 (4) 171 169 7.25% notes maturing in 2038 (4) 42 42 Vehicle capital leases (5) 85 90 Other (6) 92 54 Less current portion (61) (144) Total long-term debt $ 2,675 $ 2,643 ___________________________________ (1) As of June 30, 2018 and December 31, 2017 presented net of $14 million and $16 million, respectively, in unamortized debt issuance costs and $3 million in unamortized original issue discount paid. (2) As of June 30, 2018 and December 31, 2017, presented net of $ 10 million and $11 million, respectively, in unamortized debt issuance costs. (3) On March 1, 2018, the Company paid $79 million upon their maturity. (4) As of June 30, 2018 and December 31, 2017, collectively presented net of $34 million and $ 37 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (5) The Company has entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows the Company to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are capital leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent. (6) A s of June 30, 2018, includes approximately $ 52 million of future payments in connection with the Company’s acquisitions of Copesan and other pest control companies as further described in Note 13. Interest Rate Swaps Interest rate swap agreements in effect as of June 30, 2018 are as follows: Trade Date Effective Date Expiration Date Notional Amount Fixed Rate (1) Floating Rate November 7, 2016 November 8, 2016 November 30, 2023 $650,000 1.493 % One month LIBOR ___________________________________ (1) Before the application of the applicable borrowing margin. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Acquisitions [Abstract] | |
Acquisitions | Note 13. Acquisitions Acquisitions have been accounted for as business combinations using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. Asset acquisitions have been accounted for under ASU 2017-01. The assets and liabilities of these businesses were recorded in the financial statements at their estimated fair values as of the acquisition dates. On March 30, 2018 , the Company acquired all of the outstanding stock of Copesan Services, Inc. (“Copesan”) for an aggregate purchase price of $148 million, subject to certain post-closing net working capital adjustments. The acquisition is expected to improve Terminix’s capabilities in commercial pest control as Copesan is expected to provide the Company with significant expertise, system capabilities and processes for delivering pest management solutions to sophisticated commercial customers. The Company funded $104 million at closing using available cash on hand. An additional $35 million of deferred purchase price and up to $10 million earnout contingent on the successful achievement of projected revenue targets are both due to the sellers three years from the acquisition date. Changes in projected revenue would result in a change in the fair value of the recorded earnout obligation. Subsequent changes to the estimated earnout obligation will be recognized in the consolidated statements of operations and comprehensive income when incurred. As a result of this acquisition, the Company recognized a preliminary value of $ 104 million of goodwill, which is primarily attributable to the expected benefits from synergies of the combination with existing businesses and growth opportunities and Copesan’s workforce and is not deductible for tax purposes. Goodwill increased from the preliminary value recognized at March 31, 2018 of $98 million, reflecting the valuation work completed to date and the receipt of additional information. As of June 30, 2018, the presentation of Copesan in the condensed consolidated financial statements is preliminary and may change in future periods as fair value estimates of the assets acquired are refined during the measurement period. As of June 30, 2018, the Company is still evaluating working capital balances and the fair value and useful lives of the acquired intangible assets. The Company expects to complete the purchase price allocation no later than the fourth quarter of 2018. During the six months ended June 30, 2018, the Company completed four additional pest control acquisitions which have been accounted for as business combinations and purchased a ServiceMaster Restore master distributor within the Franchise Services Group which has been accounted for as an asset acquisition in accordance with ASU 2017-01. The Company funded $46 million at closing for these acquisitions using available cash on hand. An additional $4 million of deferred purchase price and up to $4 million of earnouts contingent on the successful achievement of projected revenue and earnings targets are due to the sellers between one and five years from the acquisition dates. As a result of these acquisitions, the Company recorded a preliminary value of $38 million of goodwill, and $15 million of other intangibles, primarily customer lists and reacquired rights. As of June 30, 2018, the purchase price allocations for these acquisitions has not been finalized as the Company is still evaluating working capital balances and the fair value and useful lives of the acquired intangible assets. The Company expects to complete the purchase price allocations no later than the fourth quarter of 2018. During the six months ended June 30, 2017, the Company completed two pest control acquisitions and purchased a ServiceMaster Clean master distributor within the Franchise Services Group. The total purchase price for these acquisitions was $14 million. The Company recorded goodwill of $1 million and other intangibles, primarily reacquired rights, of $13 million related to these acquisitions. Supplemental cash flow information regarding the acquisitions is as follows: Six Months Ended June 30, (In millions) 2018 2017 Assets acquired $ 228 $ 15 Liabilities assumed (1) (27) (1) Net assets acquired $ 201 $ 14 Net cash paid $ 149 $ 12 Seller financed debt 39 3 Contingent earnout 12 — Purchase price $ 201 $ 14 ___________________________________ (1) Includes $12 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets. Acquisition related costs were $1 million and less than $1 million for the six months ended June 30, 2018 and 2017. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | Note 14. Income Taxes As required by ASC 740, “Income Taxes,” the Company computes interim period income taxes by applying an anticipated annual effective tax rate to the Company’s year-to-date income or loss from continuing operations before income taxes, except for significant unusual or infrequently occurring items. The Company’s estimated tax rate is adjusted each quarter in accordance with ASC 740. The effective tax rate on income from continuing operations was 26.1 percent and 38.0 percent for the three months ended June 30, 2018 and 2017, respectively. The year over year decrease in the effective tax rate on income from continuing operations for the three months ended June 30, 2018 was primarily driven by the reduction in the U.S. federal corporate income tax rate from 35 percent to 21 percent. The effective tax rate on income from continuing operations was 26.1 percent and 38.0 percent for the six months ended June 30, 2018 and 2017, respectively. The year over year decrease in the effective tax rate on income from continuing operations for the six months ended June 30, 2018 was primarily driven by the reduction in the U.S. federal corporate income tax rate from 35 percent to 21 percent. As of June 30, 2018 and December 31, 2017, the Company had $15 million and $14 million, respectively, of tax benefits primarily reflected in state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $2 million as the result of settlements of ongoing audits, statute of limitation expirations or final settlements of uncertain tax positions in multiple jurisdictions. The Company’s policy is to recognize interest income, interest expense and penalties related to its tax positions within the tax provision. On December 22, 2017, U.S. Tax Reform was signed into law. The Act includes numerous changes in existing tax law, including a permanent reduction in the federal corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. The adjustments to deferred tax assets and liabilities and the liability related to the transition tax recorded in the period ending December 31, 2017 are provisional amounts. As described below, the Company has made reasonable estimates. At June 30, 2018, the Company has considered all available information and no adjustments to our original provisional amounts were identified. These amounts are subject to change as the Company obtains information necessary to complete the calculations. The Company will recognize any changes to the provisional amounts within (Benefit) Provision for Income Taxes on the Consolidated Statements of Operations and Comprehensive Income as estimates of deferred tax assets and liabilities and interpretations of the application of the Act are refined. The Company expects to complete its analysis of the provisional items described further below during the second half of 2018. The effects of other provisions of the Act are not expected to have a material impact on the Company’s condensed consolidated financial statements. Corporate Tax Rate Change The Company is subject to the provisions of the FASB ASC 740-10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. The Company remeasured deferred tax assets and liabilities based on the new U.S. tax rates at which they are expected to reverse in the future, which is generally 21 percent. The provisional amount recorded at December 31, 2017 relating to the remeasurement of these deferred tax balances was a net reduction of total deferred tax liabilities of $271 million. We are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect these deferred tax balances or potentially give rise to changes in existing deferred tax amounts. Deferred Tax Analysis The Act changes the treatment of certain income and expense items for which the Company records deferred tax assets and liabilities. The Company has assessed its valuation of deferred tax assets and liabilities at June 30, 2018, as well as valuation allowance analyses affected by various aspects of the Act. The Company has recorded no provisional amounts related to valuation allowances and revaluation of deferred tax assets affected by various aspects of the Act. However, the Company is still analyzing certain aspects of the Act and refining its calculations, which could potentially affect the valuation of these balances. Transition Tax The Act imposes a Transition Tax on undistributed and previously untaxed post-1986 foreign earnings and profits, as determined in accordance with U.S. tax principles, of certain foreign owned corporations of U.S. stockhol ders. The Company recorded a provisional amount at December 31, 2017 for the one-time transition tax liability for the deemed distribution of earnings from our foreign subsidiaries resulting in an increase in income tax expense of less than $1 million. The Company recorded a provisional transition tax amount because certain information related to the computations required to compute the transition tax, including the computation of previously undistributed earnings, is not readily available, and there is limited information from federal and state taxing authorities regarding the application and interpretation of the recently enacted legislation. Accordingly, the Company is still analyzing certain aspects of the transition tax calculations which could potentially affect the amount recorded. GILTI Because of the complexity of the new global intangible low-taxed income (“GILTI”) tax rules, we are continuing to evaluate this provision of the Act and the application of ASC 740. Under U.S. GAAP, we are allowed to make an accounting policy choice. Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. The Company is not yet able to reasonably estimate the effect of this provision of the Act. Therefore, the Company has not made any adjustments related to potential GILTI tax in our financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI. |
Business Segment Reporting
Business Segment Reporting | 6 Months Ended |
Jun. 30, 2018 | |
Business Segment Reporting [Abstract] | |
Business Segment Reporting | Note 15. Business Segment Reporting The business of the Company is conducted through three reportable segments: Terminix, American Home Shield and Franchise Services Group. In accordance with accounting standards for segments, the Company’s reportable segments are strategic business units that offer different services. The Terminix segment provides termite and pest control services to residential and commercial customers and distributes pest control products. The American Home Shield segment provides home service plans for home systems and appliances. The Franchise Services Group segment provides residential and commercial disaster restoration, janitorial and cleaning services through franchises primarily under the ServiceMaster, ServiceMaster Restore and ServiceMaster Clean brand names, home cleaning services through franchises primarily under the Merry Maids brand name, cabinet and wood furniture repair primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate includes SMAC, the Company’s financing subsidiary exclusively dedicated to providing financing to its franchisees and retail customers of its operating units, and the Company’s headquarters operations (substantially all of which costs are allocated to the Company’s reportable segments), which provide various technology, marketing, finance, legal and other support services to the reportable segments. The composition of the Company’s reportable segments is consistent with that used by the Company’s chief operating decision maker (the “CODM”) to evaluate performance and allocate resources. Information regarding the accounting policies used by the Company is described in the Company’s 2017 Form 10-K. The Company derives substantially all of its revenue from customers and franchisees in the United States with approximately two percent generated in foreign markets. Operating expenses of the business units consist primarily of direct costs and indirect costs allocated from Corporate. The Company uses Reportable Segment Adjusted EBITDA as its measure of segment profitability. Accordingly, the CODM evaluates performance and allocates resources based primarily on Reportable Segment Adjusted EBITDA. Reportable Segment Adjusted EBITDA is defined as net income before: unallocated corporate expenses; gain from discontinued operations, net of income taxes; (benefit) provision for income taxes; interest expense; depreciation and amortization expense; fumigation related matters; insurance reserve adjustment; non-cash stock-based compensation expense; restructuring charges; American Home Shield spin-off charges; loss on extinguishment of debt; and non-cash impairment of software and other related costs. The Company’s definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. The Company believes Reportable Segment Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives and equity-based, long-term incentive plans. Information for continuing operations for each reportable segment and Corporate is presented below: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Revenue: Terminix $ 456 $ 428 $ 823 $ 794 American Home Shield 355 326 602 553 Franchise Services Group 64 52 123 102 Reportable Segment Revenue $ 874 $ 806 $ 1,548 $ 1,449 Corporate — 1 1 1 Total Revenue $ 874 $ 807 $ 1,549 $ 1,450 Reportable Segment Adjusted EBITDA: (1) Terminix $ 109 $ 105 $ 195 $ 186 American Home Shield 73 82 105 113 Franchise Services Group 24 22 46 43 Reportable Segment Adjusted EBITDA $ 206 $ 209 $ 347 $ 343 ___________________________________ (1) Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Net Income $ 96 $ 85 $ 136 $ 124 Unallocated corporate expenses (2) — (1) (1) Depreciation and amortization expense 28 25 53 51 Fumigation related matters — 1 — 2 Non-cash stock-based compensation expense 4 4 8 9 Restructuring charges — 1 12 3 American Home Shield spin-off charges 8 — 15 — Non-cash impairment of software and other related costs — — — 2 Gain from discontinued operations, net of income taxes — — — (1) Provision for income taxes 34 52 48 76 Loss on extinguishment of debt — 3 — 3 Interest expense 37 38 75 75 Reportable Segment Adjusted EBITDA $ 206 $ 209 $ 347 $ 343 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 16. Fair Value Measurements The period-end carrying amounts of cash and cash equivalents, receivables, restricted cash, accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The period-end carrying amounts of long-term notes receivable approximate fair value as the effective interest rates for these instruments are comparable to period-end market rates. The period-end carrying amounts of short- and long-term marketable securities also approximate fair value, with unrealized gains and losses reported in interest and net investment income in the condensed consolidated statements of operations and comprehensive income. The carrying amount of total debt was $ 2,737 million and $ 2,787 million, and the estimated fair value was $2,79 5 million and $2,88 8 million as of June 30, 2018 and December 31, 2017, respectively. The fair value of the Company’s debt is estimated based on available market prices for the same or similar instruments which are considered significant other observable inputs (Level 2) within the fair value hierarchy. The fair values presented reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value estimates presented in this report are based on information available to the Company as of June 30, 2018 and December 31, 2017. The Company has estimated the fair value of its financial instruments measured at fair value on a recurring basis using the market and income approaches. For investments in marketable securities, deferred compensation trust assets and derivative contracts, which are carried at their fair values, the Company’s fair value estimates incorporate quoted market prices, other observable inputs (for example, forward interest rates) and unobservable inputs (for example, forward commodity prices) at the balance sheet date. Interest rate swap contracts are valued using forward interest rate curves obtained from third-party market data providers. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract interest rate to the expected forward interest rate as of each settlement date and applying the difference between the two rates to the notional amount of debt in the interest rate swap contracts. Fuel swap contracts are valued using forward fuel price curves obtained from third-party market data providers. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract fuel price to the expected forward fuel price as of each settlement date and applying the difference between the contract and expected prices to the notional gallons in the fuel swap contracts. The Company regularly reviews the forward price curves obtained from third-party market data providers and related changes in fair value for reasonableness utilizing information available to the Company from other published sources. The Company has not changed its valuation techniques for measuring the fair value of any financial assets and liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period. There were no significant transfers between levels during each of the six month periods ended June 30, 2018 and 2017. We account for these investments at fair value with adjustments to fair value recognized in unrealized gain/(loss) on investments in our condensed consolidated statements of operations and comprehensive income as a non-operating expense. The carrying amount and estimated fair value of the Company’s financial instruments that are recorded at fair value on a recurring basis for the periods presented are as follows: Estimated Fair Value Measurements Quoted Significant Prices In Other Significant Active Observable Unobservable Statement of Financial Carrying Markets Inputs Inputs (In millions) Position Location Value (Level 1) (Level 2) (Level 3) As of June 30, 2018: Financial Assets: Deferred compensation trust Long-term marketable securities $ 13 $ 13 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 34 34 — — Fuel swap contracts Prepaid expenses and other assets and Other assets 4 — — 4 Interest rate swap contract Prepaid expenses and other assets and Other assets 42 — 42 — Total financial assets $ 92 $ 47 $ 42 $ 4 As of December 31, 2017: Financial Assets: Deferred compensation trust Long-term marketable securities $ 12 $ 12 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 35 34 1 — Fuel swap contracts Prepaid expenses and other assets and Other assets 3 — — 3 Interest rate swap contract Prepaid expenses and other assets and Other assets 25 — 25 — Total financial assets $ 75 $ 46 $ 26 $ 3 A reconciliation of the beginning and ending fair values of financial instruments valued using significant unobservable inputs (Level 3) on a recurring basis is presented as follows: Fuel Swap Contract Assets (In millions) (Liabilities) Location of Gain (Loss) included in Earnings Balance as of December 31, 2017 $ 3 Total (losses) gains (realized and unrealized) Included in earnings 1 Cost of services rendered and products sold Included in other comprehensive income 1 Settlements (1) Balance as of June 30, 2018 $ 4 Balance as of December 31, 2016 $ 5 Total (losses) gains (realized and unrealized) Included in earnings 1 Cost of services rendered and products sold Included in other comprehensive income (5) Settlements (1) Balance as of June 30, 2017 $ — The following tables present information relating to the significant unobservable inputs of the Company’s Level 3 financial instruments: Fair Value Valuation Weighted (in millions) Technique Unobservable Input Range Average As of June 30, 2018: Fuel swap contracts $ 4 Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.59 - $3.00 $ 2.86 As of December 31, 2017: Fuel swap contracts $ 3 Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.43 - $2.90 $ 2.66 ___________________________________ (1) Forward prices per gallon were derived from third-party market data providers. A decrease in the forward price would result in a decrease in the fair value of the fuel swap contracts. The Company uses derivative financial instruments to manage risks associated with changes in fuel prices and interest rates. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. In designating its derivative financial instruments as hedging instruments under accounting standards for derivative instruments, the Company formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for the use of the hedging instrument. This documentation includes linking the derivatives to forecasted transactions. The Company assesses at the time a derivative contract is entered into, and at least quarterly thereafter, whether the derivative item is effective in offsetting the projected changes in cash flows of the associated forecasted transactions. All of the Company’s designated hedging instruments are classified as cash flow hedges. The Company has historically hedged a significant portion of its annual fuel consumption. The Company has also historically hedged the interest payments on a portion of its variable rate debt through the use of interest rate swap agreements. All of the Company’s fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the condensed consolidated statements of financial position as either an asset or liability at fair value, with the effective portion of changes in the fair value attributable to the hedged risks recorded in accumulated other comprehensive income. Any change in the fair value of the hedging instrument resulting from ineffectiveness, as defined by accounting standards, is recognized in current period earnings. Cash flows related to fuel and interest rate derivatives are classified as operating activities in the condensed consolidated statements of cash flows. Ineffective portions of derivative instruments designated in accordance with accounting standards as cash flow hedge relationships were insignificant during the six months ended June 30, 2018. As of June 30, 2018, the Company had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $ 29 million, maturing through 2019. Under the terms of its fuel swap contracts, the Company is required to post collateral in the event that the fair value of the contracts exceeds a certain agreed upon liability level and in other circumstances required by the counterparty. As of June 30, 2018, the Company had posted $2 million in letters of credit as collateral under its fuel hedging program, which were issued under the Revolving Credit Facility. The effective portion of the gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments is recorded in accumulated other comprehensive income. These amounts are reclassified into earnings in the same period or periods during which the hedged forecasted debt interest settlement or the fuel settlement affects earnings. See Note 9 to the condensed consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in accumulated other comprehensive income and for the amounts reclassified out of accumulated other comprehensive income and into earnings. The amount expected to be reclassified into earnings during the next 12 months includes unrealized gains and losses related to open fuel hedges and interest rate swaps. Specifically, as the underlying forecasted transactions occur during the next 12 months, the hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings is a gain of $6 million, net of tax, as of June 30, 2018 . The amounts that are ultimately reclassified into earnings will be based on actual fuel prices and interest rates at the time the positions are settled and may differ materially from the amount noted above. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 17. Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of stock options, RSUs and performance shares are reflected in diluted earnings per share by applying the treasury stock method. A reconciliation of the amounts included in the computation of basic earnings per share from continuing operations and diluted earnings per share from continuing operations is as follows: Three Months Ended Six Months Ended June 30, June 30, (In millions, except per share data) 2018 2017 2018 2017 Income from continuing operations $ 96 $ 85 $ 137 $ 123 Weighted-average common shares outstanding 135.5 133.7 135.4 134.1 Effect of dilutive securities: RSUs 0.1 0.1 0.1 0.1 Stock options (1) 0.2 1.3 0.2 1.3 Weighted-average common shares outstanding—assuming dilution 135.8 135.0 135.7 135.5 Basic earnings per share from continuing operations $ 0.71 $ 0.64 $ 1.01 $ 0.92 Diluted earnings per share from continuing operations $ 0.71 $ 0.63 $ 1.01 $ 0.91 ___________________________________ (1) Options to purchase 0.4 million and 1.3 million shares for the three months ended June 30, 2018 and 2017, respectively, and 0.4 million and 1.3 million shares for the six months ended June 30, 2018 and 2017, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. |
Significant Accounting Polici23
Significant Accounting Policies (Policy) | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” to provide a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. On January 1, 2018, the Company adopted FASB Accounting Standards Codification (“ASC”) 606 using the modified retrospective method to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, “ Revenue Recognition .” The Company implemented internal controls and system functionality where necessary to enable the preparation of financial information on adoption. See Note 3 to the condensed consolidated financial statements for more details. In January 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-01, “ Recognition and Measurement of Financial Assets and Financial Liabilities ” to change how entities measure certain equity investments, to require the disclosure of changes in the fair value of financial liabilities measured under the fair value option that are attributable to a company’s own credit, and to change certain other disclosure requirements. The changes in ASU 2016-01 specifically require that the changes in fair value of all investments in equity securities be recognized in net income. In March 2018, the FASB issued an amendment to this standard (ASU 2018-03), which provides further clarification regarding this standard. The Company adopted this ASU on January 1, 2018. As a result of the adoption, less than $1 million of gains and less than $1 million of losses related to the Company’s equity investments were recognized in Net income for the three and six months ended June 30, 2018, respectively, and approximately $2 million was reclassified from Accumulated other comprehensive income (“AOCI”) to Accumulated deficit related to unrealized gains on available-for-sale equity securities upon adoption. Additionally, the Company holds minority interests in several strategic investments which do not have readily determinable fair values. The carrying amount of these investments at June 30, 2018 is approximately $4 million. These investments are recorded at cost and will be remeasured upon the occurrence of observable price changes or impairments. No adjustments to the carrying amount were made during the period. In January 2017, the FASB issued ASU 2017-01, “ Business Combinations (Topic 805): Clarifying the Definition of a Business .” The ASU clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by providing a screen to determine when an integrated set of assets or activities is not a business. The Company adopted this ASU on January 1, 2018. The consolidated financial statements may be impacted if an acquisition does not qualify as a business combination under the ASU. Such acquisitions would be accounted for as asset purchases. In May 2017, the FASB issued ASU 2017-09, “ Stock Compensation – Scope of Modification Accounting .” The ASU clarifies the scope of modification accounting for share-based payment arrangements. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. The Company adopted this ASU on January 1, 2018 and will apply the guidance prospectively to awards modified on or after the adoption date. In February 2018, the FASB issued ASU 2018-02, “ Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ” allowing a reclassification from AOCI to Retained Earnings for stranded tax effects resulting from the corporate income tax rate change in the Tax Cuts and Jobs Act (the “Act” or “U.S. Tax Reform”). It is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. As allowed by the ASU, the Company elected to early adopt the amendments of this ASU on January 1, 2018 and reclassified approximately $4 million of unrealized losses from AOCI to Accumulated deficit. Following are the results of the adoption of these standards on the Company’s consolidated statements of stockholders’ equity previously reported: (In millions) Accumulated other comprehensive income Accumulated deficit As reported, December 31, 2017 $ 5 $ (895) Impact of adopting ASC 606 (Note 3) — 16 Impact of adopting ASU 2016-01 (2) 2 Impact of adopting ASU 2018-02 4 (4) As revised, January 1, 2018 $ 7 $ (881) |
Significant Accounting Polici24
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Significant Accounting Policies [Abstract] | |
Results of the Adoption of These Standards on the Company’s Consolidated Statements of Stockholders’ Equity Previously Reported | (In millions) Accumulated other comprehensive income Accumulated deficit As reported, December 31, 2017 $ 5 $ (895) Impact of adopting ASC 606 (Note 3) — 16 Impact of adopting ASU 2016-01 (2) 2 Impact of adopting ASU 2018-02 4 (4) As revised, January 1, 2018 $ 7 $ (881) |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenues[Abstract] | |
Disaggregation of Revenue | Terminix American Home Shield Franchise Services Group Total Three months ended June 30, Three months ended June 30, Three months ended June 30, Three months ended June 30, (In millions) 2018 2017 2018 2017 2018 2017 2018 2017 Major service line Pest Control $ 254 $ 229 $ — $ — $ — $ — $ 254 $ 229 Termite and Other Services 178 177 — — — — 178 177 Home Service Plans — — 355 326 — — 355 326 Royalty Fees — — — — 35 32 35 32 Janitorial National Accounts — — — — 16 12 16 12 Sales of Products and Other 24 23 — — 12 8 36 31 Corporate — — — — — — — 1 Total $ 456 $ 428 $ 355 $ 326 $ 64 $ 52 $ 874 $ 807 Terminix American Home Shield Franchise Services Group Total Six months ended June 30, Six months ended June 30, Six months ended June 30, Six months ended June 30, (In millions) 2018 2017 2018 2017 2018 2017 2018 2017 Major service line Pest Control $ 456 $ 430 $ — $ — $ — $ — $ 456 $ 430 Termite and Other Services 328 326 — — — — 328 326 Home Service Plans — — 602 553 — — 602 553 Royalty Fees — — — — 68 63 68 63 Janitorial National Accounts — — — — 31 23 31 23 Sales of Products and Other 39 37 — — 24 16 63 53 Corporate — — — — — — 1 1 Total $ 823 $ 794 $ 602 $ 553 $ 123 $ 102 $ 1,549 $ 1,450 |
Deferred Revenue By Segment | As of As of (In millions) June 30, 2018 December 31, 2017 Terminix $ 97 $ 90 American Home Shield (1) 188 573 Franchise Services Group (2) 11 — Total $ 297 $ 663 ___________________________________ (1) Includes a net contract liability of $8 million as of June 30, 2018 related to the recognition of American Home Shield monthly pay customer revenue on an other than straight-line basis to match the timing of cost recognition . (2) Includes approximately $7 million of Franchise Services Group Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of June 30, 2018. |
Movement In Deferred Revenue | (In millions) Deferred revenue Balance, January 1, 2018 $ 284 Deferral of revenue 303 Recognition of deferred revenue (299) Contract liability (1) 8 Balance, June 30, 2018 $ 297 |
Comparison of the Reported Condensed Consolidated Statement of Financial Position to the Pro-forma Amounts had the Previous Guidance Been in Effect | As of June 30, 2018 Condensed Consolidated Statement of Financial Position As reported Under Prior Revenue Recognition Guidance Current Assets: Receivables $ 202 $ 612 Prepaid expenses and other assets 92 104 Deferred customer acquisition costs — 41 Other Assets: Deferred customer acquisition costs 94 — Total Assets $ 5,530 $ 5,901 Current Liabilities: Deferred revenue $ 290 $ 696 Other Long-Term Liabilities: Deferred taxes 529 521 Other long-term obligations, primarily self-insured claims 188 181 Total Liabilities 4,184 4,575 Accumulated deficit (745) (761) Accumulated other comprehensive income 20 20 Net Income 136 132 Liabilities and Equity $ 5,530 $ 5,901 Three months ended June 30, 2018 Condensed Consolidated Statement of Operations and Comprehensive Income As reported Under Prior Revenue Recognition Guidance Revenue $ 874 $ 870 Cost of services rendered and products sold 467 467 Selling and administrative expenses 225 227 Provision for income taxes 34 32 Net Income $ 96 $ 89 Six months ended June 30, 2018 Condensed Consolidated Statement of Operations and Comprehensive Income As reported Under Prior Revenue Recognition Guidance Revenue $ 1,549 $ 1,542 Cost of services rendered and products sold 829 829 Selling and administrative expenses 422 419 Provision for income taxes 48 47 Net Income $ 136 $ 132 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring Charges [Abstract] | |
Schedule Of Restructuring Charges | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Terminix (1) $ (1) $ — $ 2 $ 1 Corporate (2) — — 3 — Leadership transition (3) — — — 1 Global Service Center relocation (4) 1 1 7 1 Total restructuring charges $ — $ 1 $ 12 $ 3 ___________________________________ (1) For the three and six months ended June 30, 2018, restructuring charges included a $1 million reserve adjustment associated with previous restructuring initiatives and $2 million of severance and other costs. For the six months ended June 30, 2017, these charges included $1 million of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of June 30, 2018, which includes amounts previously accrued as of December 31, 2017. (2) The Company has historically made changes on an ongoing basis to enhance capabilities and reduce costs in its corporate functions that provide company-wide administrative services to support operations. In 2017, the Company began taking actions to enhance capabilities and align corporate functions with those required to support the strategic needs as two stand-alone companies in anticipation of the American Home Shield spin-off. For the six months ended June 30, 2018 these charges included $3 million of severance and other costs. Severance and other costs of $ 1 million were unpaid and accrued as of June 30, 2018. (3) For the six months ended June 30, 2017, these charges include $1 million of severance costs as part of the severance agreement with the former Chief Financial Officer. Severance and other costs of $3 million were unpaid and accrued as of June 30, 2018, which includes amounts previously accrued as of December 31, 2017. (4) For the three months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $1 million and $1 million, respectively, related to the relocation of the Company’s headquarters, which is referred to as the Company’s Global Service Center. For the six months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $7 million and $1 million, respectively, related to the relocation of the Company’s headquarters. Of this amount, $5 million was unpaid and accrued as of June 30, 2018. |
Schedule Of Reconciliation Of The Beginning And Ending Balances Of Accrued Restructuring Charges | Accrued Restructuring (In millions) Charges Balance as of December 31, 2017 $ 6 Costs incurred 12 Costs paid or otherwise settled (9) Balance as of June 30, 2018 $ 10 Balance as of December 31, 2016 $ 3 Costs incurred 3 Costs paid or otherwise settled (4) Balance as of June 30, 2017 $ 2 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims | Accrued Self-insured (In millions) Claims, Net Balance as of December 31, 2017 $ 115 Provision for self-insured claims 17 Cash payments (18) Balance as of June 30, 2018 $ 114 Balance as of December 31, 2016 $ 120 Provision for self-insured claims 18 Cash payments (17) Balance as of June 30, 2017 $ 122 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters | American Franchise (In millions) Terminix Home Shield Services Group Total Balance as of December 31, 2017 $ 1,605 $ 476 $ 176 $ 2,256 Acquisitions 142 — — 142 Impact of foreign exchange rates (1) — — (1) Balance as of June 30, 2018 $ 1,745 $ 476 $ 175 $ 2,396 |
Schedule Of Other Intangible Asset Balances For Continuing Operations | As of June 30, 2018 As of December 31, 2017 Accumulated Accumulated (In millions) Gross Amortization Net Gross Amortization Net Trade names (1) $ 1,608 $ — $ 1,608 $ 1,608 $ — $ 1,608 Customer relationships 634 (562) 72 589 (555) 34 Franchise agreements 88 (71) 17 88 (70) 18 Other 100 (53) 47 81 (49) 32 Total $ 2,430 $ (686) $ 1,743 $ 2,366 $ (674) $ 1,692 ___________________________________ (1) Not subject to amortization. |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Comprehensive Income [Abstract] | |
Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects | Unrealized Gains (Losses) Unrealized on Available Foreign Gains (Losses) -for-Sale Currency (In millions) on Derivatives Securities Translation Total Balance as of December 31, 2017 $ 16 $ 2 $ (12) $ 5 Reclassification of unrealized gain/loss on equity securities — (2) — (2) Reclassification of tax rate change 3 1 — 4 As revised, January 1, 2018 19 — (12) 7 Other comprehensive income before reclassifications: Pre-tax amount 20 — (2) 18 Tax provision (5) — — (5) After-tax amount 14 — (2) 13 Amounts reclassified from accumulated other comprehensive income (1) — — — — Net current period other comprehensive income 15 — (2) 13 Balance as of June 30, 2018 $ 34 $ — $ (13) $ 20 Balance as of December 31, 2016 $ 12 $ 1 $ (15) $ (3) Other comprehensive income before reclassifications: Pre-tax amount (9) 2 2 (5) Tax benefit (3) — — (3) After-tax amount (6) 2 2 (2) Amounts reclassified from accumulated other comprehensive income (1) 3 — — 3 Net current period other comprehensive income (3) 2 2 1 Balance as of June 30, 2017 $ 9 $ 2 $ (13) $ (2) ___________________________________ (1) Amounts are net of tax. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated. |
Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss) | Amounts Reclassified from Accumulated Other Comprehensive Income Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Gains (losses) on derivatives: Fuel swap contracts $ 1 $ — $ 1 $ 1 Interest rate swap contracts — (4) (2) (5) Net gains (losses) on derivatives — (3) — (4) Impact of income taxes — 1 — 1 Total reclassifications related to derivatives $ — $ (2) $ — $ (3) Gains on available-for-sale securities $ — $ — $ — $ — Impact of income taxes — — — — Total reclassifications related to securities $ — $ — $ — $ — Total reclassifications for the period $ — $ (2) $ — $ (3) |
Supplemental Cash Flow Inform30
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows | Six Months Ended June 30, (In millions) 2018 2017 Cash paid for or (received from): Interest expense $ 70 $ 67 Income taxes, net of refunds 16 41 |
Cash and Marketable Securities
Cash and Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Cash and Marketable Securities [Abstract] | |
Schedule Of Amortized Cost, Fair Value And Gross Unrealized Gains And Losses Of The Company's Short- And Long-Term Investments In Debt And Equity Securities | Gross Realized Gross Realized Amortized and Unrealized and Unrealized Fair (In millions) Cost Gains Losses Value June 30, 2018: Debt securities $ 29 $ — $ — $ 29 Equity securities 15 2 — 17 Total securities $ 44 $ 2 $ — $ 46 December 31, 2017: Debt securities $ 29 $ — $ — $ 29 Equity securities 15 3 — 18 Total securities $ 44 $ 3 $ — $ 47 |
Schedule Of Proceeds And Gross Realized Gains Resulting From Sales Of Available-For-Sale Securities And Gross Realized Losses Or Impairment Charges Due To Other Than Temporary Declines In The Value Of Certain Investments | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Proceeds from sale of securities $ 1 $ — $ 1 $ — Maturities of securities — — 9 — Gross realized (gains) losses — — — — |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Long-Term Debt [Abstract] | |
Schedule Of Long-Term Debt | As of As of June 30, December 31, (In millions) 2018 2017 Senior secured term loan facility maturing in 2023 (1) $ 1,608 $ 1,615 Revolving credit facility maturing in 2021 — — 5.125% notes maturing in 2024 (2) 740 739 7.10% notes maturing in 2018 (3) — 79 7.45% notes maturing in 2027 (4) 171 169 7.25% notes maturing in 2038 (4) 42 42 Vehicle capital leases (5) 85 90 Other (6) 92 54 Less current portion (61) (144) Total long-term debt $ 2,675 $ 2,643 ___________________________________ (1) As of June 30, 2018 and December 31, 2017 presented net of $14 million and $16 million, respectively, in unamortized debt issuance costs and $3 million in unamortized original issue discount paid. (2) As of June 30, 2018 and December 31, 2017, presented net of $ 10 million and $11 million, respectively, in unamortized debt issuance costs. (3) On March 1, 2018, the Company paid $79 million upon their maturity. (4) As of June 30, 2018 and December 31, 2017, collectively presented net of $34 million and $ 37 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (5) The Company has entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows the Company to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are capital leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent. (6) A s of June 30, 2018, includes approximately $ 52 million of future payments in connection with the Company’s acquisitions of Copesan and other pest control companies as further described in Note 13. |
Schedule of Interest Rate Swap Agreements | Trade Date Effective Date Expiration Date Notional Amount Fixed Rate (1) Floating Rate November 7, 2016 November 8, 2016 November 30, 2023 $650,000 1.493 % One month LIBOR ___________________________________ (1) Before the application of the applicable borrowing margin. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Acquisitions [Abstract] | |
Schedule Of Supplemental Cash Flow Information Regarding Acquisitions | Six Months Ended June 30, (In millions) 2018 2017 Assets acquired $ 228 $ 15 Liabilities assumed (1) (27) (1) Net assets acquired $ 201 $ 14 Net cash paid $ 149 $ 12 Seller financed debt 39 3 Contingent earnout 12 — Purchase price $ 201 $ 14 ___________________________________ (1) Includes $12 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets. |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Segment Reporting [Abstract] | |
Schedule Of Information For Continuing Operations For Each Reportable Segment And Other Operations And Headquarters | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Revenue: Terminix $ 456 $ 428 $ 823 $ 794 American Home Shield 355 326 602 553 Franchise Services Group 64 52 123 102 Reportable Segment Revenue $ 874 $ 806 $ 1,548 $ 1,449 Corporate — 1 1 1 Total Revenue $ 874 $ 807 $ 1,549 $ 1,450 Reportable Segment Adjusted EBITDA: (1) Terminix $ 109 $ 105 $ 195 $ 186 American Home Shield 73 82 105 113 Franchise Services Group 24 22 46 43 Reportable Segment Adjusted EBITDA $ 206 $ 209 $ 347 $ 343 ___________________________________ Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: |
Schedule Of Reconciliation Of Net Income (Loss) To Reportable Segment Adjusted EBITDA | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2018 2017 2018 2017 Net Income $ 96 $ 85 $ 136 $ 124 Unallocated corporate expenses (2) — (1) (1) Depreciation and amortization expense 28 25 53 51 Fumigation related matters — 1 — 2 Non-cash stock-based compensation expense 4 4 8 9 Restructuring charges — 1 12 3 American Home Shield spin-off charges 8 — 15 — Non-cash impairment of software and other related costs — — — 2 Gain from discontinued operations, net of income taxes — — — (1) Provision for income taxes 34 52 48 76 Loss on extinguishment of debt — 3 — 3 Interest expense 37 38 75 75 Reportable Segment Adjusted EBITDA $ 206 $ 209 $ 347 $ 343 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Measurements [Abstract] | |
Schedule Of The Carrying Amount And Estimated Fair Value Of The Company's Financial Instruments That Are Recorded At Fair Value On A Recurring Basis | Estimated Fair Value Measurements Quoted Significant Prices In Other Significant Active Observable Unobservable Statement of Financial Carrying Markets Inputs Inputs (In millions) Position Location Value (Level 1) (Level 2) (Level 3) As of June 30, 2018: Financial Assets: Deferred compensation trust Long-term marketable securities $ 13 $ 13 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 34 34 — — Fuel swap contracts Prepaid expenses and other assets and Other assets 4 — — 4 Interest rate swap contract Prepaid expenses and other assets and Other assets 42 — 42 — Total financial assets $ 92 $ 47 $ 42 $ 4 As of December 31, 2017: Financial Assets: Deferred compensation trust Long-term marketable securities $ 12 $ 12 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 35 34 1 — Fuel swap contracts Prepaid expenses and other assets and Other assets 3 — — 3 Interest rate swap contract Prepaid expenses and other assets and Other assets 25 — 25 — Total financial assets $ 75 $ 46 $ 26 $ 3 |
Schedule Of Reconciliation Of The Beginning And Ending Fair Values Of Financial Instruments Valued Using Significant Unobservable Inputs (Level 3) On A Recurring Basis | Fuel Swap Contract Assets (In millions) (Liabilities) Location of Gain (Loss) included in Earnings Balance as of December 31, 2017 $ 3 Total (losses) gains (realized and unrealized) Included in earnings 1 Cost of services rendered and products sold Included in other comprehensive income 1 Settlements (1) Balance as of June 30, 2018 $ 4 Balance as of December 31, 2016 $ 5 Total (losses) gains (realized and unrealized) Included in earnings 1 Cost of services rendered and products sold Included in other comprehensive income (5) Settlements (1) Balance as of June 30, 2017 $ — |
Schedule Of Level 3 Financial Instruments | Fair Value Valuation Weighted (in millions) Technique Unobservable Input Range Average As of June 30, 2018: Fuel swap contracts $ 4 Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.59 - $3.00 $ 2.86 As of December 31, 2017: Fuel swap contracts $ 3 Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.43 - $2.90 $ 2.66 ___________________________________ (1) Forward prices per gallon were derived from third-party market data providers. A decrease in the forward price would result in a decrease in the fair value of the fuel swap contracts. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule Of Reconciliation Of The Amounts Included In The Computation Of Basic Earnings Per Share From Continuing Operations And Diluted Earnings Per Share From Continuing Operations | Three Months Ended Six Months Ended June 30, June 30, (In millions, except per share data) 2018 2017 2018 2017 Income from continuing operations $ 96 $ 85 $ 137 $ 123 Weighted-average common shares outstanding 135.5 133.7 135.4 134.1 Effect of dilutive securities: RSUs 0.1 0.1 0.1 0.1 Stock options (1) 0.2 1.3 0.2 1.3 Weighted-average common shares outstanding—assuming dilution 135.8 135.0 135.7 135.5 Basic earnings per share from continuing operations $ 0.71 $ 0.64 $ 1.01 $ 0.92 Diluted earnings per share from continuing operations $ 0.71 $ 0.63 $ 1.01 $ 0.91 ___________________________________ (1) Options to purchase 0.4 million and 1.3 million shares for the three months ended June 30, 2018 and 2017, respectively, and 0.4 million and 1.3 million shares for the six months ended June 30, 2018 and 2017, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) | Jun. 30, 2018entity |
American Home Shield And Terminix and Franchise Services Group, Separation [Member] | |
Number Of Independent, Publicly Traded Companies | 2 |
Significant Accounting Polici38
Significant Accounting Policies (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Carrying amount of investments | $ 25,000,000 | $ 25,000,000 | $ 25,000,000 | ||
Impact of adopting ASC 606 (Note 3) [Member] | |||||
Adjustment to equity | $ 16,000,000 | ||||
Accounting Standards Update 2016-01 [Member] | |||||
Gain (Losses) related to equity investments | 1,000,000 | (1,000,000) | |||
Reclassification from OCI to Retained Earnings related to unrealized gains and losses on available-for-sale equity securities | 2,000,000 | ||||
Carrying amount of investments | $ 4,000,000 | 4,000,000 | |||
Adjustment to carrying amount of investments | $ 0 | ||||
Accounting Standards Update 2018-02 [Member] | |||||
Adjustment to equity | $ 4,000,000 |
Significant Accounting Polici39
Significant Accounting Policies (Results of the Adoption of These Standards on the Company’s Consolidated Statements of Stockholders’ Equity Previously Reported) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Stockholders' equity | $ 1,347 | $ 1,167 | |
Accumulated Deficit [Member] | |||
Stockholders' equity | $ (881) | ||
Accumulated Deficit [Member] | Under Prior Revenue Recognition Guidance [Member] | |||
Stockholders' equity | (895) | ||
Accumulated Deficit [Member] | Impact of adopting ASC 606 (Note 3) [Member] | |||
Stockholders' equity | 16 | ||
Accumulated Deficit [Member] | Accounting Standards Update 2016-01 [Member] | |||
Stockholders' equity | 2 | ||
Accumulated Deficit [Member] | Accounting Standards Update 2018-02 [Member] | |||
Stockholders' equity | (4) | ||
Accumulated Other Comprehensive Income [Member] | |||
Stockholders' equity | $ 7 | ||
Accumulated Other Comprehensive Income [Member] | Under Prior Revenue Recognition Guidance [Member] | |||
Stockholders' equity | 5 | ||
Accumulated Other Comprehensive Income [Member] | Accounting Standards Update 2016-01 [Member] | |||
Stockholders' equity | (2) | ||
Accumulated Other Comprehensive Income [Member] | Accounting Standards Update 2018-02 [Member] | |||
Stockholders' equity | $ 4 |
Revenues (Narrative) (Details)
Revenues (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | ||
Carrying amount of investments | $ 25,000,000 | $ 25,000,000 | $ 25,000,000 | |||
Notes receivable, net of allowances | 45,000,000 | 45,000,000 | ||||
Revenue recognized | 93,000,000 | 196,000,000 | ||||
Contract with Customer, Liability | 297,000,000 | 297,000,000 | $ 284,000,000 | 663,000,000 | ||
Impact of adopting ASC 606 (Note 3) [Member] | ||||||
Adjustment to equity | 16,000,000 | |||||
Impact to revenues | 4,000,000 | 7,000,000 | ||||
Accounting Standards Update 2016-01 [Member] | ||||||
Gain (Losses) related to equity investments | 1,000,000 | (1,000,000) | ||||
Reclassification from OCI to Retained Earnings related to unrealized gains and losses on available-for-sale equity securities | 2,000,000 | |||||
Carrying amount of investments | 4,000,000 | 4,000,000 | ||||
Adjustment to carrying amount of investments | 0 | |||||
Accounting Standards Update 2018-02 [Member] | ||||||
Adjustment to equity | $ 4,000,000 | |||||
Terminix [Member] | ||||||
Contract with Customer, Liability | 97,000,000 | 97,000,000 | 90,000,000 | |||
Terminix [Member] | Impact of adopting ASC 606 (Note 3) [Member] | ||||||
Capitalized Contract Cost, Net | 71,000,000 | 71,000,000 | 61,000,000 | |||
Capitalized Contract Cost, Amortization | 16,000,000 | 32,000,000 | ||||
Capitalized Contract Cost, Impairment Loss | 0 | |||||
American Home Shield [Member] | ||||||
Contract with Customer, Liability | [1] | 188,000,000 | 188,000,000 | $ 573,000,000 | ||
American Home Shield [Member] | Impact of adopting ASC 606 (Note 3) [Member] | ||||||
Capitalized Contract Cost, Net | 21,000,000 | 21,000,000 | 21,000,000 | |||
Capitalized Contract Cost, Amortization | 6,000,000 | 11,000,000 | ||||
Capitalized Contract Cost, Impairment Loss | 0 | |||||
Franchise Services Group [Member] | ||||||
Capitalized Contract Cost, Net | 1,000,000 | 1,000,000 | ||||
Contract with Customer, Liability | [2] | 11,000,000 | 11,000,000 | |||
Franchise Services Group [Member] | Impact of adopting ASC 606 (Note 3) [Member] | ||||||
Capitalized Contract Cost, Net | $ 1,000,000 | |||||
Capitalized Contract Cost, Amortization | 1,000,000 | 1,000,000 | ||||
Capitalized Contract Cost, Impairment Loss | $ 0 | $ 0 | ||||
[1] | As ofAs of(In millions)June 30, 2018December 31, 2017Terminix$ 97$ 90American Home Shield(1) 188 573Franchise Services Group(2) 11 -Total$ 297$ 663___________________________________Includes a net contract liability of $8 million as of June 30, 2018 related to the recognition of American Home Shield monthly pay customer revenue on an other than straight-line basis to match the timing of cost recognition | |||||
[2] | Includes approximately $7 million of Franchise Services Group Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of June 30, 2018. |
Revenues (Disaggregation of Rev
Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reportable segment revenues | $ 874 | $ 807 | $ 1,549 | $ 1,450 |
Corporate Non-Segment [Member] | ||||
Reportable segment revenues | 1 | 1 | 1 | |
Pest Control [Member] | ||||
Reportable segment revenues | 254 | 229 | 456 | 430 |
Termite and Other Services [Member] | ||||
Reportable segment revenues | 178 | 177 | 328 | 326 |
Home Service Plans [Member] | ||||
Reportable segment revenues | 355 | 326 | 602 | 553 |
Royalty Fees [Member] | ||||
Reportable segment revenues | 35 | 32 | 68 | 63 |
Janitorial National Accounts [Member] | ||||
Reportable segment revenues | 16 | 12 | 31 | 23 |
Sales of Products and Other [Member] | ||||
Reportable segment revenues | 36 | 31 | 63 | 53 |
Terminix [Member] | ||||
Reportable segment revenues | 456 | 428 | 823 | 794 |
Terminix [Member] | Pest Control [Member] | ||||
Reportable segment revenues | 254 | 229 | 456 | 430 |
Terminix [Member] | Termite and Other Services [Member] | ||||
Reportable segment revenues | 178 | 177 | 328 | 326 |
Terminix [Member] | Sales of Products and Other [Member] | ||||
Reportable segment revenues | 24 | 23 | 39 | 37 |
American Home Shield [Member] | ||||
Reportable segment revenues | 355 | 326 | 602 | 553 |
American Home Shield [Member] | Home Service Plans [Member] | ||||
Reportable segment revenues | 355 | 326 | 602 | 553 |
Franchise Services Group [Member] | ||||
Reportable segment revenues | 64 | 52 | 123 | 102 |
Franchise Services Group [Member] | Royalty Fees [Member] | ||||
Reportable segment revenues | 35 | 32 | 68 | 63 |
Franchise Services Group [Member] | Janitorial National Accounts [Member] | ||||
Reportable segment revenues | 16 | 12 | 31 | 23 |
Franchise Services Group [Member] | Sales of Products and Other [Member] | ||||
Reportable segment revenues | $ 12 | $ 8 | $ 24 | $ 16 |
Revenues (Deferred Revenue By S
Revenues (Deferred Revenue By Segment) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Deferred Revenue | $ 297 | $ 284 | $ 663 | |
Net contract liability | 290 | 663 | ||
Terminix [Member] | ||||
Deferred Revenue | 97 | 90 | ||
American Home Shield [Member] | ||||
Deferred Revenue | [1] | 188 | $ 573 | |
Net contract liability | 8 | |||
Franchise Services Group [Member] | ||||
Deferred Revenue | [2] | 11 | ||
Franchise Services Group [Member] | Royalty Arrangement [Member] | ||||
Deferred Revenue | $ 7 | |||
[1] | As ofAs of(In millions)June 30, 2018December 31, 2017Terminix$ 97$ 90American Home Shield(1) 188 573Franchise Services Group(2) 11 -Total$ 297$ 663___________________________________Includes a net contract liability of $8 million as of June 30, 2018 related to the recognition of American Home Shield monthly pay customer revenue on an other than straight-line basis to match the timing of cost recognition | |||
[2] | Includes approximately $7 million of Franchise Services Group Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of June 30, 2018. |
Revenues (Movement In Deferred
Revenues (Movement In Deferred Revenue) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Revenues[Abstract] | |
Balance at beginning of period | $ 663 |
Deferral of revenue | 303 |
Recognition of deferred revenue | (299) |
Contract liability | 8 |
Balance at end of period | $ 297 |
Revenues (Comparison of the Rep
Revenues (Comparison of the Reported Condensed Consolidated Statement of Financial Position to the Pro-forma Amounts had the Previous Guidance Been in Effect) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Receivables | $ 202 | $ 202 | $ 570 | ||||
Prepaid expenses and other assets | 92 | 92 | 94 | ||||
Deferred customer acquisition costs | 36 | ||||||
Deferred customer acquisition costs | 94 | 94 | |||||
Assets | 5,530 | 5,530 | 5,646 | ||||
Net contract liability | 290 | 290 | 663 | ||||
Deferred taxes | 529 | 529 | 493 | ||||
Other long-term obligations, primarily self-insured claims | 188 | 188 | 169 | ||||
Liabilities | 717 | 717 | 662 | ||||
Retained Earnings | (745) | (745) | (895) | ||||
Accumulated other comprehensive income (loss) | 20 | $ (2) | 20 | $ (2) | $ 7 | 5 | $ (3) |
Reportable segment revenues | 874 | 807 | 1,549 | 1,450 | |||
Cost of services rendered and products sold | 467 | 415 | 829 | 761 | |||
Selling and administrative expenses | 225 | 206 | 422 | 392 | |||
Provision for income taxes | 34 | 52 | 48 | 76 | |||
Net Income | 96 | $ 85 | 136 | $ 124 | |||
Liabilities and Equity | 5,530 | 5,530 | $ 5,646 | ||||
Impact of adopting ASC 606 (Note 3) [Member] | |||||||
Receivables | 202 | 202 | |||||
Prepaid expenses and other assets | 92 | 92 | |||||
Deferred customer acquisition costs | 94 | 94 | |||||
Assets | 5,530 | 5,530 | |||||
Net contract liability | 290 | 290 | |||||
Deferred taxes | 529 | 529 | |||||
Other long-term obligations, primarily self-insured claims | 188 | 188 | |||||
Liabilities | 4,184 | 4,184 | |||||
Retained Earnings | (745) | (745) | |||||
Accumulated other comprehensive income (loss) | 20 | 20 | |||||
Reportable segment revenues | 874 | 1,549 | |||||
Cost of services rendered and products sold | 467 | 829 | |||||
Selling and administrative expenses | 225 | 422 | |||||
Provision for income taxes | 34 | 48 | |||||
Net Income | 96 | 136 | |||||
Liabilities and Equity | 5,530 | 5,530 | |||||
Impact of adopting ASC 606 (Note 3) [Member] | Under Prior Revenue Recognition Guidance [Member] | |||||||
Receivables | 612 | 612 | |||||
Prepaid expenses and other assets | 104 | 104 | |||||
Deferred customer acquisition costs | 41 | 41 | |||||
Assets | 5,901 | 5,901 | |||||
Net contract liability | 696 | 696 | |||||
Deferred taxes | 521 | 521 | |||||
Other long-term obligations, primarily self-insured claims | 181 | 181 | |||||
Liabilities | 4,575 | 4,575 | |||||
Retained Earnings | (761) | (761) | |||||
Accumulated other comprehensive income (loss) | 20 | 20 | |||||
Reportable segment revenues | 870 | 1,542 | |||||
Cost of services rendered and products sold | 467 | 829 | |||||
Selling and administrative expenses | 227 | 419 | |||||
Provision for income taxes | 32 | 47 | |||||
Net Income | 89 | 132 | |||||
Liabilities and Equity | $ 5,901 | $ 5,901 |
Restructuring Charges (Narrativ
Restructuring Charges (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 1 | $ 1 | $ 12 | $ 3 | |
Restructuring charges, net of tax | 1 | 1 | 10 | 2 | |
Global Service Center Relocation [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | [1] | $ 1 | $ 1 | $ 7 | $ 1 |
[1] | For the three months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $1 million and $1 million, respectively, related to the relocation of the Company's headquarters, which is referred to as the Company's Global Service Center. For the six months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $7 million and $1 million, respectively, related to the relocation of the Company's headquarters. Of this amount, $5 million was unpaid and accrued as of June 30, 2018. |
Restructuring Charges (Schedule
Restructuring Charges (Schedule Of Restructuring Charges) (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($)entity | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)entity | Jun. 30, 2017USD ($) | ||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 1 | $ 1 | $ 12 | $ 3 | |
Terminix [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | [1] | (1) | 2 | 1 | |
Severance and other restructuring costs | 2 | 2 | 1 | ||
Reserve adjustment | 1 | 1 | |||
Unpaid and accrued costs | $ 1 | 1 | |||
Corporate [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | [2] | $ 3 | |||
Number Of Independent, Publicly Traded Companies | entity | 2 | 2 | |||
Severance costs | $ 3 | ||||
Unpaid and accrued costs | $ 1 | 1 | |||
Global Service Center Relocation [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | [3] | 1 | 1 | 7 | 1 |
Redundant Rent Expense, Accelerated Depreciation And Other Charges | 1 | $ 1 | 7 | 1 | |
Unpaid and accrued costs | 5 | 5 | |||
Leadership Transition [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | [4] | $ 1 | |||
Severance costs | 1 | ||||
Unpaid and accrued costs | $ 3 | $ 3 | |||
[1] | For the three and six months ended June 30, 2018, restructuring charges included a $1 million reserve adjustment associated with previous restructuring initiatives and $2 million of severance and other costs. For the six months ended June 30, 2017, these charges included $1 million of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of June 30, 2018, which includes amounts previously accrued as of December 31, 2017. | ||||
[2] | The Company has historically made changes on an ongoing basis to enhance capabilities and reduce costs in its corporate functions that provide company-wide administrative services to support operations. In 2017, the Company began taking actions to enhance capabilities and align corporate functions with those required to support the strategic needs as two stand-alone companies in anticipation of the American Home Shield spin-off. For the six months ended June 30, 2018 these charges included $3 million of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of June 30, 2018. | ||||
[3] | For the three months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $1 million and $1 million, respectively, related to the relocation of the Company's headquarters, which is referred to as the Company's Global Service Center. For the six months ended June 30, 2018 and 2017, these charges included lease termination and other charges of $7 million and $1 million, respectively, related to the relocation of the Company's headquarters. Of this amount, $5 million was unpaid and accrued as of June 30, 2018. | ||||
[4] | For the six months ended June 30, 2017, these charges include $1 million of severance costs as part of the severance agreement with the former Chief Financial Officer. Severance and other costs of $3 million were unpaid and accrued as of June 30, 2018, which includes amounts previously accrued as of December 31, 2017. |
Restructuring Charges (Schedu47
Restructuring Charges (Schedule Of Reconciliation Of The Beginning And Ending Balances Of Accrued Restructuring Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of the beginning and ending balances of accrued restructuring charges | ||||
Balance at the beginning of the period | $ 6 | $ 3 | ||
Costs incurred | $ 1 | $ 1 | 12 | 3 |
Costs paid or otherwise settled | (9) | (4) | ||
Balance at the end of the period | $ 10 | $ 2 | $ 10 | $ 2 |
American Home Shield Spin-Off (
American Home Shield Spin-Off (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring charges | $ 1 | $ 1 | $ 12 | $ 3 | ||
Restructuring charges, net of tax | 1 | $ 1 | 10 | 2 | ||
Costs paid or otherwise settled | 8 | $ 3 | ||||
American Home Shield Spin-off [Member] | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff [Member] | ||||||
Restructuring charges | 8 | 15 | ||||
Restructuring charges, net of tax | 6 | 12 | ||||
Unpaid and accrued costs | $ 7 | $ 7 | $ 1 | |||
Costs paid or otherwise settled | $ 2 | |||||
Minimum [Member] | Scenario, Forecast [Member] | American Home Shield Spin-off [Member] | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff [Member] | ||||||
Restructuring charges | $ 35 | |||||
Incremental capital expenditures required to effect the spin-off | 20 | |||||
Maximum [Member] | Scenario, Forecast [Member] | American Home Shield Spin-off [Member] | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff [Member] | ||||||
Restructuring charges | 45 | |||||
Incremental capital expenditures required to effect the spin-off | $ 30 |
Commitments and Contingencies49
Commitments and Contingencies (Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Commitments and Contingencies [Line Items] | |||
Increase (Decrease) in Self Insurance Reserve | $ 12 | ||
Accrued Self-Insured Claims, Net [Member] | |||
Commitments and Contingencies [Line Items] | |||
Balance at the beginning of the period | $ 115 | $ 120 | |
Provision for self-insured claims | 17 | 18 | |
Cash payments | (18) | (17) | |
Balance at the end of the period | $ 114 | $ 114 | $ 122 |
Home service plan claims, average settled term | 3 months | ||
Home service plan claims, substantially settled, term | 6 months |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Indefinite-lived Intangible Assets [Line Items] | ||||
Accumulated impairment losses recorded in continuing operations | $ 0 | $ 0 | ||
Amortization expense, for the remainder of 2018 | 15 | 15 | ||
Amortization expense, 2019 | 24 | 24 | ||
Amortization expense, 2020 | 21 | 21 | ||
Amortization expense, 2021 | 17 | 17 | ||
Amortization expense, 2022 | 14 | 14 | ||
Amortization expense, Thereafter | 12 | 12 | ||
Trade Names [Member] | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Goodwill and trade name impairment | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset51
Goodwill and Intangible Assets (Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | $ 2,256 |
Acquisitions | 142 |
Impact of foreign exchange rates | (1) |
Balance at the end of the period | 2,396 |
Terminix [Member] | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | 1,605 |
Acquisitions | 142 |
Impact of foreign exchange rates | (1) |
Balance at the end of the period | 1,745 |
American Home Shield [Member] | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | 476 |
Balance at the end of the period | 476 |
Franchise Services Group [Member] | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | 176 |
Balance at the end of the period | $ 175 |
Goodwill and Intangible Asset52
Goodwill and Intangible Assets (Schedule Of Other Intangible Asset Balances For Continuing Operations) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 | |
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | $ 2,430 | $ 2,366 | |
Accumulated Amortization | (686) | (674) | |
Net | 1,743 | 1,692 | |
Customer Relationships [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | 634 | 589 | |
Accumulated Amortization | (562) | (555) | |
Net | 72 | 34 | |
Franchise Agreements [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | 88 | 88 | |
Accumulated Amortization | (71) | (70) | |
Net | 17 | 18 | |
Other [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | 100 | 81 | |
Accumulated Amortization | (53) | (49) | |
Net | 47 | 32 | |
Trade Names [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | [1] | 1,608 | 1,608 |
Net | [1] | $ 1,608 | $ 1,608 |
[1] | Not subject to amortization. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock-Based Compensation [Abstract] | ||||
Stock-based compensation expense | $ 4 | $ 4 | $ 8 | $ 9 |
Stock-based compensation expense, net of tax | 3 | $ 2 | 6 | $ 5 |
Total unrecognized compensation costs related to non-vested stock options and restricted share units | $ 32 | $ 32 | ||
Weighted-average period of recognition of stock-based compensation cost | 2 years 4 months 28 days |
Comprehensive Income (Narrative
Comprehensive Income (Narrative) (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Jun. 30, 2018 |
Comprehensive Income [Abstract] | ||
Unrealized gain on marketable securities | $ 3 | |
Unrealized gain on marketable securities, net of tax | $ 2 | |
Tax Cuts and Jobs Act, Reclassification from AOCI to Retained Earnings, Tax Effect | $ 4 |
Comprehensive Income (Summary O
Comprehensive Income (Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects) (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at the beginning of period | $ 5 | $ 5 | $ (3) | |
Reclassification of unrealized gain/loss on equity securities | (2) | |||
Reclassification of tax rate change | 4 | |||
Other comprehensive income before reclassifications: | ||||
Pre-tax amount | 18 | (5) | ||
Tax benefit | (5) | (3) | ||
After-tax amount | 13 | (2) | ||
Amounts reclassified from accumulated other comprehensive income | [1] | 3 | ||
Net current period other comprehensive income | 13 | 1 | ||
Balance at the end of period | 7 | 20 | (2) | |
Gains (Losses) on Derivatives [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at the beginning of period | 16 | 16 | 12 | |
Reclassification of tax rate change | 3 | |||
Other comprehensive income before reclassifications: | ||||
Pre-tax amount | 20 | (9) | ||
Tax benefit | (5) | (3) | ||
After-tax amount | 14 | (6) | ||
Amounts reclassified from accumulated other comprehensive income | [1] | 3 | ||
Net current period other comprehensive income | 15 | (3) | ||
Balance at the end of period | 19 | 34 | 9 | |
Unrealized Gains (Losses) on Available-for-Sale Securities [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at the beginning of period | 2 | 2 | 1 | |
Reclassification of unrealized gain/loss on equity securities | (2) | |||
Reclassification of tax rate change | 1 | |||
Other comprehensive income before reclassifications: | ||||
Pre-tax amount | 2 | |||
After-tax amount | 2 | |||
Net current period other comprehensive income | 2 | |||
Balance at the end of period | 2 | |||
Foreign Currency Translation [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at the beginning of period | (12) | (12) | (15) | |
Other comprehensive income before reclassifications: | ||||
Pre-tax amount | (2) | 2 | ||
After-tax amount | (2) | 2 | ||
Net current period other comprehensive income | (2) | 2 | ||
Balance at the end of period | $ (12) | $ (13) | $ (13) | |
[1] | Amounts are net of tax. |
Comprehensive Income (Schedule
Comprehensive Income (Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Cost of services rendered and products sold | $ (467) | $ (415) | $ (829) | $ (761) |
Interest expense | (37) | (38) | (75) | (75) |
Interest and net investment income | 1 | 1 | 2 | 1 |
Income from Continuing Operations before Income Taxes | 130 | 137 | 185 | 199 |
Provision for income taxes | (34) | (52) | (48) | (76) |
Net Income | 96 | 85 | 136 | 124 |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net Income | (2) | (3) | ||
Gains (Losses) on Derivatives [Member] | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net losses on derivatives | (3) | (4) | ||
Provision for income taxes | 1 | 1 | ||
Net Income | (2) | (3) | ||
Gains (Losses) on Derivatives [Member] | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | Fuel Swap Contracts [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Cost of services rendered and products sold | $ 1 | 1 | 1 | |
Gains (Losses) on Derivatives [Member] | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | Interest Rate Swap Contracts [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense | (4) | $ (2) | $ (5) | |
Unrealized Gains (Losses) on Available-for-Sale Securities [Member] | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest and net investment income | ||||
Provision for income taxes | ||||
Net Income |
Supplemental Cash Flow Inform57
Supplemental Cash Flow Information (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash paid for or (received from): | ||||
Cash and cash equivalents | $ 449 | $ 378 | $ 475 | |
Restricted cash | 89 | 89 | 89 | |
Cash and Cash Equivalents Including Restricted Cash, at Carrying Value | 538 | 467 | $ 563 | $ 386 |
Capital lease and other non-cash financing transactions | 10 | 23 | ||
Cash received for franchise | $ 1 | $ 1 |
Supplemental Cash Flow Inform58
Supplemental Cash Flow Information (Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash paid for or (received from): | ||
Interest expense | $ 70 | $ 67 |
Income taxes, net of refunds | $ 16 | $ 41 |
Cash and Marketable Securitie59
Cash and Marketable Securities (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Cash and Marketable Securities [Abstract] | ||
Impairment charges due to other than temporary declines in the value of certain investments | $ 0 | |
Gross unrealized losses of securities | 1,000,000 | |
Gross unrealized gains of securities | 2,000,000 | $ 3,000,000 |
Gross unrealized gains of securities, net of tax | $ 2,000,000 |
Cash and Marketable Securitie60
Cash and Marketable Securities (Schedule Of Amortized Cost, Fair Value And Gross Unrealized Gains And Losses Of The Company's Short- And Long-Term Investments In Debt And Equity Securities) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost of securities | $ 44 | $ 44 |
Gross unrealized gains of securities | 2 | 3 |
Gross unrealized losses of securities | (1) | |
Fair value of securities | 46 | 47 |
Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost of debt securities | 29 | 29 |
Fair value of debt securities | 29 | 29 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost of equity securities | 15 | 15 |
Gross unrealized gains of equity securities | 2 | 3 |
Fair value of equity securities | $ 17 | $ 18 |
Cash and Marketable Securitie61
Cash and Marketable Securities (Schedule Of Proceeds And Gross Realized Gains Resulting From Sales Of Available-For-Sale Securities And Gross Realized Losses)(Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cash and Marketable Securities [Abstract] | ||||
Proceeds from sale of securities | $ 1 | $ 1 | ||
Maturities of securities | 9 | |||
Gross realized (gains) losses |
Long-Term Debt (Schedule Of Lon
Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Dec. 31, 2017 | ||
Long-term debt [Line Items] | |||
Less current portion | $ (61) | $ (144) | |
Total long-term debt | 2,675 | 2,643 | |
Vehicle Capital Leases [Member] | |||
Long-term debt [Line Items] | |||
Vehicle capital leases | [1] | $ 85 | 90 |
Borrowing margin (as a percent) | 2.45% | ||
Variable rate basis | one-month LIBOR | ||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [2] | $ 1,608 | 1,615 |
Unamortized debt issuance costs | 14 | 16 | |
Unamortized original issue discount | 3 | 3 | |
Revolving Credit Facility Maturing In 2021 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | |||
5.125% Notes Maturing In 2024 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [3] | $ 740 | 739 |
Interest rate (as a percent) | 5.125% | ||
Unamortized debt issuance costs | $ 10 | 11 | |
7.10% Notes Maturing In 2018 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [4] | 79 | |
Interest rate (as a percent) | 7.10% | ||
Payment of debt costs | $ 79 | ||
7.45% Notes Maturing In 2027 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [5] | $ 171 | 169 |
Interest rate (as a percent) | 7.45% | ||
7.25% Notes Maturing In 2038 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [5] | $ 42 | 42 |
Interest rate (as a percent) | 7.25% | ||
Notes 7.45%, And 7.25% Collectively [Member] | |||
Long-term debt [Line Items] | |||
Unamortized fair value adjustments related to purchase accounting | $ 34 | 37 | |
Other [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [6] | 92 | 54 |
Copesan Services, Inc. (“Copesan”) [Member] | Other [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | $ 52 | $ 52 | |
[1] | The Company has entered into a fleet management services agreement (the "Fleet Agreement") which, among other things, allows the Company to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are capital leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent.A | ||
[2] | As of June 30, 2018 and December 31, 2017 presented net of $14 million and $16 million, respectively, in unamortized debt issuance costs and $3 million in unamortized original issue discount paid. | ||
[3] | As of June 30, 2018 and December 31, 2017, presented net of $10 million and $11 million, respectively, in unamortized debt issuance costs. | ||
[4] | On March 1, 2018, the Company paid $79 million upon their maturity. | ||
[5] | As of June 30, 2018 and December 31, 2017, collectively presented net of $34 million and $37 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. | ||
[6] | As of June 30, 2018, includes approximately $52 million of future payments in connection with the Company's acquisitions of Copesan and other pest control companies as further described in Note 13. |
Long-Term Debt (Schedule of Int
Long-Term Debt (Schedule of Interest Rate Swap Agreements) (Details) - Interest Rate Swap Contracts [Member] $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($) | ||
Derivative, Trade Date | Nov. 7, 2016 | |
Derivative, Effective Date | Nov. 8, 2016 | |
Derivative, Expiration Date | Nov. 30, 2023 | |
Notional amount | $ 650,000 | |
Weighted Average Fixed Rate (as a percent) | 1.493% | [1] |
Variable rate basis | One month LIBOR | |
[1] | Before the application of the applicable borrowing margin. |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) $ in Millions | 6 Months Ended | |||
Jun. 30, 2018USD ($)entity | Jun. 30, 2017USD ($)entity | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Acquisitions [Line Items] | ||||
Net purchase price | $ 201 | $ 14 | ||
Net cash paid | 149 | 12 | ||
Goodwill | 2,396 | $ 2,256 | ||
Deferred tax liabilities | 12 | |||
Acquisition related costs | $ 1 | $ 1 | ||
Copesan Services, Inc. (“Copesan”) [Member] | ||||
Acquisitions [Line Items] | ||||
Business Acquisition, Effective Date of Acquisition | Mar. 30, 2018 | |||
Net purchase price | $ 148 | |||
Net cash paid | 104 | |||
Goodwill | $ 104 | $ 98 | ||
Contingent consideration, term | 3 years | |||
Copesan Services, Inc. (“Copesan”) [Member] | Deferred Purchase Price [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration | $ 35 | |||
Copesan Services, Inc. (“Copesan”) [Member] | Earnout [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration | $ 10 | |||
Pest control, termite and franchise acquisitions [Member] | ||||
Acquisitions [Line Items] | ||||
Number of Businesses Acquired | entity | 4 | 2 | ||
Net purchase price | $ 46 | $ 14 | ||
Goodwill | 38 | 1 | ||
Other intangibles related to acquisitions | 15 | $ 13 | ||
Pest control, termite and franchise acquisitions [Member] | Deferred Purchase Price [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration | 4 | |||
Pest control, termite and franchise acquisitions [Member] | Earnout [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration | $ 4 | |||
Minimum [Member] | Pest control, termite and franchise acquisitions [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration, term | 1 year | |||
Maximum [Member] | Pest control, termite and franchise acquisitions [Member] | ||||
Acquisitions [Line Items] | ||||
Contingent consideration, term | 5 years |
Acquisitions (Schedule Of Suppl
Acquisitions (Schedule Of Supplemental Cash Flow Information Regarding Acquisitions) (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Supplemental cash flow information regarding acquisitions | |||
Assets acquired | $ 228 | $ 15 | |
Liabilities assumed | [1] | (27) | (1) |
Net assets acquired | 201 | 14 | |
Net cash paid | 149 | 12 | |
Seller financed debt | 39 | 3 | |
Total purchase price | 201 | $ 14 | |
Deferred tax liabilities | 12 | ||
Earnout [Member] | |||
Supplemental cash flow information regarding acquisitions | |||
Contingent earnout | $ 12 | ||
[1] | Includes $12 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Income Taxes [Abstract] | |||||
Effective tax rate on income from continuing operations (as a percent) | 26.10% | 38.00% | 26.10% | 38.00% | |
Tax at U.S. federal statutory rate (as a percent) | 21.00% | 35.00% | 21.00% | 35.00% | |
Unrecognized tax benefits that would impact effective tax rate if recognized | $ 15 | $ 15 | $ 14 | ||
Estimated reduction in unrecognized tax benefits during the next 12 months | $ 2 | 2 | |||
Net reduction of total deferred tax liabilities | $ 271 | ||||
One-time transition tax liability for the deemed distribution of earnings from our foreign subsidiaries | $ 1 |
Business Segment Reporting (Nar
Business Segment Reporting (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2018segment | |
Business Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Maximum percentage of revenue from customers and franchisees generated in foreign market | 2.00% |
Business Segment Reporting (Sch
Business Segment Reporting (Schedule Of Information For Continuing Operations For Each Reportable Segment And Other Operations And Headquarters) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | ||
Segment Reporting Information [Line Items] | ||||||
Revenue | $ 874 | $ 807 | $ 1,549 | $ 1,450 | ||
Adjusted EBITDA | 206 | 209 | 347 | 343 | ||
Identifiable Assets | 5,530 | 5,530 | $ 5,646 | |||
Depreciation & Amortization Expense | 28 | 25 | 53 | 51 | ||
Capital Expenditures | 49 | 34 | ||||
Operating Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 874 | 806 | 1,548 | 1,449 | ||
Adjusted EBITDA | [1] | 206 | 209 | 347 | 343 | |
Terminix [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 456 | 428 | 823 | 794 | ||
Terminix [Member] | Operating Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 456 | 428 | 823 | 794 | ||
Adjusted EBITDA | [1] | 109 | 105 | 195 | 186 | |
American Home Shield [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 355 | 326 | 602 | 553 | ||
American Home Shield [Member] | Operating Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 355 | 326 | 602 | 553 | ||
Adjusted EBITDA | [1] | 73 | 82 | 105 | 113 | |
Franchise Services Group [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 64 | 52 | 123 | 102 | ||
Franchise Services Group [Member] | Operating Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 64 | 52 | 123 | 102 | ||
Adjusted EBITDA | [1] | $ 24 | 22 | 46 | 43 | |
Corporate [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | $ 1 | $ 1 | $ 1 | |||
[1] | Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: Three Months EndedSix Months EndedJune 30,June 30,(In millions)2018201720182017Net Income$ 96$ 85$ 136$ 124Unallocated corporate expenses (2) - (1) (1)Depreciation and amortization expense 28 25 53 51Fumigation related matters - 1 - 2Non-cash stock-based compensation expense 4 4 8 9Restructuring charges - 1 12 3American Home Shield spin-off charges 8 - 15 -Non-cash impairment of software and other related costs - - - 2Gain from discontinued operations, net of income taxes - - - (1)Provision for income taxes 34 52 48 76Loss on extinguishment of debt - 3 - 3Interest expense 37 38 75 75Reportable Segment Adjusted EBITDA $ 206$ 209$ 347$ 343 |
Business Segment Reporting (S69
Business Segment Reporting (Schedule Of Reconciliation Of Net Income (Loss) To Reportable Segment Adjusted EBITDA) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Net Income | $ 96 | $ 85 | $ 136 | $ 124 | |
Depreciation and amortization expense | 28 | 25 | 53 | 51 | |
Fumigation related matters | 1 | 2 | |||
Insurance reserve adjustment | 12 | ||||
Non-cash stock-based compensation expense | 4 | 4 | 8 | 9 | |
Restructuring charges | 1 | 1 | 12 | 3 | |
American Home Shield spin-off charges | 8 | 15 | |||
Non-cash impairment of software and other related costs | 2 | ||||
Gain from discontinued operations, net of income taxes | (1) | ||||
Provision for income taxes | 34 | 52 | 48 | 76 | |
Loss on extinguishment of debt | 3 | 3 | |||
Interest expense | 37 | 38 | 75 | 75 | |
Reportable Segment Adjusted EBITDA | 206 | 209 | 347 | 343 | |
Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 206 | 209 | 347 | 343 |
Terminix [Member] | Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 109 | 105 | 195 | 186 |
American Home Shield [Member] | Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 73 | 82 | 105 | 113 |
Franchise Services Group [Member] | Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 24 | $ 22 | 46 | 43 |
Corporate [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Net Income | $ (2) | $ (1) | $ (1) | ||
[1] | Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: Three Months EndedSix Months EndedJune 30,June 30,(In millions)2018201720182017Net Income$ 96$ 85$ 136$ 124Unallocated corporate expenses (2) - (1) (1)Depreciation and amortization expense 28 25 53 51Fumigation related matters - 1 - 2Non-cash stock-based compensation expense 4 4 8 9Restructuring charges - 1 12 3American Home Shield spin-off charges 8 - 15 -Non-cash impairment of software and other related costs - - - 2Gain from discontinued operations, net of income taxes - - - (1)Provision for income taxes 34 52 48 76Loss on extinguishment of debt - 3 - 3Interest expense 37 38 75 75Reportable Segment Adjusted EBITDA $ 206$ 209$ 347$ 343 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Letters of credit posted as collateral under fuel hedging program | $ 2,000,000 | |
Hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings, net of tax | 6,000,000 | |
Carrying Value [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Long Term Debt And Capital Lease Obligation | 2,737,000,000 | $ 2,787,000,000 |
Estimated Fair Value [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Fair value of total debt | 2,795,000,000 | $ 2,888,000,000 |
Fuel Swap Contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Aggregate notional amount | 29,000,000 | |
Interest Rate Swap Contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Aggregate notional amount | $ 650,000,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule Of The Carrying Amount And Estimated Fair Value Of The Company's Financial Instruments That Are Recorded At Fair Value On A Recurring Basis) (Details) - Recurring [Member] - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Quoted Price In Active Markets (Level 1) [Member] | ||
Financial Assets: | ||
Deferred compensation trust | $ 13 | $ 12 |
Investments in marketable securities | 34 | 34 |
Total financial assets | 47 | 46 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Financial Assets: | ||
Investments in marketable securities | 1 | |
Total financial assets | 42 | 26 |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 42 | 25 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Financial Assets: | ||
Total financial assets | 4 | 3 |
Significant Unobservable Inputs (Level 3) [Member] | Fuel Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 4 | 3 |
Carrying Value [Member] | ||
Financial Assets: | ||
Deferred compensation trust | 13 | 12 |
Investments in marketable securities | 34 | 35 |
Total financial assets | 92 | 75 |
Carrying Value [Member] | Fuel Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 4 | 3 |
Carrying Value [Member] | Interest Rate Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | $ 42 | $ 25 |
Fair Value Measurements (Sche72
Fair Value Measurements (Schedule Of Reconciliation Of The Beginning And Ending Fair Values Of Financial Instruments Valued Using Significant Unobservable Inputs (Level 3) On A Recurring Basis) (Details) - Fuel Swap Contracts [Member] - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Reconciliation of the beginning and ending fair values of financial instruments valued using significant unobservable inputs (Level 3) | ||
Balance at the beginning of the period | $ 3 | $ 5 |
Total (losses) gains (realized and unrealized) | ||
Included in earnings | 1 | 1 |
Included in other comprehensive income | 1 | (5) |
Settlements | (1) | $ (1) |
Balance at the end of the period | $ 4 |
Fair Value Measurements (Sche73
Fair Value Measurements (Schedule Of Level 3 Financial Instruments) (Details) - Fuel Swap Contracts [Member] $ in Millions | Jun. 30, 2018USD ($)$ / gal | Dec. 31, 2017USD ($)$ / gal | Dec. 31, 2016USD ($) | |
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||
Fair value at the end of the period | $ | $ 4 | $ 3 | $ 5 | |
Discounted Cash Flows [Member] | Minimum [Member] | ||||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||
Forward Unleaded Price per Gallon (in dollars per gallon) | [1] | 2.59 | 2.43 | |
Discounted Cash Flows [Member] | Maximum [Member] | ||||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||
Forward Unleaded Price per Gallon (in dollars per gallon) | [1] | 3 | 2.90 | |
Discounted Cash Flows [Member] | Weighted Average [Member] | ||||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||
Forward Unleaded Price per Gallon (in dollars per gallon) | [1] | 2.86 | 2.66 | |
[1] | Forward prices per gallon were derived from third-party market data providers. A decrease in the forward price would result in a decrease in the fair value of the fuel swap contracts. |
Earnings Per Share (Schedule Of
Earnings Per Share (Schedule Of Reconciliation Of The Amounts Included In The Computation Of Basic Earnings Per Share From Continuing Operations And Diluted Earnings Per Share From Continuing Operations) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||
Income from continuing operations | $ 96 | $ 85 | $ 137 | $ 123 | |
Weighted average common shares outstanding | 135.5 | 133.7 | 135.4 | 134.1 | |
Effect of dilutive securities: | |||||
Weighted average common shares outstanding-assuming dilution | 135.8 | 135 | 135.7 | 135.5 | |
Basic earnings per share from continuing operations (in dollars per share) | $ 0.71 | $ 0.64 | $ 1.01 | $ 0.92 | |
Diluted earnings per share from continuing operations (in dollars per share) | $ 0.71 | $ 0.63 | $ 1.01 | $ 0.91 | |
RSUs [Member] | |||||
Effect of dilutive securities: | |||||
Dilutive securities | 0.1 | 0.1 | 0.1 | 0.1 | |
Stock Options [Member] | |||||
Effect of dilutive securities: | |||||
Dilutive securities | [1] | 0.2 | 1.3 | 0.2 | 1.3 |
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 0.4 | 1.3 | 0.4 | 1.3 | |
[1] | Options to purchase 0.4 million and 1.3 million shares for the three months ended June 30, 2018 and 2017, respectively, and 0.4 million and 1.3 million shares for the six months ended June 30, 2018 and 2017, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. |