Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 25, 2019 | Jun. 29, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SERVICEMASTER GLOBAL HOLDINGS INC | ||
Entity Central Index Key | 1,428,875 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 135,880,104 | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 8 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Trading Symbol | serv |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Operations and Comprehensive (Loss) Income [Abstract] | |||
Revenue | $ 1,900 | $ 1,755 | $ 1,726 |
Cost of services rendered and products sold | 1,041 | 962 | 924 |
Selling and administrative expenses | 555 | 500 | 462 |
Amortization expense | 18 | 18 | 27 |
Acquisition-related costs | 5 | 1 | |
401(k) Plan corrective contribution | (3) | 2 | |
Fumigation related matters | 3 | 4 | 93 |
Insurance reserve adjustment | 23 | ||
Impairment of software and other related costs | 2 | 1 | |
Mark-to-market loss on investment in frontdoor, inc. | 249 | ||
Restructuring charges | 17 | 21 | 15 |
Gain on sale of Merry Maids branches | (2) | ||
Interest expense | 133 | 150 | 153 |
Interest and net investment income | (5) | (2) | (1) |
Loss on extinguishment of debt | 10 | 6 | 32 |
(Loss) Income from Continuing Operations before Income Taxes | (126) | 99 | (2) |
Provision (benefit) for income taxes | 37 | (242) | (5) |
Equity in losses of joint venture | (1) | ||
(Loss) Income from Continuing Operations | (163) | 341 | 2 |
Gain from discontinued operations, net of income taxes | 122 | 169 | 153 |
Net (Loss) Income | (41) | 510 | 155 |
Other Comprehensive (Loss) Income, Net of Income Taxes: | |||
Net unrealized gains (losses) on securities | 1 | (2) | |
Net unrealized gains on derivative instruments | 1 | 4 | 20 |
Foreign currency translation (loss) gain | (3) | 3 | |
Other Comprehensive (Loss) Income, Net of Income Taxes | (3) | 8 | 18 |
Total Comprehensive (Loss) Income | $ (44) | $ 518 | $ 173 |
Weighted-average common shares outstanding - Basic | 135.5 | 134.4 | 135.3 |
Weighted-average common shares outstanding - Diluted | 135.5 | 135.4 | 137.3 |
Basic Earnings Per Share: | |||
(Loss) Income from Continuing Operations (in dollars per share) | $ (1.20) | $ 2.54 | $ 0.01 |
Gain from discontinued operations, net of income taxes (in dollars per share) | 0.90 | 1.26 | 1.13 |
Net (Loss) Income (in dollars per share) | (0.30) | 3.79 | 1.14 |
Diluted Earnings Per Share: | |||
(Loss) Income from Continuing Operations (in dollars per share) | (1.20) | 2.52 | 0.01 |
Gain from discontinued operations, net of income taxes (in dollars per share) | 0.90 | 1.25 | 1.11 |
Net (Loss) Income (in dollars per share) | $ (0.30) | $ 3.76 | $ 1.13 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 224 | $ 192 |
Investment in frontdoor, inc. | 445 | |
Receivables, less allowances of $21 and $22, respectively | 186 | 162 |
Inventories | 45 | 41 |
Prepaid expenses and other assets | 61 | 88 |
Deferred customer acquisition costs | 18 | |
Current assets of discontinued operations | 740 | |
Total Current Assets | 962 | 1,242 |
Other Assets: | ||
Property and equipment, net | 201 | 202 |
Goodwill | 1,956 | 1,780 |
Intangible assets, primarily trade names, service marks and trademarks, net | 1,588 | 1,526 |
Restricted cash | 89 | 89 |
Notes receivable | 43 | 41 |
Long-term marketable securities | 21 | 21 |
Deferred customer acquisition costs | 77 | |
Other assets | 87 | 67 |
Long-term assets of discontinued operations | 678 | |
Total Assets | 5,023 | 5,646 |
Current Liabilities: | ||
Accounts payable | 89 | 82 |
Accrued liabilities: | ||
Payroll and related expenses | 60 | 56 |
Self-insured claims and related expenses | 58 | 60 |
Accrued interest payable | 14 | 14 |
Other | 61 | 43 |
Deferred revenue | 95 | 90 |
Current liabilities of discontinued operations | 693 | |
Current portion of long-term debt | 49 | 136 |
Total Current Liabilities | 425 | 1,174 |
Long-Term Debt | 1,727 | 2,642 |
Other Long-Term Liabilities: | ||
Deferred taxes | 484 | 451 |
Long-term liabilities of discontinued operations | 44 | |
Other long-term obligations, primarily self-insured claims | 182 | 168 |
Total Other Long-Term Liabilities | 666 | 663 |
Commitments and Contingencies (Note 10) | ||
Stockholders' Equity: | ||
Common stock $0.01 par value (authorized 2,000,000,000 shares with 147,209,928 shares issued and 135,687,558 shares outstanding at December 31, 2018, and 146,662,232 shares issued and 135,141,048 outstanding at December 31, 2017) | 2 | 2 |
Additional paid-in capital | 2,309 | 2,321 |
Retained earnings (accumulated deficit) | 156 | (895) |
Accumulated other comprehensive loss | 5 | 5 |
Less common stock held in treasury, at cost (11,522,370 shares at December 31, 2018, and 11,521,184 shares at December 31, 2017) | (267) | (267) |
Total Stockholders' Equity | 2,204 | 1,167 |
Total Liabilities and Stockholders' Equity | $ 5,023 | $ 5,646 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Consolidated Statements of Financial Position [Abstract] | ||
Allowance for receivables (in dollars) | $ 21 | $ 22 |
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) | 147,209,928 | 146,662,232 |
Common stock, shares outstanding (in shares) | 135,687,558 | 135,141,048 |
Treasury stock (in shares) | 11,522,370 | 11,521,184 |
Consolidated Statements of Shar
Consolidated Statements of Shareholder's Equity - USD ($) shares in Millions, $ in Millions | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Total |
Balance, shares at Dec. 31, 2015 | 143 | (8) | ||||
Balance, value at Dec. 31, 2015 | $ 2 | $ 2,245 | $ (1,560) | $ (21) | $ (122) | $ 545 |
Net income (loss) | 155 | 155 | ||||
Other comprehensive income (loss), net of tax | 18 | 18 | ||||
Total Comprehensive (Loss) Income | 155 | 18 | 173 | |||
Issuance of common stock, value | 2 | 2 | ||||
Exercise of stock options, shares | 1 | |||||
Exercise of stock options, value | 10 | 10 | ||||
Repurchase of common stock, shares | (2) | |||||
Repurchase of common stock, value | $ (60) | (60) | ||||
Stock-based employee compensation | 16 | 16 | ||||
Balance, shares at Dec. 31, 2016 | 144 | (9) | ||||
Balance at Dec. 31, 2016 | $ 2 | 2,274 | (1,405) | (3) | $ (182) | 686 |
Net income (loss) | 510 | 510 | ||||
Other comprehensive income (loss), net of tax | 8 | 8 | ||||
Total Comprehensive (Loss) Income | 510 | 8 | 518 | |||
Issuance of common stock, value | 2 | 2 | ||||
Exercise of stock options, shares | 2 | |||||
Exercise of stock options, value | 28 | 28 | ||||
Repurchase of common stock, shares | (2) | |||||
Repurchase of common stock, value | $ (85) | (85) | ||||
Stock-based employee compensation | 18 | 18 | ||||
Balance, shares at Dec. 31, 2017 | 147 | (12) | ||||
Balance at Dec. 31, 2017 | $ 2 | 2,321 | (895) | 5 | $ (267) | 1,167 |
Net income (loss) | (41) | (41) | ||||
Other comprehensive income (loss), net of tax | (3) | (3) | ||||
Total Comprehensive (Loss) Income | (41) | (3) | (44) | |||
Cumulative effect of accounting changes | 14 | 2 | 16 | |||
Net assets distributed to frontdoor, inc. | (35) | 1,078 | 1,043 | |||
Exercise of stock options, value | 6 | 6 | ||||
Stock-based employee compensation | 16 | 16 | ||||
Balance, shares at Dec. 31, 2018 | 147 | (12) | ||||
Balance at Dec. 31, 2018 | $ 2 | $ 2,309 | $ 156 | $ 5 | $ (267) | $ 2,204 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Cash Flows [Abstract] | |||
Cash and Cash Equivalents and Restricted Cash at Beginning of Period | $ 563 | $ 386 | $ 296 |
Cash Flows from Operating Activities from Continuing Operations: | |||
Net (Loss) Income | (41) | 510 | 155 |
Adjustments to reconcile net (loss) income to net cash provided from operating activities: | |||
Gain from discontinued operations, net of income taxes | (122) | (169) | (153) |
Equity in losses of joint venture | 1 | ||
Depreciation expense | 73 | 68 | 53 |
Amortization expense | 18 | 18 | 27 |
Amortization of debt issuance costs | 4 | 5 | 5 |
401(k) Plan corrective contribution | (3) | 2 | |
Fumigation related matters | 3 | 4 | 93 |
Payments on fumigation related matters | (2) | (12) | (90) |
Insurance reserve adjustment | 23 | ||
Impairment of software and other related costs | 2 | 1 | |
Mark-to-market loss on investment in frontdoor, inc. | 249 | ||
Gain on sale of Merry Maids brands | (2) | ||
Loss on extinguishment of debt | 10 | 6 | 32 |
Deferred income tax provision | 8 | (233) | 20 |
Stock-based compensation expense | 14 | 10 | 12 |
Gain on sale of marketable securities | (1) | ||
Restructuring charges | 17 | 21 | 15 |
Cash payments related to restructuring charges | (15) | (6) | (8) |
Other | (2) | 9 | (4) |
Change in working capital, net of acquisitions: | |||
Receivables | (6) | (2) | |
Inventories and other current assets | (6) | (1) | (11) |
Accounts payable | (1) | (6) | 6 |
Deferred revenue | (2) | (11) | 1 |
Accrued liabilities | 12 | 12 | (30) |
Accrued interest payable | (1) | (1) | 6 |
Current income taxes | 17 | (15) | (5) |
Net Cash Provided from Operating Activities from Continuing Operations | 229 | 204 | 148 |
Cash Flows from Investing Activities from Continuing Operations: | |||
Property additions | (49) | (68) | (46) |
Government grant fundings for property additions | 7 | 2 | |
Sale of equipment and other assets | 2 | 4 | 8 |
Business acquisitions, net of cash acquired | (191) | (13) | (34) |
Purchases of available-for-sale securities | (2) | ||
Origination of notes receivable | (120) | (102) | (100) |
Collections on notes receivable | 100 | 100 | 97 |
Other investments | 1 | (1) | (3) |
Net Cash Used for Investing Activities from Continuing Operations | (250) | (79) | (79) |
Cash Flows from Financing Activities from Continuing Operations: | |||
Borrowings of debt | 1,000 | 2,400 | |
Payments of debt | (1,114) | (91) | (2,416) |
Discount paid on issuance of debt | (4) | ||
Debt issuance costs paid | (34) | ||
Call premium paid on retirement of debt | (1) | ||
Contribution to frontdoor, Inc. | (242) | ||
Repurchase of common stock and RSU vesting | (85) | (60) | |
Issuance of common stock | 7 | 30 | 13 |
Net Cash Used for Financing Activities from Continuing Operations | (350) | (147) | (102) |
Cash Flows from Discontinued Operations: | |||
Cash provided from operating activities | 146 | 210 | 177 |
Cash used for investing activities | (1) | (6) | (54) |
Cash used for financing activities | (24) | (5) | (1) |
Net Cash Provided from Discontinued Operations | 121 | 198 | 122 |
Effect of Exchange Rate Changes on Cash | (1) | 1 | |
Cash (Decrease) Increase During the Period | (250) | 177 | 89 |
Cash and Cash Equivalents and Restricted Cash at End of Period | $ 313 | $ 563 | $ 386 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation ServiceMaster is a leading provider of essential residential and commercial services. Our services include residential termite and pest control, commercial termite and pest control, national accounts pest control services, restoration, commercial cleaning, residential cleaning, cabinet and furniture repair and home inspection. We provide these services through an extensive service network of company-owned, franchised and licensed locations operating primarily under the following leading brands: Terminix, Terminix Commercial, Copesan, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. All of our consolidated subsidiaries are wholly-owned. Intercompany transactions and balances have been eliminated. American Home Shield Spin-off On October 1, 2018, we completed the previously announced separation of our American Home Shield business (the “Separation”). The Separation was effectuated through a pro rata dividend (the “Distribution”) to our stockholders of approximately 80.2% of the outstanding shares of common stock of frontdoor, inc. (“Frontdoor”), which was formed as a wholly owned subsidiary of the Company to hold its American Home Shield business. As a result of the Distribution, Frontdoor is an independent public company that trades on the Nasdaq Global Select Market under the symbol “FTDR.” The Distribution was made to our stockholders of record as of the close of business on September 14, 2018 (the “Record Date”), and such stockholders received one share of Frontdoor common stock for every two shares of ServiceMaster common stock held as of the close of business on the Record Date. We distributed 67,781,527 shares of common stock of Frontdoor in the Distribution and retained 16,734,092 shares, or approximately 19.8% , of the common stock of Frontdoor immediately following the Distribution. These investments are accounted for as available for sale securities. We currently intend to responsibly dispose of all of the Frontdoor common stock retained after the Distribution through one or more subsequent exchanges for debt by June 14, 2019 , in accordance with terms set forth in a private letter ruling with the IRS governing the tax-free status of the Distribution . As a result of the Separation, we now have two reportable segments: Terminix and ServiceMaster Brands. The historical results of the American Home Shield Business, including the results of operations, cash flows and related assets and liabilities are reported as discontinued operations for all periods presented herein. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Consolidation The consolidated financial statements include all of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements requires management to make certain estimates and assumptions required under GAAP which may differ from actual results. The more significant areas requiring the use of management estimates relate to revenue recognition; the allowance for uncollectible receivables; accruals for self-insured retention limits related to medical, workers’ compensation, auto and general liability insurance claims; accruals for termite damage claims; the possible outcome of outstanding litigation; accruals for income tax liabilities as well as deferred tax accounts; the deferral and amortization of customer acquisition costs; share based compensation; useful lives for depreciation and amortization expense; the valuation of marketable securities, including the valuation of retained shares of Frontdoor common stock; and the valuation of tangible and intangible assets. In 2018, there were no changes in the significant areas that require estimates or in the underlying methodologies used in determining the amounts of these associated estimates, other than the valuation of our retained shares of Frontdoor common stock. The allowance for uncollectible receivables is developed based on several factors including overall customer credit quality, historical write-off experience and specific account analyses that project the ultimate collectability of the outstanding balances. As such, these factors may change over time causing the allowance level to vary. We carry insurance policies on insurable risks at levels which we believe to be appropriate, including workers’ compensation, auto and general liability risks. We purchase insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. We are responsible for all claims that fall below the retention limits. In determining our accrual for self-insured claims, we use 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. We adjust the 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. We seek to reduce the potential amount of loss arising from self-insured claims by insuring certain levels of risk. While insurance agreements are designed to limit our losses from large exposure and permit recovery of a portion of direct unpaid losses, insurance does not relieve us of ultimate liability. Accordingly, the accruals for insured claims represent our total unpaid gross losses. Insurance recoverables, which are reported within Prepaid expenses and other assets and Other assets, relate to estimated insurance recoveries on the insured claims reserves. 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. We have certain liabilities with respect to existing or potential claims, lawsuits, and other proceedings. We accrue 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. We record deferred income tax balances based on the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and income tax purposes. We record deferred tax items based on the estimated value of the tax basis. We adjust tax estimates when required to reflect changes based on factors such as changes in tax laws, relevant court decisions, results of tax authority reviews and statutes of limitations. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize potential interest and penalties related to our uncertain tax positions in Provision (benefit) for income taxes on the consolidated statements of operations and comprehensive (loss) income. Revenue On January 1, 2018, we adopted FASB Accounting Standards Codification (“ASC”) 606. 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.” See Note 3 to the consolidated financial statements for more details. Deferred Customer Acquisition Costs Customer acquisition costs, which are incremental and direct costs of obtaining a customer, are deferred and amortized over the expected customer relationship period. See Note 3 to the consolidated financial statements for more details. Advertising Advertising costs are expensed when the advertising occurs. Advertising expense for the years ended December 31, 2018, 2017 and 2016 was $ 85 million, $71 million and $ 66 million, respectively. Inventory Inventories are recorded at the lower of cost (primarily on a weighted-average cost basis) or net realizable value. Our inventory primarily consists of finished goods to be used on the customers’ premises or sold to franchisees. Property and Equipment, Intangible Assets and Goodwill Property and equipment consist of the following: Estimated As of December 31, Useful Lives (In millions) 2018 2017 (Years) Land $ 5 $ 4 N/A Buildings and improvements 47 50 10 - 40 Technology and communications 208 190 3 - 7 Machinery, production equipment and vehicles 242 222 3 - 9 Office equipment, furniture and fixtures 19 13 5 - 7 521 480 Less accumulated depreciation (320) (277) Net property and equipment $ 201 $ 202 Depreciation of property and equipment, including depreciation of assets held under capital leases was $73 million, $68 million and $53 million for the years ended December 31, 2018, 2017 and 2016, respectively. We recorded impairment charges of $2 million and $1 million in the years ended December 31, 2017 and 2016, respectively, relating to our decisions to replace certain software. No impairment charges were recorded in the year ended December 31, 2018. As of December 31, 2018 and 2017, goodwill was $1,956 million a nd $1,780 million, respectively. I ntangible assets consisted of indefinite-lived trade names of $1,4 82 million and $1,468 million and other amortizable intangible assets in the amount of $ 106 million and $59 million as of December 31, 2018 and 2017, respectively . Fixed assets and intangible assets with finite lives are depreciated and amortized on a straight-line basis over their estimated useful lives. These lives are based on our previous experience for similar assets, potential market obsolescence and other industry and business data. As required by accounting standards for the impairment or disposal of long-lived assets, fixed assets and finite-lived intangible assets are tested for recoverability whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment loss would be recognized equal to the difference between the carrying amount and the fair value of the asset. Changes in the estimated useful lives or in the asset values could cause us to adjust its book value or future expense accordingly. As required under accounting standards for goodwill and other intangibles, goodwill is not subject to amortization, and intangible assets with indefinite useful lives are not amortized until their useful lives are determined to no longer be indefinite. Goodwill and intangible assets that are not subject to amortization 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. Goodwill and indefinite-lived intangible assets, primarily trade names, are assessed annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. The Company’s 2018, 2017 and 2016 annual impairment analyses, which were performed as of October 1 of each year, did not result in any goodwill or trade name impairments to continuing operations. Restricted Cash Restricted cash consists of cash held in trust as collateral under our automobile, general liability and workers’ compensation insurance program. Restricted Net Assets There are third-party restrictions on the ability of certain of our subsidiaries to transfer funds to the Company. These restrictions are related to a subsidiary borrowing arrangement at our financing subsidiary. As of December 31, 2018, the total net assets subject to these third-party restrictions was $ 23 million. None of our subsidiaries are obligated to make funds available to us through the payment of dividends. Financial Instruments and Credit Risk We have entered into specific financial arrangements in the normal course of business to manage certain market risks, with a policy of matching positions and limiting the terms of contracts to relatively short durations. The effect of derivative financial instrument transactions could have a material impact on our financial statements. We do not hold or issue derivative financial instruments for trading or speculative purposes. We have historically hedged a significant portion of our annual fuel consumption and have also historically hedged the interest payments on a portion of our variable rate debt using interest rate swap agreements. All our fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the 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. Financial instruments, which potentially subject us to financial and credit risk, consist principally of investments and receivables. Investments consist primarily of publicly traded debt and common equity securities. Financial instruments are accounted for at fair value with adjustments to fair value recognized in Interest and net investment income in the consolidated statements of operations and comprehensive (loss) income in the period incurred. Most of our receivables and notes receivable have little concentration of credit risk due to the large number of customers with relatively small balances and their dispersion across geographical areas. We maintain an allowance for losses based upon the expected collectability of receivables. See Note 18 to the consolidated financial statements for information relating to the fair value of financial instruments. Stock-Based Compensation Stock-based compensation expense for stock options is estimated at the grant date based on an award’s fair value as calculated by the Black-Scholes option-pricing model and is recognized as expense over the requisite service period. The Black-Scholes model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for future grants may differ materially from that recorded in the current period related to options granted to date. In addition, we estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience. To the extent the actual forfeiture rate is different from the estimate, stock-based compensation expense is adjusted accordingly. See Note 17 to the consolidated financial statements for more details. Income Taxes We and our subsidiaries file consolidated U.S. federal income tax returns. State and local returns are filed both on a separate company basis and on a combined unitary basis with the Company. Current and deferred income taxes are provided for on a separate company basis. We account for income taxes using an asset and liability approach for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. Valuation allowances are established when necessary to reduce deferred income tax assets to the amounts expected to be realized. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in our tax return. We recognize potential interest income, interest expense and penalties related to uncertain tax positions in income tax expense. Earnings Per Share Basic earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net (loss) 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, restricted stock units (“RSUs”) and performance shares are reflected in diluted earnings per share by applying the treasury stock method. See Note 19 to the consolidated financial statements for more details. Newly Issued 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, we adopted FASB Accounting Standards Codification (“ASC”) 606 using the modified retrospective method for 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 our historic accounting under ASC 605, “ Revenue Recognition .” We implemented internal controls and system functionality where necessary to enable the preparation of financial information on adoption. See Note 3 to the 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 (loss) income. In March 2018, the FASB issued an amendment to this standard (ASU 2018-03), which provides further clarification regarding this standard. We adopted this ASU on January 1, 2018. As a result of the adoption, 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. 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. We 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. We adopted this ASU on January 1, 2018 and applied 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, we 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. 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. We adopted this ASU on January 1, 2019 and applied the guidance prospectively . In August 2018, the FASB issued ASU 2018-15, “ Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .” This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The amendments in ASU 2018-15 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We early adopted this ASU on January 1, 2019 and applied the guidance prospectively to implementation costs incurred related to cloud computing arrangements. We expect the adoption of this ASU will result in the capitalization of certain development costs that would have otherwise been expensed to our consolidated statements of operations and comprehensive (loss) income as we implement Salesforce. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “ Disclosure Update and Simplification ,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018, with relief provided for filings made shortly after the final rule’s effective date in SEC Question 105.09 of the Exchange Act Forms C&DIs. We adopted this final rule on November 5, 2018. Following are the results of the adoption of these standards on our 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. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, which amend ASU 2016-02 to provide companies an alternative transition method whereby it may elect to recognize and measure leases by applying the cumulative impact of adopting ASU 2016-02 to the opening retained earnings balance in the period of adoption, thereby removing the requirement that the financial statements of prior periods be restated. The Company plans to utilize this alternative transition method. 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. We adopted the new lease guidance effective January 1, 2019 , and elect ed the available practical expedients upon adoption. The adoption resulted in the recognition of a right of use asset of approximately $195 million and a lease liability of approximately $230 million on January 1, 2019. In August 2017, the FASB issued ASU 2017-12, “Derivatives 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. We adopted the amendments in this ASU on January 1, 2019 and will apply the guidance prospectively to our hedges. In August 2018, the FASB issued ASU 2018-13, “ Fair Value Measurement. ” This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The amendments in ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for the removed disclosures and delayed adoption is permitted until fiscal 2021 for the new disclosures. We are currently evaluating the disclosure changes necessary to our consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, “ Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes , ” which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. The company will early adopt the ASU in the first quarter of fiscal year 2019. The adoption will not have a material effect on our consolidated financial statements. We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do not expect the future adoption of any such pronouncements will have a material impact on our financial condition or the results of our operations. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2018 | |
Revenues[Abstract] | |
Revenues | Note 3. Revenues The following table presents our reportable segment revenues, disaggregated by revenue source. We disaggregate revenue from contracts with customers into major product lines. We have 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 4 , our reportab le segments are Terminix and ServiceMaster Brands . Terminix ServiceMaster Brands Total Year ended December 31, Year ended December 31, Year ended December 31, (In millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016 Major service line Residential Pest Control $ 655 $ 613 $ 621 $ — $ — $ — $ 655 $ 613 $ 621 Commercial Pest Control 317 255 255 — — — 317 255 255 Termite and Home Services 599 593 571 — — — 599 593 571 Royalty Fees — — 77 132 127 120 132 127 197 Commercial Cleaning National Accounts — — — 65 53 43 65 53 43 Sales of Products and Other 84 81 — 48 32 37 132 113 37 Corporate — — — — — — 1 2 2 Total $ 1,655 $ 1,541 $ 1,524 $ 244 $ 212 $ 200 $ 1,900 $ 1,755 $ 1,726 At contract inception, we assess the goods and services promised in our contracts with customers and identify 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, we consider 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 Residential pest control services Residential pest control services can be for one-time or recurring services. Revenues from residential 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 we have an unconditional right to invoice and receive payment. Payments are typically received shortly after services have been rendered. Commercial pest control services Commercial pest control services are largely for recurring services. Revenues from commercial 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 we have an unconditional right to invoice and receive payment. Payments are typically received shortly after services have been rendered. Termite and home services We eradicate 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. We also perform other related services, including wildlife exclusion, crawl space encapsulation and attic insulation, which may be one-time or renewable services. Revenues 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 we have 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 renewal 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, we have a stand ready obligation of which the customer receives and consumes the benefits over the annual period. Associated service costs are expensed as incurred. We measure progress toward satisfaction of our 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 we have an unconditional right to invoice and receive payment. Payments are typically received shortly after a customer is invoiced. ServiceMaster Brands segment Royalty fees We have franchise agreements in our 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 us 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 us in arrears. Commercial cleaning 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. We engage either a franchisee or non-franchisee business to perform the services. Under these agreements, we are directly responsible for providing the services and receive payment directly from the customer. A receivable is recorded related to this revenue as we have 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 we have 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 we have ultimate control of the marketing and advertising, we recognize 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 $14 million for the year ended December 31, 2018. In addition, we have contractual arrangements with several national insurance companies to maintain a call center which receives and provides non-recurring recovery and restoration referrals from the insurers to qualifying franchisees. We receive a referral fee from the franchisee. We recognize 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 We capitalize the incremental costs of obtaining a contract with a customer, primarily commissions, and recognize the expense on a straight-line basis over the expected customer relationship period. As of January 1, 2018, the date we adopted ASC 606, we capitalized a total of $61 million in deferred customer acquisition costs related to contracts that were not completed. As of December 31, 2018, we had long-term deferred customer acquisition costs of $75 million related to contracts that were not completed. In the year ended December 31, 2018, the amount of amortization was $69 million. There was no impairment loss in relation to costs capitalized. ServiceMaster Brands We capitalize the incremental costs of selling a new franchise license, primarily commissions, and recognize the expense over the term of the initial franchise agreement. As of January 1, 2018, the date the Company adopted ASC 606, we capitalized a total of $1 million in deferred customer acquisition costs related to contracts that were not completed. As of December 31, 2018, we had capitalized a total of $1 million in deferred customer acquisition costs related to contracts that were not completed. In the year ended December 31, 2018, the amount of amortization was $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 customers. Contracts with customers are generally for a period of one year or less, and are generally renewable. We record a receivable related to revenue recognized on services once we have 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 consolidated statements of financial position. The current portion of Notes receivable, which represent amounts financed for customers through our financing subsidiary, are included within Receivables, less allowances, on the consolidated statements of financial position and totaled $42 million as of December 31, 2018 and 2017. 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. Deferred revenue by segment was as follows (in millions): As of December 31, (In millions) 2018 2017 Terminix $ 91 $ 90 ServiceMaster Brands (1) 11 — Total $ 101 $ 90 ___________________________________ (1) Includes approximately $7 million of Deferred revenue included within Other long-term obligations, primarily self-insured claims on the consolidated statement of financial position as of December 31, 2018. Changes in deferred revenue for the year ended December 31, 2018 were as follows (in millions): (In millions) Deferred revenue Balance, January 1, 2018 $ 101 Deferral of revenue 149 Recognition of deferred revenue (149) Balance, December 31, 2018 $ 101 There was approximately $6 7 million of revenue recognized in the year ended December 31, 2018, that was included in the deferred revenue balance as of January 1, 2018. Arrangements with Multiple Performance Obligations Our 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 We offer 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. We do 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. We do 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 consolidated statements of operations and comprehensive (loss) income. We utilize 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 Consolidated Financial Statements We recorded a net reduction to opening retained earnings of $1 6 million, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606. Changes to the consolidated statements of operations and comprehensive (loss) income include: i) costs 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) ServiceMaster Brands national advertising fund income, previously recorded net of advertising expense incurred for our 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 (loss) income; and iv) commissions costs at Terminix 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. The primary change to the consolidated statements of financial position is 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. The following tables compare affected lines of the 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 December 31, 2018 Consolidated Statement of Financial Position As reported Under Prior Revenue Recognition Guidance Current Assets: Receivables $ 186 $ 186 Prepaid expenses and other assets 61 74 Deferred customer acquisition costs — 22 Other Assets: Deferred customer acquisition costs 77 — Total Assets $ 5,023 $ 4,982 Current Liabilities: Deferred revenue $ 95 $ 91 Other Long-Term Liabilities: Deferred taxes 484 473 Other long-term obligations, primarily self-insured claims 182 176 Total Liabilities 2,818 2,798 Retained earnings (accumulated deficit) 156 141 Accumulated other comprehensive income 5 5 Net (Loss) (41) (46) Liabilities and Equity $ 5,023 $ 4,982 Year ended December 31, 2018 Consolidated Statement of Operations and Comprehensive (Loss) Income As reported Under Prior Revenue Recognition Guidance Revenue $ 1,900 $ 1,886 Cost of services rendered and products sold 1,041 1,041 Selling and administrative expenses 555 548 Provision for income taxes 37 35 Net (Loss) $ (41) $ (46) 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 (loss) income and various change in working capital line items. |
Business Segment Reporting
Business Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Business Segment Reporting [Abstract] | |
Business Segment Reporting | Note 4 . Business Segment Reporting Through October 1, 2018, the date of the Separation, we conducted business through three reportable segments: Terminix, ServiceMaster Brands and American Home Shield. After the Separation, our business is conducted through two reportable segments: Terminix and ServiceMaster Brands. In accordance with accounting standards for segments, our 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 ServiceMaster Brands segment provides residential and commercial restoration and commercial 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 furniture repair primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate includes our corporate operations (substantially all of which costs are allocated to our reportable segments), which provide various technology, human resources, finance, legal and other support services to the reportable segments. Certain corporate expenses which were historically allocated to the American Home Shield segment are not permitted to be classified as discontinued operations under GAAP. Such corporate expenses amounted to $33 million, $44 million and $42 million in 2018, 2017 and 2016, respectively, and are reflected in Corporate herein. The composition of our reportable segments is consistent with that used by our chief operating decision maker (the “CODM”) to evaluate performance and allocate resources. Information regarding our accounting policies is described in Note 2 to the consolidated financial statements. We derive substantially all of our 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. Identifiable assets are those used in carrying out the operations of the business unit and include intangible assets directly related to our operations. We use Reportable Segment Adjusted EBITDA as our 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 (loss) income before: depreciation and amortization expense; acquisition-related costs; 401(k) Plan corrective contribution; fumigation related matters; insured reserve adjustment; non-cash stock-based compensation expense; restructuring charges; gain on sale of Merry Maids branches; non-cash impairment of software and other costs; loss on investment in frontdoor, inc.; (gain) loss from discontinued operations, net of income taxes; (benefit) provision for income taxes; loss on extinguishment of debt; interest expense; and other non - operating expenses. Our definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. We believe 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, acquisition activities and equity-based, long-term incentive plans. During 2018, 2017 and 2016, no single customer exceeded 10 percent of global sales. Information for continuing operations for each reportable segment and Corporate is presented below: Year Ended December 31, (In millions) 2018 2017 2016 Revenue: Terminix $ 1,655 $ 1,541 $ 1,524 ServiceMaster Brands 244 212 200 Reportable Segment Revenue $ 1,899 $ 1,754 $ 1,724 Corporate 1 2 2 Total Revenue $ 1,900 $ 1,755 $ 1,726 Reportable Segment Adjusted EBITDA: (1) Terminix $ 333 $ 330 $ 372 ServiceMaster Brands 89 87 79 Reportable Segment Adjusted EBITDA $ 422 $ 417 $ 450 Identifiable Assets: Terminix $ 3,162 $ 2,821 $ 2,820 ServiceMaster Brands 491 489 480 Reportable Segment Identifiable Assets $ 3,653 $ 3,310 $ 3,300 Corporate 1,370 917 808 Total Identifiable Assets $ 5,023 $ 4,228 $ 4,109 Depreciation & Amortization Expense: Terminix $ 59 $ 58 $ 58 ServiceMaster Brands 8 7 7 Reportable Segment Depreciation & Amortization Expense $ 67 $ 65 $ 65 Corporate 24 21 15 Total Depreciation & Amortization Expense (2) $ 91 $ 86 $ 80 Capital Expenditures: Terminix $ 12 $ 12 $ 11 ServiceMaster Brands 2 2 2 Reportable Segment Capital Expenditures $ 14 $ 15 $ 13 Corporate 34 53 33 Total Capital Expenditures $ 49 $ 68 $ 46 ________________________________ (1) Presented below is a reconciliation of Net (Loss) Income to Reportable Segment Adjusted EBITDA : Year Ended December 31, (In millions) 2018 2017 2016 Net (Loss) Income $ (41) $ 510 $ 155 Unallocated corporate expenses (9) (1) 3 Costs historically allocated to American Home Shield 33 44 42 Depreciation and amortization expense 91 86 80 Acquisition-related costs 5 — 1 401(k) Plan corrective contribution — (3) 2 Fumigation related matters 3 4 93 Insurance reserve adjustment — — 23 Non-cash stock-based compensation expense 14 10 12 Restructuring charges 17 21 15 Gain on sale of Merry Maids branches — — (2) Non-cash impairment of software and other related costs — 2 1 Mark-to-market loss on investment in frontdoor, inc. 249 — — Gain from discontinued operations, net of income taxes (122) (169) (153) Provision (benefit) for income taxes 37 (242) (5) Loss on extinguishment of debt 10 6 32 Interest expense 133 150 153 Other non-operating expenses — — — Reportable Segment Adjusted EBITDA $ 422 $ 417 $ 450 ___________________________________ (2) There are no adjustments necessary to reconcile total depreciation and amortization as presented in the business segment table to consolidated totals. Amortization of debt issue costs is not included in the business segment table. See Note 5 to the consolidated financial statements for information relating to segment goodwill. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Note 5. 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. Our annual assessment date is October 1. There were no goodwill or trade name impairment charges or accumulated impairment losses recorded in continuing operations during the years ended December 31, 2018, 201 7 and 2016. The table below summarizes the goodwill balances for continuing operations by reportable segment: Franchise (In millions) Terminix Services Group Total Balance as of December 31, 2016 $ 1,601 $ 175 $ 1,776 Acquisitions 2 — 2 Other (1) 1 — 2 Balance as of December 31, 2017 $ 1,605 $ 176 $ 1,780 Acquisitions 179 — 179 Other (1) (2) — (2) Balance as of December 31, 2018 $ 1,781 $ 175 $ 1,956 ____________________________________ (1) Reflects the impact of foreign exchange rates. T he table below summarizes the other intangible asset balances for continuing operations: As of December 31, 2018 As of December 31, 2017 Accumulated Accumulated (In millions) Gross Amortization Net Gross Amortization Net Trade names (1) $ 1,482 $ — $ 1,482 $ 1,468 $ — $ 1,468 Customer relationships 469 (406) 64 417 (395) 22 Franchise agreements 88 (73) 15 88 (70) 18 Other 62 (35) 27 49 (30) 19 Total $ 2,101 $ (513) $ 1,588 $ 2,022 $ (496) $ 1,526 ___________________________________ (1) Not subject to amortization. Amortization expense of $18 million , $18 million and $27 million was recorded in the years ended December 31, 2018, 2017 and 2016, respectively. For the existing intangible assets, we anticipate amortization expense of $ 20 million, $18 million, $17 million, $15 million and $12 million in 2019, 2020, 2021, 2022 and 2023, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes [Abstract] | |
Income Taxes | Note 6. Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act, the tax reform bill (the "Act" or “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 Securities and Exchange Commission provided up to a one-year measurement period for companies to finalize the accounting for the impacts of this new legislation. As required, we finalized our accounting for items previously considered provisional during 2018. Corporate Tax Rate Change We are subject to the provisions of the Financial Accounting Standards Board 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. We remeasured deferred tax assets and liabilities at December 31, 2017, 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 relating to the remeasurement of these deferred tax balances was a net reduction of total deferred tax liabilities of $271 million. For the year ended December 31, 2018, the Company has completed its review of the applicable provisions of the Act and has recognized an additional expense of $3 million during the measurement period, primarily related to return to provision adjustments. Deferred Tax Analysis The Act changes the treatment of certain income and expense items for which we record deferred tax assets and liabilities. We have assessed our valuation of deferred tax assets and liabilities at December 31, 2018, as well as valuation allowance analyses affected by various aspects of the Act. The Company has recorded no amounts related to valuation allowances and revaluation of deferred tax assets affected by various aspects of the Act. Transition Tax The Act imposed 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 owned by U.S. stockhol ders. We recorded a 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 in 2017. GILTI The Act also created a new requirement that Global Intangible Low Taxed Income (GILTI) earned by controlled foreign corporations (CFCs) must be included currently in the gross income of the CFCs U.S. shareholder. Under GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the period cost method) or (2) factoring such amounts into our measurement of deferred taxes (the deferral method). At December 31, 2018, the Company has elected to account for GILTI in the year the tax is incurred and have recorded GILTI tax expense of less than $1 million, which is included as a component of income tax expense from continuing operations. As of December 31, 2018, 2017 and 2016 , we have $15 million, $14 million and $13 million , respectively, of tax benefits primarily reflected in U.S. federal and state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). At December 31, 2018 and 2017 , $14 million and $13 million , respectively, of unrecognized tax benefits would impact the effective tax rate if recognized. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: Year Ended December 31, (In millions) 2018 2017 2016 Gross unrecognized tax benefits at beginning of period $ 14 $ 13 $ 16 Increases in tax positions for prior years — — — Decrease in tax positions for prior years — — (5) Increases in tax positions for current year 3 3 3 Lapse in statute of limitations (1) (1) (1) Gross unrecognized tax benefits at end of period $ 15 $ 14 $ 13 Based on information currently available, it is reasonably possible that over the next 12 - month period unrecognized tax benefits may decrease by $3 million as the result of settlements of ongoing audits, statute of limitation expirations or final settlements of uncertain tax positions in multiple jurisdictions. We file consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. In the ordinary course of business, the Company is subject to review by domestic and foreign taxing authorities. For U.S. federal income tax purposes, the Company participates in the IRS’s Compliance Assurance Process whereby its U.S. federal income tax returns are reviewed by the IRS both prior to and after their filing. The U.S. federal income tax returns filed by the Company through the year ended December 31, 2016 have been audited by the IRS. The IRS commenced pre-filing examinations of the Company’s U.S. federal income tax returns for 2017 in the second quarter of 2017 . Four state tax authorities are in the process of auditing state income tax returns of various subsidiaries. The Company is no longer subject to state and local or foreign income tax examinations by tax au thorities for years before 2013, except for a pending refund claim related to 2008. Our policy is to recognize potential interest and penalties related to tax positions within the tax provision. Total interest and penalties included in the consolidated statements of income are imm aterial. As of December 31, 2018 and 2017 , we had accrued for the payment of interest and penalties of approximately $2 million . The components of income from continuing operations before income taxes are as follows: Year Ended December 31, (In millions) 2018 2017 2016 U.S. $ (130) $ 94 $ (5) Foreign 4 5 3 Income from Continuing Operations before Income Taxes $ (126) $ 99 $ (2) The reconciliation of income tax computed at the U.S. federal statutory tax rate to the Company’s effective income tax rate for continuing operations is as follows: Year Ended December 31, 2018 2017 2016 Tax at U.S. federal statutory rate 21.0 % 35.0 % 35.0 % State and local income taxes, net of U.S. federal benefit (7.1) 5.7 (297.8) Tax credits 1.5 (1.3) 91.5 Investment in frontdoor, inc. mark-to-market adjustment (41.5) — — Other permanent items (2.1) 1.8 (156.1) U.S. Tax Reform rate change (1) (2.7) (273.6) — Remeasurement of prior year tax positions (0.9) — 205.1 Excess tax benefits from stock-based compensation 1.1 (14.5) 274.0 Other, including foreign rate differences and reserves 1.7 1.4 51.9 Effective rate (29.1) % (245.6) % 203.5 % ___________________________________ (1) Deferred income taxes in the consolidated statements of financial position at December 31, 2017, were remeasured for the change in the U.S. income tax rate through income tax expense (see discussion on U.S. Tax Reform). This one-time beneficial rate change adjustment for $271 million includes $11 million in state income tax expense for December 31, 2017 and $3 million additional tax expense for December 31, 2018. The effective tax rate for discontinued operations for t he years ended December 31, 2018, 2017 and 2016 was a tax provision of 26.0 percent and benefit of 37.9 percent and 37.0 percent , respectively . Income tax expense from continuing operations is as follows: Year Ended December 31, (In millions ) 2018 2017 2016 Current: U.S. federal $ 23 $ (14) $ (28) Foreign 1 3 2 State and local 6 5 4 29 (6) (22) Deferred: U.S. federal 1 (242) 14 Foreign 1 2 (2) State and local 6 4 5 8 (235) 17 (Benefit) provision for income taxes $ 37 $ (242) $ (5) Deferred income tax expense results from timing differences in the recognition of income and expense for income tax and financial reporting purposes. Deferred income tax balances reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The deferred tax asset primarily reflects the impact of future tax deductions related to our accruals and certain net operating loss carryforwards. The deferred tax liability is primarily attributable to the basis differences related to intangible assets. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. The valuation allowance for deferred ta x assets as of December 31, 2018 and 2017 was $11 million. Significant components of our deferred tax balances are as follows: As of December 31, (In millions) 2018 2017 Long-term deferred tax assets (liabilities): Intangible assets (1) $ (471) $ (446) Property and equipment (25) (22) Prepaid expenses and deferred customer acquisition costs (20) (8) Receivables allowances 5 9 Self-insured claims and related expenses 7 7 Accrued liabilities 22 13 Other long-term obligations (6) (12) Net operating loss and tax credit carryforwards 15 19 Less valuation allowance (11) (11) Net Long-term deferred tax liability $ (484) $ (451) ___________________________________ (1) The deferred tax liability relates primarily to the difference in the tax versus book basis of intangible assets. We had $505 million and $507 million of deferred tax liability included in this net deferred tax l iability as of December 31, 2018 and 2017 , respectively, that will not actually be paid unless certain business unit s of the Company are sold. As of December 31, 2018 , we had deferred tax assets, net of valuation allowances, of $6 million for federal and state net operating loss and capital loss carryforwards, which expire at various dates up to 203 8 . We also had deferred tax assets, net of valuation allowances, of less than $1 million for federal and state credit carryforwards which ex pire at various dates up to 2026 . The federal and state net operating loss carryforwards in the filed income tax returns included unrecognized tax benefits taken in prior years. The net operating losses for which a deferred tax asset is recognized for financial statement purposes in accordance with ASC 740 are presented net of these unrecognized tax benefits. We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. Prior to the Transition Tax included in t he Act discussed herein, we had an excess amount for financial reporting over the tax basis in our foreign subsidiaries, including cumulative undistributed earnings of our foreign subsidiar ies of $70 million as of December 31, 2018 . While the Transition Tax resulted in all remaining undistributed foreign earnings being subject to U.S. tax, an actual repatriation from our non-U.S. subsidiaries could still be subject to additional foreign withholding taxes and U.S. state taxes. Included in our December 31, 201 7 U.S. income tax provision is less than $1 million in Transition Tax. The amount of cash associated with indefinitely reinvested foreign earnings was approximately $30 million and $29 million as of December 31 , 2018 and 2017, respectively . |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions [Abstract] | |
Acquisitions | Note 7 . 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 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. 2018 During the year ended December 31, 2018, we completed 20 acquisitions. On March 30, 2018 , we 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 us with significant expertise, system capabilities and processes for delivering pest management solutions to sophisticated commercial customers. We 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. The deferred purchase price and earnout are recorded at fair value on the consolidated statements of financial position. Subsequent changes to the estimated earnout obligation will be recognized in the consolidated statements of operations and comprehensive (loss) income when incurred. As a result of this acquisition, we recognized a preliminary value of $99 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 changed from the preliminary values recognized reflecting the valuation work completed to date and the receipt of additional information which resulted in adjustments to working capital accounts. We also recognized approximately $55 million of other intangibles, primarily customer lists and trade names. The weighted-average useful life for each class of definite-lived intangible asset associated with Copesan is between three to five years. As of December 31, 2018, the purchase price allocation for this acquisition has not been finalized as the Company is still evaluating the fair value and useful lives of certain intangible assets. We will complete the purchase price allocation in the first quarter of 2019. During the year ended December 31, 2018, we completed 17 additional pest control acquisitions and reacquired a Terminix franchisee, all of which have been accounted for as business combinations, and purchased a ServiceMaster Restore master distributor within ServiceMaster Brands which has been accounted for as an asset acquisition. We funded $86 million at closing for these acquisitions using available cash on hand. An additional approximately $ 20 million of future payments, primarily deferred purchase price, are due to the sellers between one and five years from the acquisition dates. We recorded a preliminary value of $80 million of goodwill and $2 5 million of other intangibles, primarily customer lists and reacquired rights. Goodwill and intangibles recognized for these acquisitions changed from the preliminary values recognized reflecting the valuation work completed to date and the receipt of additional information which resulted in adjustments to working capital accounts. As of December 31, 2018, the purchase price allocations for these acquisitions have not been finalized as we are 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 within the respective measurement periods during 2019. The weighted-average useful life for each class of definite-lived intangible asset associated with these acquisitions is between three to five years. Prior Years During the year ended December 31, 2017, we completed four pest control acquisitions and purchased a ServiceMaster Clean master distributor within ServiceMaster Brands. The total purchase price for these acquisitions was $16 million. We recorded goodwill of $2 million and other intangibles, primarily reacquired rights, of $13 million related to those acquisitions. The weighted-average useful life for each class of definite lived intangible asset associated with these acquisitions was approximately three years. During the year ended December 31, 2016, we completed several pest control and termite acquisitions. The total purchase price for these acquisitions was $ 43 million . We recorded goodwill of $34 million and other intangibles, primarily customer relationships, of $6 million related to these acquisitions. The weighted-average useful life for each class of definite lived intangible asset recorded for these acquisitions was five years. Supplemental cash flow information regarding our acquisitions is as follows: Year Ended December 31, (In millions) 2018 2017 2016 Assets acquired $ 284 $ 16 $ 44 Liabilities assumed (30) — — Net assets acquired (1) $ 254 $ 16 $ 43 Net cash paid $ 191 $ 13 $ 34 Seller financed debt 64 3 9 Purchase price $ 254 $ 16 $ 43 ___________________________________ (1) Includes approximately $1 5 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets. Acquisition-related costs, which represent legal, accounting and other expenses associated with completed or contemplated acquisitions, were $5 million for the year ended December 31, 2018 and $1 million for the year ended December 31 2016. No acquisition-related costs were incurred in the year ended December 31, 2017. Prior period amounts have been reclassified from Selling and administrative expenses to Acquisition-related costs on the consolidated statements of income and comprehensive (loss) income to conform to current period presentation. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | Note 8 . Discontinued Operations American Home Shield Spin-off On October 1, 2018, ServiceMaster completed the previously announced separation of its Ame rican Home Shield business. The Separation was effectuated through a pro rata dividend to our stockholders of approximately 80.2% of the outstanding shares of common stock of Frontdoor . We hold approximately 16.7 million shares of Frontdoor common stock with a fair value of approximately $445 million as of December 31, 2018. The investment is accounted for as an available-for-sale security. For the year ended December 31, 2018, approximately $249 million of unrealized losses were recorded within Loss on investment in frontdoor, inc. related to a decline in value of the common stock held in Frontdoor in the consolidated statements of operations and comprehensive income. In connection with the American Home Shield spin-off, the Company and Frontdoor entered into (1) a separation and distribution agreement containing key provisions relating to the separation of Frontdoor and the distribution of Frontdoor common stock to ServiceMaster stockholders, as well as insurance coverage, non-competition, indemnification and other matters, (2) an employee matters agreement allocating liabilities and responsibilities relating to employee benefit plans and programs and other related matters and (3) a tax matters agreement governing the respective rights, responsibilities and obligations of the parties thereto with respect to taxes, including allocating liabilities for income taxes attributable to Frontdoor and its subsidiaries generally to the Company for tax periods (or portions thereof) ending on or before October 1, 2018, and generally to Frontdoor for tax periods (or portions thereof) beginning after that date. The charges for the transition services are designed to allow us to fully recover the direct costs of providing the services, plus specified margins and any out-of-pocket costs and expenses. The services provided under the transition services agreement will terminate at various specified times, and in no event later than December 31, 2019. Frontdoor may terminate the transition services agreement (or certain services under the transition services agreement) for convenience upon 90 days written notice, in which case Frontdoor will be required to reimburse us for early termination costs. Under this transition services agreement, in the year ended December 31, 2018, we recorded approximately $1 million of fees from Frontdoor, which is included, net of costs incurred, in Selling and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. As of December 31, 2018, approximately $1 million owed by Frontdoor under this agreement was unpaid. Subsequent to December 31, 2018, all amounts under this agreement have been paid. During the year ended December 31, 2018, we processed certain of Frontdoor’s accounts payable transactions. Through this process, in the year ended December 31, 2018, approximately $2 million was paid on Frontdoor’s behalf, approximately $1 million of which was repaid by Frontdoor as of December 31, 2018. Subsequent to December 31, 2018, all amounts under this agreement have been paid. The Company and Frontdoor also entered into a sublease agreement for the space Frontdoor retained in our Global Service Center and Memphis customer care center after the spin-off. We recognized approximately $1 million of rental income related to these sublease agreements during the year ended December 31, 2018 in Selling and administrative expenses on the consolidated statements of operations and comprehensive (loss) income . Payments received under the sublease agreements during the year ended December 31, 2018 totaled approximately $1 million. The historical results of the American Home Shield segment, including the results of operations, cash flows and related assets and liabilities, are reported as discontinued operations for all periods presented herein. For all periods after the Separation, discontinued operations includes spin-off transaction costs primarily related to transaction fees to effect the spin-off and receipts pursuant to the transition services agreement. American Home Shield Goodwill and Intangible Assets Goodwill and indefinite lived intangible assets are assessed annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. No goodwill or indefinite-lived intangible asset impairments were recorded relating to American Home Shield in the years ended December 31, 2018, 2017 and 2016. F inancial Information for Discontinued Operations Loss from discontinued operations, net of income taxes, for all periods presented includes the operating results of Frontdoor and previously sold businesses. The operating results of discontinued operations are as follows: Year Ended December 31, (In millions) 2018 2017 2016 Revenue $ 979 $ 1,157 $ 1,020 Cost of services rendered and products sold 534 591 524 Operating expenses (1) 282 296 257 Interest and net investment income (1) (2) (5) Income before income taxes 164 272 243 Provision for income taxes 43 103 90 Gain from discontinued operations, net of income taxes $ 122 $ 169 $ 153 ___________________________________ (1) Includes spin-off transaction costs incurred of $35 million and $13 million for the years ended December 31, 2018 and 2017, respectively. The following table presents the aggregate carrying amount of the major classes of assets and liabilities of discontinued operations. At December 31, 2017, these balances reflect the historical assets and liabilities of the American Home Shield business, which was spun off in the year ended December 31, 2018. (In millions) Assets of Discontinued Operations: December 31, 2017 Cash and cash equivalents $ 282 Receivables, net 408 Inventories and other current assets 50 Current assets of discontinued operations 740 Property and equipment, net 35 Goodwill 476 Intangible assets, net 165 Other long-term assets 2 Total Assets of Discontinued Operations $ 1,418 Liabilities of Discontinued Operations: Accounts payable $ 34 Accrued liabilities: Payroll and related expenses 7 Self-insured claims and related expenses 57 Accrued interest payable 1 Other 13 Deferred revenue 573 Current portion of long-term debt 9 Total Current Liabilities 693 Deferred taxes 42 Other long-term obligations 2 Total Liabilities of Discontinued Operations $ 737 ___________________________________ The following selected financial information of American Home Shield is included in the statements of cash flows: Year ended December 31, (In millions) 2018 2017 2016 Depreciation $ 8 $ 9 $ 8 Amortization $ 6 $ 8 $ 6 Capital expenditures $ (18) $ (9) $ (10) Significant operating and investing non-cash items: Net assets acquired through seller financed debt $ — $ — $ 14 |
Restructuring Charges
Restructuring Charges | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring Charges [Abstract] | |
Restructuring Charges | Note 9 . Restructuring Charges We incurred restructuring charges of $ 17 million ( $13 million , net of tax), $21 million ( $15 million , net of tax) and $15 million ( $ 9 million , net of tax) for t he years ended December 31, 2018, 2017 and 2016 , respectively. Restructuring charges are comprised of the following: Year Ended December 31, (In millions) 2018 2017 2016 Terminix (1) $ 2 $ 2 $ 7 ServiceMaster Brands (2) 1 1 — Corporate (3) 7 2 5 Leadership transition (4) — 11 — Global Service Center relocation (5) 8 5 3 Total restructuring charges $ 17 $ 21 $ 15 ___________________________________ (1) For the years ended December 31, 201 8 , 201 7 and 201 6 , these charges include $2 million, $2 million and $4 million, respectively, of lease termination and severance costs driven by Terminix’s branch optimization program. Of this amount $1 million was unpaid and accrued as of December 31, 2018. For the year ended December 31, 2016, these charges include $1 million of se verance costs and $3 million of stock-based compensation expense due to the modification of non-vested stock options and RSUs as part of the severance agreement with the former president of Terminix. (2) Represents severance and other costs related to the reorganization of ServiceMaster Brands . (3) We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services for our operations. In 2017, we began taking actions to enhance capabilities and align our corporate functions with those required to support our strategic needs as two stand-alone companies in anticipation of the American Home Shield spin-off. For the years ended December 31, 2018, 201 7 and 2016, these charges include severance and other costs of $3 million, $ 2 million and $2 million, respectively. For the year ended December 31, 2018, these charges also included $4 million of costs incurred due to the Separation that were not included in discontinued operations. For the year ended December 31, 2016, these charges include professional fees of $2 million and accelerated depreciation of $2 million related to the early termination of a long-term human resources outsourcing agreement. Of this amount, $1 million was unpaid and accrued as of December 31, 2018. (4) For the year ended December 31, 2017, these charges include $5 million of severance costs and $5 million of stock-based compensation expense as part of the severance agreements with the former CEO and CFO. Of this amount, $2 million was unpaid and accrued as of December 31, 2018. (5) For the year ended December 31, 2018, these charges include future rent of $7 million and $1 million of professional and other fees. For the year ended December 31, 2017, these charges include accelerated depreciation of $2 million, redundant rent expense of $2 million and a $1 million loss recorded on the sale of an asset related to the relocation of the Company’s corporate headquarters, which we refer to as our Global Service Center. For the year ended December 31, 2016 , r epresents impairment charges of $1 million and professional fees and other costs of $1 million related to the relocation of the Company’s Global Service Center. Of this amount, $4 million was unpaid and accrued as of December 31, 2018. The pretax charges discussed above are reported in Restructuring charges in the consolidated statements of operations and comprehensive (loss) income. A reconciliation of the beginning and ending balances of accrued restructuring charges, which are included in Accrued liabilities—Other on the consolidated statements of financial position, is presented as follows: Accrued Restructuring (In millions) Charges Balance as of December 31, 2016 $ 3 Costs incurred 21 Costs paid or otherwise settled (17) Balance as of December 31, 2017 6 Costs incurred 17 Costs paid or otherwise settled (17) Balance as of December 31, 2018 $ 7 We expect substantially all of our accrued restructuring charges to be paid within one year. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies We lease certain property and equipment under various operating lease arrangements. Most of the property leases provide that we pay taxes, insurance and maintenance applicable to the leased premises. As leases for existing locations expire, we expect to renew the leases or substitute another location and lease. Rental expense for the years ended December 31, 2018, 2017 and 2016 was $33 million, $ 29 million and $ 28 million, respectively. Based on leases in place as of December 31, 2018, future long-term non-cancelable operating lease payments will be approximately $26 million in 2019, $23 million in 2020, $20 million in 2021, $18 million in 2022, $14 million in 2023, and $92 million in 2024, and thereafter. We expect to receive sublease income from Frontdoor’s sublease of space in our Global Service Center and Memphis customer care center of approximately $2 million in each year through 2033. Sublease income of approximately $1 million was recognized within Selling and administrative expenses on the consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2018. In the normal course of business, we periodically enter into agreements that incorporate indemnification provisions. While the maximum amount to which we may be exposed under such agreements cannot be estimated, we do not expect these guarantees and indemnifications to have a material effect on our business, financial condition, results of operations or cash flows. We carry insurance policies on insurable risks at levels that we believe to be appropriate, including workers’ compensation, automobile and general liability risks. We purchase insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. We are 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 our accrual for self-insured claims, we use 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. We adjust our 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 consolidated statements of financial position, net of insurance recoverables, which are included in Prepaid expenses and other assets and Other assets on the consolidated statements of financial position, is presented as follows: Accrued Self-insured (In millions) Claims, Net Balance as of December 31, 2016 $ 120 Provision for self-insured claims 36 Cash payments (42) Balance as of December 31, 2017 115 Provision for self-insured claims 29 Cash payments (33) Balance as of December 31, 2018 $ 111 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. We have certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. We accrue 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. In addition to the matters discussed above and the fumigation related matters discussed below, in the ordinary course of conducting business activities, we and our 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. We have 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 our settlements are not finally approved, we could have additional or different exposure, which could be material. Subject to the paragraphs below, we do not expect any of these proceedings to have a material effect on our reputation, business, financial position, results of operations or cash flows; however, we 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 . Fumigation Related Matters On January 20, 2017, TMX USVI and TMX LP, each an indirect, wholly-owned subsidiary of the Company, entered into a revised Plea Agreement in connection with the investigation initiated by the DOJ into allegations that a local Terminix branch used methyl bromide as a fumigant at a resort in St. John, U.S. Virgin Islands. The Plea Agreement was intended to resolve four misdemeanor charges of violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide. At a hearing on November 20, 2017 , TMX USVI and TMX LP were sentenced for pleading guilty to four misdemeanor charges of violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide. Under the terms of sentencing handed down, TMX USVI and TMX LP each paid fines or costs of approximately $5 million (total of approximately $10 million). The court required TMX USVI and TMX LP to provide for training certification courses with respect to pesticide application and safety in the U.S. Virgin Islands over the next five years. As a result of the sentencing, we have recorded an additional $1 million in charges in the fourth quarter of 2017. The Company had previously recorded within Fumigation related matters in the consolidated statement of operations and comprehensive (loss) income total charges of $10 million in connection with the aforementioned criminal matter as of December 31, 2016. 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 the aforementioned 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 further 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 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 insurance policies. In addition to the matters discussed above, in the ordinary course of conducting business activities, we and our 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. We have 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 our settlements are not finally approved, we could have additional or different exposure, which could be material. Subject to the paragraphs above, we do not expect any of these proceedings to have a material effect on our reputation, business, financial position, results of operations or cash flows; however, we 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. On September 15, 2015, a lawsuit was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, styled Carl Robert McCaughey, et al. v. Terminix International Company Limited Partnership, Sunland Pest Control Services, Inc., et al . The lawsuit alleged that fumigation of a Florida family’s residence by Sunland, a subcontractor of TMX LP, resulted in serious injuries to one of the family’s children. Under the terms of the court approved settlement agreement, in addition to the amounts that the Company’s insurance carriers agreed to pay to the family pursuant to our general liability insurance policies, the Company paid $3 million, an amount equal to the Company’s insurance deductible under its general liability insurance policies. In the year ended December 31, 2016, the Company recorded within Cost of services rendered and products sold in the consolidated statement of operations and comprehensive (loss) income a charge of $3 million in connection with civil claims related to the Florida fumigation matter . |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | Note 11 . Employee Benefit Plans Discretionary contributions to our 401(k) plan were made in the amount of $13 million, $1 3 million and $1 2 million for t he years ended December 31, 2018, 2017 and 2016 , respectively. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | Note 12 . Long-Term Debt Long-term debt is summarized in the following table: As of December 31, (In millions) 2018 2017 Senior secured term loan facility maturing in 2023 (1) $ 637 $ 1,615 5.125% notes maturing in 2024 (2) 740 739 Revolving credit facility maturing in 2021 — — 7.10% notes maturing in 2018 (3) — 79 7.45% notes maturing in 2027 (4) 172 169 7.25% notes maturing in 2038 (4) 42 42 Vehicle capital leases (5) 90 90 Other (6) 94 45 Less current portion (49) (136) Total long-term debt $ 1,727 $ 2,642 ___________________________________ (1) As of December 31 , 201 8 and 201 7 , presented net of $ 5 million and $ 16 million, respectively, in unamortized debt issuance costs and $ 1 million and $ 3 million, respectively, in unamortized original issue discount paid as described below under “––Term Loan Facility.” (2) As of December 31, 201 8 and 201 7 , presented net of $10 million and $11 million, respectively, in unamortized debt issuance costs as described below under “––2024 Notes.” (3) On March 1, 2018, we paid $79 million upon their maturity. (4) As of December 31, 2018 and 2017, collectively presented net of $33 million and $ 3 6 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (5) We have entered into the Fleet Agreement which, among other things, allows us 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 % . (6) As of December 3, 2018, includes approximately $82 million of future payments in connection with our acquisitions of Copesan and other companies as further described in Note 7. Term Loan Facility On November 8, 2016, we entered into a $1,650 million Term Loan Facility maturing November 8, 2023. Borrowings under the Term Loan Facility, together with the 2024 Notes, were used to repay the remaining outstanding $2,356 million in aggregate principal amount of the Old Term Loan Facility. In connection with the repayment, we recorded a loss on extinguishment of debt of $32 million in the year ended December 31, 2016, which includes the write-off of $14 million of original issue discount and $18 million of debt issuance costs. In addition, $38 million of proceeds was used to pay debt issuance costs of $34 million and original issue discount of $4 million in connection with the Term Loan Facility, the Revolving Credit Facility and the 2024 Notes. The interest rates applicable to the term loans under the Term Loan Facility are based on a fluctuating rate of interest measured by reference to either, at our option, (i) an adjusted LIBOR (subject to a floor of zero percent) plus a margin of 2.50 % per annum or (ii) an alternate base rate (subject to a floor of 1.00% ) plus a margin of 1.50 % per annum. Voluntary prepayments of borrowings under the Term Loan Facility are permitted at any time, in minimum principal amounts, without premium or penalty. The Term Loan Facility and the guarantees thereof are secured by substantially all of the tangible and intangible assets of the Company and certain of our domestic subsidiaries, excluding certain subsidiaries subject to regulatory requirements in various states, including pledges of all the capital stock of all direct domestic subsidiaries (other than foreign subsidiary holding companies, which are deemed to be foreign subsidiaries) owned by the Company or any Guarantor and of up to 65% of the capital stock of each direct foreign subsidiary owned by the Company or any Guarantor. The Term Loan Facility security interests are subject to certain exceptions, including, but not limited to, exceptions for (i) equity interests, (ii) indebtedness or other obligations of subsidiaries, (iii) real estate or (iv) any other assets, if the granting of a security interest therein would require that any notes issued under the Company’s indenture dated as of August 15, 1997 be secured. The Term Loan Facility is secured on a pari passu basis with the security interests created in the same collateral securing the Revolving Credit Facility. We have historically entered into interest rate swap agreements. Under the terms of these agreements, we pay a fixed rate of interest on the stated notional amount and receive a floating rate of interest (based on one month LIBOR) on the stated notional amount. Therefore, during the term of the swap agreements, the effective interest rate on the portion of the term loans equal to the stated notional amount is fixed at the stated rate in the interest rate swap agreements plus the incremental borrowing margin. On November 8, 2016, in connection with the repayment of the Old Term Loan Facility, we terminated the then-existing interest rate swap agreements and paid $10 million in connection with the terminations. The fair value of the terminated agreements of $10 million wa s recorded within accumulated other comprehensive (loss) income on the consolidated statements of financial position and is being amortized into interest expense over the original term of the agreements. On November 7, 2016 we entered into a seven -year interest rate swap agreement effective November 8, 2016 . The notional amount of the agreement was $650 million . Under the terms of the agreement, we will pay a fixed rate of interest of 1.493 % on the $650 million notional amount, and we will receive a floating rate of interest (based on one-month LIBOR, subject to a floor of zero percent) on the notional amount. Therefore, during the term on the agreement, the effective interest rate on $650 million of the Term Loan Facility is fixed at a rate of 1.493% , plus the incremental borrowing margin of 2.50 % . Extinguishment of Debt and Repurchase of Notes In connection with the spin-off of the American Home Shield Segment, we borrowed an aggregate principal amount of $1 billion under a short-term credit facility on August 1, 2018, the proceeds of which were used to prepay $982 million aggregate principal amount of term loans outstanding under our senior secured term loan facility. Such prepayment resulted in a loss on extinguishment of debt of $10 million for the year ended December 31, 2018. On August 16, 2018, Frontdoor incurred in favor of the Company $350 million aggregate principal of 6.75% Senior Notes due 2026 and a $650 million senior secured term loan facility, and obtained a $250 million senior secured revolving credit facility. We then transferred and assigned our rights and obligations in respect of Frontdoor’s senior notes and senior secured term loan facility to the lender under such short-term credit facility through a debt-for-debt exchange to satisfy our obligations thereunder. On October 1, 2018, in connection with the spin-off of the American Home Shield Segment, Frontdoor’s senior secured term loan facility and senior notes were included in the transfer of assets and liabilities to Frontdoor, reducing our total long-term debt by approximately $1 billion. Interest Rate Swap Agreements The changes in interest rate swap agreements, as well as the cumulative interest rate swaps outstanding, are as follows: Weighted Notional Average Fixed (In millions) Amount Rate (1) Interest rate swap agreements in effect as of December 31, 2016 $ 650 1.493 % Terminated — Entered into effect — Interest rate swap agreements in effect as of December 31, 2017 650 1.493 % Terminated — Entered into effect — Interest rate swap agreements in effect as of December 31, 2018 $ 650 1.493 % ___________________________________ (1) Before the application of the applicable borrowing margin. In accordance with accounting standards for derivative instruments and hedging activities, and as further described in Note 18 to the consolidated financial statements, these interest rate swap agreements are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the consolidated statements of financial position as either an asset or liability at fair value, with the effective portion of the changes in fair value attributable to the hedged risks recorded in accumulate d other comprehensive (loss) income . During the year ended December 31, 2018, concurrent with the repayment of $982 million of the term loan facility, we de-designated approximately $7 million of the interest rate swaps as a cash flow hedge and recognized approximately $1 million of ineffectiveness within Interest expense on the consolidated statements of operations and comprehensive (loss) income. Revolving Credit Facility On November 8, 2016, in connection with our refinancing, we terminated the Old Revolving Credit Facility and entered into a $300 million Revolving Credit Facility. The maturity date for the Revolving Credit Facility is November 8, 2021. The Revolving Credit Facility provides for senior secured revolving loans and stand ‑by and other letters of credit. The Revolving Credit Facility limits outstanding letters of credit to $225 million . As of December 31, 201 8 , there were $33 million of letters of credit outstanding and $267 million of available borrowing capacity under the Revolving Credit Facility. The Revolving Credit Facility and the guarantees thereof are secured by the same collateral securing the Term Loan Facility, on a pari passu basis with the security interests created in the same collateral securing the Term Loan Facility. The interest rates applicable to the loans under the Revolving Credit Facility are based on a fluctuating rate of interest measured by reference to either, at our option, (i) an adjusted LIBOR plus a margin of 2.50 % per annum or (ii) an alternate base rate plus a margin of 1.50 % per annum. 2024 Notes On November 8, 2016, we sold $750 million of 2024 Notes. The 2024 Notes will mature on November 15, 2024 and bear interest at a rate of 5.125 % per annum. The 2024 Notes are jointly and severally guaranteed on a senior unsecured basis by our domestic subsidiaries that guarantee or indebtedness under the Credit Facilities (the “Guarantors”). The 2024 Notes are not guaranteed by any of the Company’s non ‑U.S. subsidiaries, any subsidiaries subject to r egulation as an insurance, or certain other subsidiaries (the “Non-Guarantors”). The 2024 Notes are our unsecured obligations and rank equally in right of payment with all of our other existing and future senior unsecured indebtedness. The subsidiary guarantees are senior unsecured obligations of the Guarantors and rank equally in right of payment with all of the existing and future senior unsecured indebtedness of our Non-Guarantors. The 2024 Notes are effectively junior to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness. 2038 Notes On September 18, 2017, we purchased $13 million in aggregate principal amount of our 7.25% notes maturing in 2038 at a price of 104.625% of the principal amount using available cash. On May 11, 2017, we purchased $17 million in aggregate principal amount of our 7.25% notes maturing in 2038 at a price of 97% of the principal amount using available cash. The repurchased notes were delivered to the trustee for cancellation. In connection with these partial repurchases, we recorded a loss on extinguishment of debt of $6 million in the year ended December 31, 2017. Other The agreements governing the Term Loan Facility and the Revolving Credit Facility contain certain covenants that, among other things, limit or restrict the incurrence of additional indebtedness, liens, sales of assets, certain payments (including dividends) and transactions with affiliates, subject to certain exceptions. We were in compliance with the covenants under these agreements at December 31, 201 8 . As of December 31, 2018 , future scheduled long ‑term debt payments are $61 million , $38 million , $67 million , $12 million and $649 million for the years ended December 31 , 201 9 , 20 20 , 202 1, 2022 and 202 3 , respectively. Certain of the Compa ny’s assets, including vehicles and equipment are leased under capital leases with $90 million in remaining lease obligations as of December 31, 201 8 . The long ‑term debt payments above include future capital lease payments of approximately $31 million in 201 9 , $27 million in 20 20 , $19 million in 20 21 , $10 million in 202 2 , and $4 million in 202 3 . |
Cash and Marketable Securities
Cash and Marketable Securities | 12 Months Ended |
Dec. 31, 2018 | |
Cash and Marketable Securities [Abstract] | |
Cash and Marketable Securities | Note 13 . 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 consolidated statements of financial position. As of December 31, 201 8 and 2017 , our marketable securities consisted primarily of common debt securities (“Debt securities”) and common equity securities (“Equity securities”). The amortized cost, fair value and gross realized and unrealized gains and losses of our 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 Available-for-sale securities, December 31, 2018: Debt securities $ 4 $ — $ — $ 4 Equity securities 15 1 — 16 Total securities $ 19 $ 1 $ — $ 21 Available-for-sale securities, December 31, 2017: Debt securities $ 4 $ — $ — $ 4 Equity securities 14 3 — 17 Total securities $ 18 $ 3 $ — $ 21 Following the adoption of ASC 2016-01, we account for equity securities at fair value with adjustments to fair value recognized in Interest and net investment income in the consolidated statements of operations and comprehensive (loss) income. Additionally, for the year ended December 31, 2018, approximately $2 million of realized and unrealized gains were recognized in Interest and net investment income in the consolidated statements of operations and comprehensive (loss) income. We periodically review our 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 year ended December 31, 2018 . Additionally, we hold minority interests in several strategic investments which do not have readily determinable fair values and are recorded at cost and are remeasured upon the occurrence of observable price changes or impairments. We account for these investments at fair value with adjustments to fair value recognized as unrealized gain (loss) on investments in our consolidated statements of operations and comprehensive (loss) income within Interest and net investment income. The investments are included within Other Assets on the consolidated statements of financial position. At December 31 , 2018 , the carrying amount of these investments is $ 4 million, which increased approximately $1 million during the year ended December 31 , 2018. |
Comprehensive (Loss) Income
Comprehensive (Loss) Income | 12 Months Ended |
Dec. 31, 2018 | |
Comprehensive (Loss) Income [Abstract] | |
Comprehensive (Loss) Income | Note 14 . Comprehensive (Loss) Income Comprehensive (loss) income, which primarily includes net (loss) income, unrealized gains on derivative instruments and the effect of foreign currency translation (loss) gain, is disclosed in the consolidated statements of operations and comprehensive (loss) income. Unrealized gains on marketable securities of $3 million ( $2 million, net of tax) were included in other comprehensive income prior to our adoption of ASU 2016-01 on January 1, 2018. Subsequent to the adoption, these unrealized gains were 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 our 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 on Foreign Unrealized Available Currency (Losses) Gains on -for-Sale Translation (In millions) Derivatives Securities (Loss) Gain Total Balance as of December 31, 2016 $ 12 $ 1 $ (15) $ (3) Other comprehensive income before reclassifications: Pre-tax amount — 2 3 5 Tax provision — 1 — 1 After-tax amount — 1 3 4 Amounts reclassified from accumulated other comprehensive (loss) income (1) 4 — — 4 Net current period other comprehensive loss 4 1 3 8 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 4 — (3) 1 Tax provision 1 — — 1 After-tax amount 3 — (3) — Amounts reclassified from accumulated other comprehensive income (1) (3) — — (3) Net current period other comprehensive income 1 — (3) (3) Balance as of December 31, 2018 $ 20 $ — $ (15) $ 5 ___________________________________ (1) Amounts are net of tax. See reclassifications out of accumul ated other comprehensive income below for further details. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated. Amounts Reclassified from Accumulated Other Comprehensive Income As of December 31, Consolidated Statements of Operations (In millions) 2018 2017 2016 and Comprehensive (Loss) Income Location Gains (losses) on derivatives: Fuel swap contracts $ 3 $ 3 $ (4) Cost of services rendered and products sold Interest rate swap contracts 1 (8) (7) Interest expense Net losses on derivatives 4 (6) (11) Impact of income taxes (1) 2 4 Provision for income taxes Total reclassifications related to derivatives $ 3 $ (4) $ (7) Gains on available-for-sale securities $ — $ — $ 3 Interest and net investment income Impact of income taxes — — (1) Provision for income taxes Total reclassifications related to securities $ — $ — $ 2 Total reclassifications for the period $ 3 $ (4) $ (5) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 15 . Supplemental Cash Flow Information Supplemental information relating to the consolidated statements of cash flows is presented in the following table: Year Ended December 31, (In millions) 2018 2017 2016 Cash paid for or (received from): Interest expense (1) $ 123 $ 134 $ 133 Interest and dividend income (2) (1) — Income taxes, net of refunds 52 109 72 (1) For the year ended December 31, 2016, excludes $10 million paid in connection with the termination of interest rate swap agreements. As of December 31, 2018, Cash and cash equivalents of $224 million and Restricted cash of $89 million as presented on the consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and restricted cash of $313 million presented on the consolidated statements of cash f lows. As of December 31, 2017, Cash and cash equivalents of $192 million and Restricted cash of $89 million as presented on the consolidated statements of financial position and cash related to discontinued operations of $282 million represent the amounts comprising Cash and cash equivalents and restricted cash of $563 million presented on the consolid ated statements of cash flows. As of December 31, 2016, Cash and cash equivalents of $123 million and Restricted cash of $95 million presented on the consolidated statements of financial position and cash related to discontinued operations of $168 million represent the amounts comprising Cash and cash equivalents and restricted cash of $386 million presented on the consolidated statements of cash flows . We acquired $36 million , $41 million and $60 million of property and equipment through capital leases and other non-cash financing transactions in t he years ended December 31, 2018, 2017 and 201 6 , respectively, which have been excluded from the consolidated statements of cash flows as non-cash investing and financing activities. In the year ended December 31, 2016, we converted certain company-owned Merry Maids branches to franchises for a total purchase price of $9 million . In t he year ended December 31, 2016, we received cash of $6 million , and provided financing of $2 million . |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Capital Stock [Abstract] | |
Capital Stock | Note 16 . Capital Stock We are authorized to issue 2,000,000,000 shares of common stock. As of December 31, 2018, there were 147,209,928 shares of common stock issued and 135,687,558 shares of common stock outstanding. We have no other classes of equity securities issued or outstanding. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 17 . Stock-Based Compensation In connection with our initial public offering, our board of directors and stockholders adopted the Omnibus Incentive Plan. Prior to our initial public offering, our board of directors and stockholders had adopted the Amended and Restated ServiceMaster Global Holdings, Inc. Stock Incentive Plan, as amended as of October 25, 2012 (the “ MSIP ”) . Upon adoption of the Omnibus Incentive Plan, we froze the MSIP and will make no further grants thereunder. However, awards previously granted under the MSIP are unaffected by the termination of the MSIP. The Omnibus Incentive Plan provides for awards in the form of stock options, stock purchase rights, restricted stock, RSUs, performance shares, performance units, stock appreciation rights, dividend equivalents, DSUs , deferred share equivalents, and other stock-based awards. The MSIP provided for the sale of shares and DSUs of our stock to our executives, officers and other employees and to our directors as well as the grant of RSUs, performance-based RSUs and options to purchase our shares to those individuals. Our Compensation Committee selects our executive officers, employees and directors eligible to participate in the Omnibus Incentive Plan and determines the specific number of shares to be offered or options to be granted to an individual. On February 24, 2015, our board of directors approved and recommended for approval by our stockholders the Employee Stock Purchase Plan, which became effective for offering periods commencing July 1, 2015. The Employee Stock Purchase Plan is intended to qualify for the favorable tax treatment under the Code. Under the plan, eligible employees may purchase common stock, subject to Internal Revenue Service limits, during pre-specified offering periods at a discount established by us not to exceed ten percent of the then-current fair market value. On April 27, 2015, our stockholders approved the Employee Stock Purchase Plan with a maximum of one million shares of common stock authorized for sale under the plan. Under the Employee Stock Purchase Plan, we sold 52,051 shares in 2017 and 70,063 shares in 2016 . As a result of the American Home Shield s pin-off described in Note 1 to the consolidated financial statements, the Employee Stock Purchase Plan was suspended effective January 1, 2018. A maximum of 16,396,667 shares of our stock is authorized for issuance under the MSIP, the Omnibus Incentive Plan and the Employee Stock Purchase Plan, of which, as of December 31, 201 8 , 6,661,265 shares remain available for future grants. We currently intend to satisfy any need for our shares of common stock associated with the vesting of RSUs, exercise of options or purchase of shares issued under the Omnibus Incentive Plan, MSIP or Employee Stock Purchase Plan through new shares available for issuance or any shares repurchased, forfeited or surrendered from participants in the MSIP and the Omnibus Incentive Plan. All option grants under the Omnibus Incentive Plan and the MSIP have been, and we expect that all future option grants will be, non-qualified options with a per-share exercise price no less than the fair market value of one share of our stock on the grant date. Any stock options granted will generally have a term of 10 years and vesting will be subject to an employee’s continued employment. Our Compensation Committee may accelerate the vesting of an option at any time. In addition, vesting of options will be accelerated if we experience a change in control (as defined in the Omnibus Incentive Plan and the MSIP) unless options with substantially equivalent terms and economic value are substituted for existing options in place of accelerated vesting. Our stock option awards also have a “double trigger provision” that provides for acceleration in the event of a change in control and subsequent termination of the employee from the acquiring company within 24 months of the change in control. For RSUs granted in July 2018 or thereafter, the Compensation Committee revised the RSU award agreements to include a double trigger provision relating to the acceleration of vesting RSUs on a change in control and subsequent termination of the employee from the acquiring company within 24 months of the change in control. Vesting of options and RSUs granted under the Omnibus Incentive Plan and the MSIP will also be accelerated , in whole or in part, in the event of an employee’s death or disability (as defined in the Omnibus Incentive Plan and the MSIP). Upon termination for cause (as defined in the Omnibus Incentive Plan and the MSIP), all options and RSUs held by an employee are immediately cancelled. Following a termination without cause, vested options will generally remain exercisable through the earlier of the expiration of their term or three months following termination of employment ( one year in the case of death, disability or retirement at normal retirement age). Unless sooner terminated by our board of directors, the Omnibus Incentive Plan will remain in effect until June 26, 2024. In 2018, 2017 and 2016 , we completed various equity offerings to certain of our executives, officers and employees pursuant to the Omnibus Incentive Plan. The shares sold and options granted in connection with these equity offerings are subject to and governed by the terms of the Omnibus Incentive Plan. No other shares of common stock were sold by us in 2018, 2017 or 2016. Stock Options We granted our executives, officers and employees options to purchase 502,004 ; 747,761 ; and 684,329 shares of our common stock in 2018, 2017 and 2016, respectively, at a weighted-average exercise price of $55.18 per share for options issued in 2018, $39.27 per share for options issued in 2017, and $39.54 per share for options issued in 2016. These options are subject to and governed by the terms of the MSIP and Omnibus Incentive Plan. The per share purchase price and exercise price was based on the determination by our Compensation Committee of the fair market value of our common stock as of the purchase/grant dates. All options granted to date generally will vest in four equal annual installments, subject to an employee’s continued employment. The four -year vesting period is the requisite service period over which compensation cost will be recognized on a straight-line basis for all grants. All options issued are accounted for as equity-classified awards. The value of each option award was estimated on the grant date using the Black-Scholes option valuation model that incorporates the assumptions noted in the following table. For options granted in 2018, 201 7 and 201 6 , the expected volatility was based on historical and implied volatilities of our publicly traded stock. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method as outlined by the SEC in Staff Accounting Bulletins No. 107 and 110 as we do not have sufficient historical exercise s to provide a reasonable basis upon which to estimate expected life due to the limited period of time our equity shares have been publicly traded. The risk-free interest rates were based on U.S. Treasury securities with terms similar to the expected lives of the options as of the grant dates. Year Ended December 31, Assumption 2018 2017 2016 Expected volatility 25.9 % 27.7 % 32.3 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected life (in years) 6.3 6.3 6.3 Risk-free interest rate 2.63% - 2.94 % 1.83% - 2.29 % 1.25% - 1.46 % The weighted-average grant-date fair value of the options granted during 201 8 , 2017 and 2016 was $17.68 , $12.45 and $13.58 per option, respectively. During the year ended December 31, 2018, we applied a forfeiture assumption of 19.22 percent per annum in the recognition of the expense related to these options, with the exception of the options held by our CEO for which we applied a forfeiture rate of zero . The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017 and 2016, was $6 million, $60 million and $20 million , respectively. The total fair value of stock options vested during t he years ended December 31, 2018, 2017 and 2016 , was $3 million, $6 million and $6 million , respectively. A summary of option activity under the MSIP and Omnibus Incent ive Plan as of December 31, 2018 and changes during the year then ended is presented below: Weighted Avg. Aggregate Remaining Weighted Avg. Intrinsic Contractual Stock Exercise Value Term Options Price (in millions) (in years) Total outstanding, December 31, 2017 1,125,162 $ 34.84 $ 18 8.15 Granted to employees 502,004 $ 55.18 Equitable Adjustment 581,231 $ 29.48 Exercised (232,527) $ 27.41 Forfeited (624,641) $ 38.21 Expired (8,386) $ 39.55 Total outstanding, December 31, 2018 1,342,843 $ 29.34 $ 10 8.01 Total exercisable, December 31, 2018 329,287 $ 21.81 $ 5 6.64 RSUs We granted our executives, officers and employees 354,931 ; 416,604 ; and 267,739 ; RSUs in 2018, 2017 and 2016 , respectively, with weighted-average grant date fair values of $ 52.40 per unit for 2018, $40.51 per unit for 2017 , and $39.15 per unit for 2016 , which was equivalent to the then current fair value of our common stock at the grant date. All RSUs out standing as of December 31, 2018 will vest in three equal annual installments, subject to an employee’s continued employment. Upon vesting, each RSU will be converted into one share of our common stock. The total fair value of RSUs vested during t he years ended December 31, 2018, 2017 and 2016 , was $18 million, $7 million and $10 million , respectively. A summary of RSU activity under the Omnibus Incent ive Plan as of December 31, 2018, and changes during the year then ended is presented below: Weighted Avg. Grant Date RSUs Fair Value Total outstanding, December 31, 2017 571,924 $ 39.26 Granted to employees 354,931 $ 52.40 Equitable Adjustment 147,082 $ 32.06 Vested (306,145) $ 36.09 Forfeited (241,048) $ 41.19 Total outstanding, December 31, 2018 526,744 $ 35.75 Included within the vested RSUs in the summary of RSU activity above are 97,920 grants of performance RSUs to certain executives who were key to the American Home Shield spin-off. All such performance RSUs were contingent upon the successful completion of the spin-off and subject to the employee’s continued employment. All of these performance RSUs vested on October 1, 2018, the date the spin-off occurred. Performance Shares We granted our executives 120,778 performa nce shares in 2017 with a weighted–average grant date fair value of $38.98 per share and 131,352 performance shares in 2016 with a weighted-average grant date fair value of $39.59 per share, which were equivalent to the then current fair value of our common stock at the grant date. The performance shares were scheduled to vest at the end of a three -year period based on the achievement of a cumulative adjusted EPS target established at the grant date and subject to an executive’s continued employment. As the performance shares contain a performance condition, stock-based compensation exp ense, net of estimated forfeitures, is recorded over the requisite service period based on the number of awards expected to vest. No performance shar es were granted in 2018 due the complexities in determining longer-term financial goals given the spin-off and financial separation of the American Home Shield business . Effective July 23, 2018, the performance shares granted in 2016 and 2017 were cancelled by the Compensation Committee to the Board of Directors due to the complexities of adjusting such awards as a consequence of the spin-off of the American Home Shield business and because the awards were tracking below payout threshold at the time of cancellation. A summary of performance share activity under the Omnibus Incent ive Plan as of December 31, 2018, and changes during the year then ended is presented below: Weighted Avg. Performance Grant Date Shares Fair Value Total outstanding, December 31, 2017 93,928 $ 38.86 Forfeited (93,928) $ 38.86 Total outstanding, December 31, 2018 — $ — Stock-based compensation expense During t he years ended December 31, 2018, 2017 and 2016 , we recognized stock-based compensation expense of $14 million ( $11 million, net of tax), $10 million ( $6 million, net of tax) and $12 million ( $8 million, net of tax ), respectively. These charges are recorded within Selling and administrative expenses in the consolidated statements of operations and comprehensive (loss) income and included $3 million of stock-based compensation expense related to retention awards granted to employees instrumental to the spin-off. For the years ended December 31, 2018, 2017 and 2016, stock-based compensation expense recognized related to employees of Frontdoor is included within Gain on discontinued operations, net of income taxes on the consolidated statements of operations and comprehensive (loss) income. Additionally, during the year s ended December 31, 2017 and 2016 , we recognized $ 5 million and $3 million, respectively, of stock-based compensation expense due to the modification of non-vested stock options and RSUs as part of the severance agreements with the former CEO (2017) and president of Terminix (2016), which has been included in Restructuring charges in the consolidated statements of operations and comprehensive (loss) income. As of December 31, 2018 , there was $ 20 million of total unrecognized compensation costs related to non-vested stock options and RSUs granted under the MSIP and Omnibus Incentive Plan. These remaining costs are expected to be recognized over a weighted-average period of 2.23 years. American Home Shield Spin-o ff On October 1, 2018, in connection with the spin-off transaction, we adjusted our outstanding share-based awards issued to employees and directors in accordance with the Separation and Distribution Agreement (the “Equitable Adjustment”). For purposes of the vesting of these share-based awards, continued employment or service with the Company or with Frontdoor is treated as continued employment for purposes of the Company’s and Frontdoor’s share-based awards. The adjustments were as follows: In connection with the spin-off, stock options were converted to stock options of each participant’s employer post spin-off. We completed the Equitable Adjustment by adjusting the exercise price of options held by our employees to reflect the fair market value of our common stock after giving effect to the spin-off by multiplying the exercise price of such options immediately prior to the spin-off by a fraction, the numerator of which was the fair market value of a share of our common stock immediately after the spin-off and the denominator of which was the fair market value of a share of our common stock immediately prior to the spin-off. To allow our employees to retain the intrinsic value of their stock options prior to the spin-off, we also adjusted the number of shares underlying the options of such employees. The number of shares underlying the options was adjusted by dividing the total intrinsic value of the underlying options held by each employee by the fair value of each underlying option immediately following the spin-off. In connection with the spin-off, we implemented an RSU Election Program whereby participants could elect to amend their RSU Awards so that the employee received only RSUs in the participant’s employer post spin-off (“Concentration Election”). If a Concentration Election was not made the employee would retain their existing ServiceMaster RSUs and receive Frontdoor RSUs pursuant to the Distribution. If the Concentration Election was made, we adjusted the number of RSU awards to allow employees to retain the intrinsic value of their RSUs prior to the spin-off. The number of RSUs was adjusted by dividing the total intrinsic value of the RSUs prior to the spin-off by the share price of the participant’s employer immediately following the spin-off. The change in the number of shares underlying options and the adjustment of the exercise price pursuant to the Equitable Adjustment represent modifications to our share-based compensation awards. As a result, we compared the fair value of the awards following the spin-off with the fair value of the original awards. The comparison did not yield incremental value. Accordingly, we did not record any incremental compensation expense pursuant to the Equitable Adjustment. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 18 . 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 debt securities also approximate fair value, with unrealized gains and losses reported net of tax as a component of accumula ted other comprehensive income on the consolidated statements of financial position, or, for certain unrealized losses, reported in interest and net investment income in the consolidated statements of oper ations and comprehensive (loss) income if the decline in value is other than temporary. The carrying amount of total debt was $1 ,776 million and $ 2, 778 million and the estimated fair value was $1 ,791 million and $2,879 million as of December 31, 201 8 and December 31, 2017 , respectively. The fair value of our 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 December 31, 201 8 and 2017 . We have estimated the fair value of our 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, our 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 us from other published sources. The investment in frontdoor, inc. common stock of $445 million is categorized as a level 2 security as these shares were not registered as of December 31, 2018. The value of this investment is based on Frontdoor’s common stock price as of December 31, 2018, which represents an identical equity investment under the Securities Act of 1933, as amended. We have not changed our 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 t he years ended December 31, 2018 and 2017 . The carrying amount and estimated fair value of our 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 December 31, 2018: Financial Assets: Deferred compensation trust assets Long-term marketable securities $ 13 $ 13 $ — $ — Investment in Frontdoor Investment in frontdoor, inc. 445 — 445 — Investments in marketable securities Long-term marketable securities 8 8 — — Interest rate swap contracts Other assets 30 — 30 — Total financial assets $ 496 $ 21 $ 475 $ — Financial Liabilities: Fuel swap contracts Other accrued liabilities $ 4 $ — $ — $ 4 Total financial liabilities $ 4 $ — $ — $ 4 As of December 31, 2017: Financial Assets: Deferred compensation trust assets Long-term marketable securities $ 12 $ 12 $ — $ — Investments in marketable securities Long-term marketable securities 9 9 — Fuel swap contracts Prepaid expenses and other assets and Other assets 3 — — 3 Interest rate swap contracts Other assets 25 — 25 — Total financial assets $ 49 $ 21 $ 25 $ 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 Loss included in Earnings Balance as of December 31, 2016 $ 5 Total (losses) gains (realized and unrealized) Included in earnings 3 Cost of services rendered and products sold Included in other comprehensive income (2) Settlements (3) Balance as of December 31, 2017 3 Total gains (losses) (realized and unrealized) Included in earnings 3 Cost of services rendered and products sold Included in other comprehensive income (7) Settlements (3) Balance as of December 31, 2018 $ (4) The following tables present information relating to the significant unobservable inputs of our Level 3 financial instruments: Fair Value Valuation Weighted (in millions) Technique Unobservable Input Range Average As of December 31, 2018: Fuel swap contracts $ (4) Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.09 - $2.43 $ 2.26 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 an increase in the fair value liability of the fuel swap contracts. We use derivative financial instruments to manage risks associated with changes in fuel prices and interest rates. We do not hold or issue derivative financial instruments for trading or speculative purposes. In designating derivative financial instruments as hedging instruments under accounting standards for derivative instruments, we formally document 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. We assess 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 our designated hedging instruments are classified as cash flow hedges. We have historically hedged a significant portion of our annual fuel consumption. We have also historically hedged the interest payments on a portion of our variable rate debt through the use of interest rate swap agreements. All of our fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the 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 accumu lated 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 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 12 months ended December 31, 2018, 2017 and 2016. As of December 31, 2018 , we had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $ 30 million , maturing through 2018. Under the terms of our fuel swap contracts, we are 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 count erparty. As of December 31, 2018 , we had posted $2 million in letters of credit as collateral under our 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 o ther 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 settleme nt affects earnings. See Note 14 to the consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in accumulated other comprehensi ve income and for the amounts reclassified out of accumula ted 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 $8 million , net of tax, as of December 31, 201 8. 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 | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 19 . Earnings Per Share Basic earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net (loss) 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 net (loss) income 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: Year Ended December 31, (In millions, except per share data) 2018 2017 2016 (Loss) income from continuing operations $ (163) $ 341 $ 2 Weighted-average common shares outstanding 135.5 134.4 135.3 Effect of dilutive securities: RSUs — 0.1 0.2 Stock options (1) — 0.9 1.8 Weighted-average common shares outstanding - assuming dilution 135.5 135.4 137.3 Basic (loss) earnings per share from continuing operations $ (1.20) $ 2.54 $ 0.01 Diluted (loss) earnings per share from continuing operations $ (1.20) $ 2.52 $ 0.01 ___________________________________ (1) Options to purchase 0. 9 million and 0. 3 million shares for the ye ars ended December 31, 2017 and 2016 , respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. Securities are not included in the table in periods when antidilutive. For the year ended December 31, 2018, weighted average potentially dilutive shares from RSUs of 0.2 million and weighted average potentially dilutive shares from stock options of 0.4 million with a weighted average exercise price of $29.34 were excluded from the dilutive (loss) earnings per share calculation due to the antidilutive effect such shares would have had on net loss per common share. |
Schedule II Valuation And Quali
Schedule II Valuation And Qualifying Accounts | 12 Months Ended |
Dec. 31, 2018 | |
Schedule II Valuation And Qualifying Accounts [Abstract] | |
Schedule II Valuation And Qualifying Accounts | SCH EDULE II SERVICEMASTER GLOBAL HOLDINGS, INC. Valuation and Qualifying Accounts (In millions ) Additions Balance at Charged to Balance at Beginning of Costs and End of Period Expenses Deductions (1) Period As of and for the year ending December 31, 2018: Continuing Operations— Allowance for doubtful accounts Accounts receivable $ 21 $ 24 $ 24 $ 20 Notes receivable 1 (1) — 1 Income tax valuation allowance 11 — — 11 As of and for the year ending December 31, 2017: Continuing Operations— Allowance for doubtful accounts Accounts receivable $ 19 $ 31 $ 30 $ 21 Notes receivable 2 — — 1 Income tax valuation allowance 7 4 — 11 As of and for the year ending December 31, 2016: Continuing Operations— Allowance for doubtful accounts Accounts receivable $ 19 $ 28 $ 28 $ 19 Notes receivable 2 — 1 2 Income tax valuation allowance 7 2 2 7 ___________________________________ (1) Deductions in the allowance for doubtful accounts for accounts and notes receivable reflect write-offs of uncollectible accounts. Deductions for the income tax valuation allowance in 2018, 2017 and 2016 are primarily attributable to the reduction of net operating loss carryforwards and other deferred tax assets related to the uncertainty of future taxable income in certain jurisdictions. |
Significant Accounting Polici_2
Significant Accounting Policies (Policy) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Abstract] | |
Consolidation | Consolidation The consolidated financial statements include all of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Use Of Estimates | Use of Estimates The preparation of the consolidated financial statements requires management to make certain estimates and assumptions required under GAAP which may differ from actual results. The more significant areas requiring the use of management estimates relate to revenue recognition; the allowance for uncollectible receivables; accruals for self-insured retention limits related to medical, workers’ compensation, auto and general liability insurance claims; accruals for termite damage claims; the possible outcome of outstanding litigation; accruals for income tax liabilities as well as deferred tax accounts; the deferral and amortization of customer acquisition costs; share based compensation; useful lives for depreciation and amortization expense; the valuation of marketable securities, including the valuation of retained shares of Frontdoor common stock; and the valuation of tangible and intangible assets. In 2018, there were no changes in the significant areas that require estimates or in the underlying methodologies used in determining the amounts of these associated estimates, other than the valuation of our retained shares of Frontdoor common stock. The allowance for uncollectible receivables is developed based on several factors including overall customer credit quality, historical write-off experience and specific account analyses that project the ultimate collectability of the outstanding balances. As such, these factors may change over time causing the allowance level to vary. We carry insurance policies on insurable risks at levels which we believe to be appropriate, including workers’ compensation, auto and general liability risks. We purchase insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. We are responsible for all claims that fall below the retention limits. In determining our accrual for self-insured claims, we use 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. We adjust the 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. We seek to reduce the potential amount of loss arising from self-insured claims by insuring certain levels of risk. While insurance agreements are designed to limit our losses from large exposure and permit recovery of a portion of direct unpaid losses, insurance does not relieve us of ultimate liability. Accordingly, the accruals for insured claims represent our total unpaid gross losses. Insurance recoverables, which are reported within Prepaid expenses and other assets and Other assets, relate to estimated insurance recoveries on the insured claims reserves. 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. We have certain liabilities with respect to existing or potential claims, lawsuits, and other proceedings. We accrue 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. We record deferred income tax balances based on the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and income tax purposes. We record deferred tax items based on the estimated value of the tax basis. We adjust tax estimates when required to reflect changes based on factors such as changes in tax laws, relevant court decisions, results of tax authority reviews and statutes of limitations. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize potential interest and penalties related to our uncertain tax positions in Provision (benefit) for income taxes on the consolidated statements of operations and comprehensive (loss) income. |
Revenue | Revenue On January 1, 2018, we adopted FASB Accounting Standards Codification (“ASC”) 606. 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.” See Note 3 to the consolidated financial statements for more details. |
Deferred Customer Acquisition Costs | Deferred Customer Acquisition Costs Customer acquisition costs, which are incremental and direct costs of obtaining a customer, are deferred and amortized over the expected customer relationship period. See Note 3 to the consolidated financial statements for more details. |
Advertising | Advertising Advertising costs are expensed when the advertising occurs. Advertising expense for the years ended December 31, 2018, 2017 and 2016 was $ 85 million, $71 million and $ 66 million, respectively. |
Inventory | Inventory Inventories are recorded at the lower of cost (primarily on a weighted-average cost basis) or net realizable value. Our inventory primarily consists of finished goods to be used on the customers’ premises or sold to franchisees. |
Property And Equipment, Intangible Assets And Goodwill | Property and Equipment, Intangible Assets and Goodwill Property and equipment consist of the following: Estimated As of December 31, Useful Lives (In millions) 2018 2017 (Years) Land $ 5 $ 4 N/A Buildings and improvements 47 50 10 - 40 Technology and communications 208 190 3 - 7 Machinery, production equipment and vehicles 242 222 3 - 9 Office equipment, furniture and fixtures 19 13 5 - 7 521 480 Less accumulated depreciation (320) (277) Net property and equipment $ 201 $ 202 Depreciation of property and equipment, including depreciation of assets held under capital leases was $73 million, $68 million and $53 million for the years ended December 31, 2018, 2017 and 2016, respectively. We recorded impairment charges of $2 million and $1 million in the years ended December 31, 2017 and 2016, respectively, relating to our decisions to replace certain software. No impairment charges were recorded in the year ended December 31, 2018. As of December 31, 2018 and 2017, goodwill was $1,956 million a nd $1,780 million, respectively. I ntangible assets consisted of indefinite-lived trade names of $1,4 82 million and $1,468 million and other amortizable intangible assets in the amount of $ 106 million and $59 million as of December 31, 2018 and 2017, respectively . Fixed assets and intangible assets with finite lives are depreciated and amortized on a straight-line basis over their estimated useful lives. These lives are based on our previous experience for similar assets, potential market obsolescence and other industry and business data. As required by accounting standards for the impairment or disposal of long-lived assets, fixed assets and finite-lived intangible assets are tested for recoverability whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment loss would be recognized equal to the difference between the carrying amount and the fair value of the asset. Changes in the estimated useful lives or in the asset values could cause us to adjust its book value or future expense accordingly. As required under accounting standards for goodwill and other intangibles, goodwill is not subject to amortization, and intangible assets with indefinite useful lives are not amortized until their useful lives are determined to no longer be indefinite. Goodwill and intangible assets that are not subject to amortization 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. Goodwill and indefinite-lived intangible assets, primarily trade names, are assessed annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. The Company’s 2018, 2017 and 2016 annual impairment analyses, which were performed as of October 1 of each year, did not result in any goodwill or trade name impairments to continuing operations. |
Restricted Cash | Restricted Cash Restricted cash consists of cash held in trust as collateral under our automobile, general liability and workers’ compensation insurance program. |
Restricted Net Assets | Restricted Net Assets There are third-party restrictions on the ability of certain of our subsidiaries to transfer funds to the Company. These restrictions are related to a subsidiary borrowing arrangement at our financing subsidiary. As of December 31, 2018, the total net assets subject to these third-party restrictions was $ 23 million. None of our subsidiaries are obligated to make funds available to us through the payment of dividends. |
Financial Instruments And Credit Risk | Financial Instruments and Credit Risk We have entered into specific financial arrangements in the normal course of business to manage certain market risks, with a policy of matching positions and limiting the terms of contracts to relatively short durations. The effect of derivative financial instrument transactions could have a material impact on our financial statements. We do not hold or issue derivative financial instruments for trading or speculative purposes. We have historically hedged a significant portion of our annual fuel consumption and have also historically hedged the interest payments on a portion of our variable rate debt using interest rate swap agreements. All our fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the 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. Financial instruments, which potentially subject us to financial and credit risk, consist principally of investments and receivables. Investments consist primarily of publicly traded debt and common equity securities. Financial instruments are accounted for at fair value with adjustments to fair value recognized in Interest and net investment income in the consolidated statements of operations and comprehensive (loss) income in the period incurred. Most of our receivables and notes receivable have little concentration of credit risk due to the large number of customers with relatively small balances and their dispersion across geographical areas. We maintain an allowance for losses based upon the expected collectability of receivables. See Note 18 to the consolidated financial statements for information relating to the fair value of financial instruments. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense for stock options is estimated at the grant date based on an award’s fair value as calculated by the Black-Scholes option-pricing model and is recognized as expense over the requisite service period. The Black-Scholes model requires various highly judgmental assumptions including expected volatility and option life. If any of the assumptions used in the Black-Scholes model change significantly, stock-based compensation expense for future grants may differ materially from that recorded in the current period related to options granted to date. In addition, we estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. We estimate the forfeiture rate based on historical experience. To the extent the actual forfeiture rate is different from the estimate, stock-based compensation expense is adjusted accordingly. See Note 17 to the consolidated financial statements for more details. |
Income Taxes | Income Taxes We and our subsidiaries file consolidated U.S. federal income tax returns. State and local returns are filed both on a separate company basis and on a combined unitary basis with the Company. Current and deferred income taxes are provided for on a separate company basis. We account for income taxes using an asset and liability approach for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. Valuation allowances are established when necessary to reduce deferred income tax assets to the amounts expected to be realized. We record a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in our tax return. We recognize potential interest income, interest expense and penalties related to uncertain tax positions in income tax expense. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing net (loss) income by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net (loss) 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, restricted stock units (“RSUs”) and performance shares are reflected in diluted earnings per share by applying the treasury stock method. See Note 19 to the consolidated financial statements for more details. |
Newly Issued Accounting Standards | Newly Issued 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, we adopted FASB Accounting Standards Codification (“ASC”) 606 using the modified retrospective method for 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 our historic accounting under ASC 605, “ Revenue Recognition .” We implemented internal controls and system functionality where necessary to enable the preparation of financial information on adoption. See Note 3 to the 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 (loss) income. In March 2018, the FASB issued an amendment to this standard (ASU 2018-03), which provides further clarification regarding this standard. We adopted this ASU on January 1, 2018. As a result of the adoption, 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. 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. We 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. We adopted this ASU on January 1, 2018 and applied 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, we 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. 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. We adopted this ASU on January 1, 2019 and applied the guidance prospectively . In August 2018, the FASB issued ASU 2018-15, “ Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract .” This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The amendments in ASU 2018-15 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We early adopted this ASU on January 1, 2019 and applied the guidance prospectively to implementation costs incurred related to cloud computing arrangements. We expect the adoption of this ASU will result in the capitalization of certain development costs that would have otherwise been expensed to our consolidated statements of operations and comprehensive (loss) income as we implement Salesforce. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “ Disclosure Update and Simplification ,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018, with relief provided for filings made shortly after the final rule’s effective date in SEC Question 105.09 of the Exchange Act Forms C&DIs. We adopted this final rule on November 5, 2018. Following are the results of the adoption of these standards on our 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. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, which amend ASU 2016-02 to provide companies an alternative transition method whereby it may elect to recognize and measure leases by applying the cumulative impact of adopting ASU 2016-02 to the opening retained earnings balance in the period of adoption, thereby removing the requirement that the financial statements of prior periods be restated. The Company plans to utilize this alternative transition method. 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. We adopted the new lease guidance effective January 1, 2019 , and elect ed the available practical expedients upon adoption. The adoption resulted in the recognition of a right of use asset of approximately $195 million and a lease liability of approximately $230 million on January 1, 2019. In August 2017, the FASB issued ASU 2017-12, “Derivatives 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. We adopted the amendments in this ASU on January 1, 2019 and will apply the guidance prospectively to our hedges. In August 2018, the FASB issued ASU 2018-13, “ Fair Value Measurement. ” This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The amendments in ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for the removed disclosures and delayed adoption is permitted until fiscal 2021 for the new disclosures. We are currently evaluating the disclosure changes necessary to our consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, “ Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes , ” which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. The company will early adopt the ASU in the first quarter of fiscal year 2019. The adoption will not have a material effect on our consolidated financial statements. We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do not expect the future adoption of any such pronouncements will have a material impact on our financial condition or the results of our operations. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Abstract] | |
Schedule Of Property And Equipment | Estimated As of December 31, Useful Lives (In millions) 2018 2017 (Years) Land $ 5 $ 4 N/A Buildings and improvements 47 50 10 - 40 Technology and communications 208 190 3 - 7 Machinery, production equipment and vehicles 242 222 3 - 9 Office equipment, furniture and fixtures 19 13 5 - 7 521 480 Less accumulated depreciation (320) (277) Net property and equipment $ 201 $ 202 |
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) | 12 Months Ended |
Dec. 31, 2018 | |
Revenues[Abstract] | |
Disaggregation of Revenue | Terminix ServiceMaster Brands Total Year ended December 31, Year ended December 31, Year ended December 31, (In millions) 2018 2017 2016 2018 2017 2016 2018 2017 2016 Major service line Residential Pest Control $ 655 $ 613 $ 621 $ — $ — $ — $ 655 $ 613 $ 621 Commercial Pest Control 317 255 255 — — — 317 255 255 Termite and Home Services 599 593 571 — — — 599 593 571 Royalty Fees — — 77 132 127 120 132 127 197 Commercial Cleaning National Accounts — — — 65 53 43 65 53 43 Sales of Products and Other 84 81 — 48 32 37 132 113 37 Corporate — — — — — — 1 2 2 Total $ 1,655 $ 1,541 $ 1,524 $ 244 $ 212 $ 200 $ 1,900 $ 1,755 $ 1,726 |
Deferred Revenue By Segment | As of December 31, (In millions) 2018 2017 Terminix $ 91 $ 90 ServiceMaster Brands (1) 11 — Total $ 101 $ 90 ___________________________________ (1) Includes approximately $7 million of Deferred revenue included within Other long-term obligations, primarily self-insured claims on the consolidated statement of financial position as of December 31, 2018. |
Movement In Deferred Revenue | (In millions) Deferred revenue Balance, January 1, 2018 $ 101 Deferral of revenue 149 Recognition of deferred revenue (149) Balance, December 31, 2018 $ 101 |
Comparison of the Reported Condensed Consolidated Statement of Financial Position to the Pro-forma Amounts had the Previous Guidance Been in Effect | As of December 31, 2018 Consolidated Statement of Financial Position As reported Under Prior Revenue Recognition Guidance Current Assets: Receivables $ 186 $ 186 Prepaid expenses and other assets 61 74 Deferred customer acquisition costs — 22 Other Assets: Deferred customer acquisition costs 77 — Total Assets $ 5,023 $ 4,982 Current Liabilities: Deferred revenue $ 95 $ 91 Other Long-Term Liabilities: Deferred taxes 484 473 Other long-term obligations, primarily self-insured claims 182 176 Total Liabilities 2,818 2,798 Retained earnings (accumulated deficit) 156 141 Accumulated other comprehensive income 5 5 Net (Loss) (41) (46) Liabilities and Equity $ 5,023 $ 4,982 Year ended December 31, 2018 Consolidated Statement of Operations and Comprehensive (Loss) Income As reported Under Prior Revenue Recognition Guidance Revenue $ 1,900 $ 1,886 Cost of services rendered and products sold 1,041 1,041 Selling and administrative expenses 555 548 Provision for income taxes 37 35 Net (Loss) $ (41) $ (46) |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Segment Reporting [Abstract] | |
Schedule Of Information For Continuing Operations For Each Reportable Segment And Other Operations And Headquarters | Year Ended December 31, (In millions) 2018 2017 2016 Revenue: Terminix $ 1,655 $ 1,541 $ 1,524 ServiceMaster Brands 244 212 200 Reportable Segment Revenue $ 1,899 $ 1,754 $ 1,724 Corporate 1 2 2 Total Revenue $ 1,900 $ 1,755 $ 1,726 Reportable Segment Adjusted EBITDA: (1) Terminix $ 333 $ 330 $ 372 ServiceMaster Brands 89 87 79 Reportable Segment Adjusted EBITDA $ 422 $ 417 $ 450 Identifiable Assets: Terminix $ 3,162 $ 2,821 $ 2,820 ServiceMaster Brands 491 489 480 Reportable Segment Identifiable Assets $ 3,653 $ 3,310 $ 3,300 Corporate 1,370 917 808 Total Identifiable Assets $ 5,023 $ 4,228 $ 4,109 Depreciation & Amortization Expense: Terminix $ 59 $ 58 $ 58 ServiceMaster Brands 8 7 7 Reportable Segment Depreciation & Amortization Expense $ 67 $ 65 $ 65 Corporate 24 21 15 Total Depreciation & Amortization Expense (2) $ 91 $ 86 $ 80 Capital Expenditures: Terminix $ 12 $ 12 $ 11 ServiceMaster Brands 2 2 2 Reportable Segment Capital Expenditures $ 14 $ 15 $ 13 Corporate 34 53 33 Total Capital Expenditures $ 49 $ 68 $ 46 ________________________________ Presented below is a reconciliation of Net (Loss) Income to Reportable Segment Adjusted EBITDA |
Schedule Of Reconciliation Of Net Income (Loss) To Reportable Segment Adjusted EBITDA | Year Ended December 31, (In millions) 2018 2017 2016 Net (Loss) Income $ (41) $ 510 $ 155 Unallocated corporate expenses (9) (1) 3 Costs historically allocated to American Home Shield 33 44 42 Depreciation and amortization expense 91 86 80 Acquisition-related costs 5 — 1 401(k) Plan corrective contribution — (3) 2 Fumigation related matters 3 4 93 Insurance reserve adjustment — — 23 Non-cash stock-based compensation expense 14 10 12 Restructuring charges 17 21 15 Gain on sale of Merry Maids branches — — (2) Non-cash impairment of software and other related costs — 2 1 Mark-to-market loss on investment in frontdoor, inc. 249 — — Gain from discontinued operations, net of income taxes (122) (169) (153) Provision (benefit) for income taxes 37 (242) (5) Loss on extinguishment of debt 10 6 32 Interest expense 133 150 153 Other non-operating expenses — — — Reportable Segment Adjusted EBITDA $ 422 $ 417 $ 450 ___________________________________ There are no adjustments necessary to reconcile total depreciation and amortization as presented in the business segment table to consolidated totals. Amortization of debt issue costs is not included in the business segment table. See Note 5 to the consolidated financial statements for information relating to segment goodwill. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters | Franchise (In millions) Terminix Services Group Total Balance as of December 31, 2016 $ 1,601 $ 175 $ 1,776 Acquisitions 2 — 2 Other (1) 1 — 2 Balance as of December 31, 2017 $ 1,605 $ 176 $ 1,780 Acquisitions 179 — 179 Other (1) (2) — (2) Balance as of December 31, 2018 $ 1,781 $ 175 $ 1,956 ____________________________________ Reflects the impact of foreign exchange rates. |
Schedule Of Other Intangible Asset Balances For Continuing Operations | As of December 31, 2018 As of December 31, 2017 Accumulated Accumulated (In millions) Gross Amortization Net Gross Amortization Net Trade names (1) $ 1,482 $ — $ 1,482 $ 1,468 $ — $ 1,468 Customer relationships 469 (406) 64 417 (395) 22 Franchise agreements 88 (73) 15 88 (70) 18 Other 62 (35) 27 49 (30) 19 Total $ 2,101 $ (513) $ 1,588 $ 2,022 $ (496) $ 1,526 ___________________________________ (1) Not subject to amortization. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes [Abstract] | |
Reconciliation Of Unrecognized Tax Benefits | Year Ended December 31, (In millions) 2018 2017 2016 Gross unrecognized tax benefits at beginning of period $ 14 $ 13 $ 16 Increases in tax positions for prior years — — — Decrease in tax positions for prior years — — (5) Increases in tax positions for current year 3 3 3 Lapse in statute of limitations (1) (1) (1) Gross unrecognized tax benefits at end of period $ 15 $ 14 $ 13 |
Components Of Income (Loss) From Continuing Operations Before Income Taxes | Year Ended December 31, (In millions) 2018 2017 2016 U.S. $ (130) $ 94 $ (5) Foreign 4 5 3 Income from Continuing Operations before Income Taxes $ (126) $ 99 $ (2) |
Reconciliation Of Effective Income Tax Rate | Year Ended December 31, 2018 2017 2016 Tax at U.S. federal statutory rate 21.0 % 35.0 % 35.0 % State and local income taxes, net of U.S. federal benefit (7.1) 5.7 (297.8) Tax credits 1.5 (1.3) 91.5 Investment in frontdoor, inc. mark-to-market adjustment (41.5) — — Other permanent items (2.1) 1.8 (156.1) U.S. Tax Reform rate change (1) (2.7) (273.6) — Remeasurement of prior year tax positions (0.9) — 205.1 Excess tax benefits from stock-based compensation 1.1 (14.5) 274.0 Other, including foreign rate differences and reserves 1.7 1.4 51.9 Effective rate (29.1) % (245.6) % 203.5 % ___________________________________ (1) Deferred income taxes in the consolidated statements of financial position at December 31, 2017, were remeasured for the change in the U.S. income tax rate through income tax expense (see discussion on U.S. Tax Reform). This one-time beneficial rate change adjustment for $271 million includes $11 million in state income tax expense for December 31, 2017 and $3 million additional tax expense for December 31, 2018. |
Income Tax Expense From Continuing Operations | Year Ended December 31, (In millions ) 2018 2017 2016 Current: U.S. federal $ 23 $ (14) $ (28) Foreign 1 3 2 State and local 6 5 4 29 (6) (22) Deferred: U.S. federal 1 (242) 14 Foreign 1 2 (2) State and local 6 4 5 8 (235) 17 (Benefit) provision for income taxes $ 37 $ (242) $ (5) |
Deferred Tax Balances | As of December 31, (In millions) 2018 2017 Long-term deferred tax assets (liabilities): Intangible assets (1) $ (471) $ (446) Property and equipment (25) (22) Prepaid expenses and deferred customer acquisition costs (20) (8) Receivables allowances 5 9 Self-insured claims and related expenses 7 7 Accrued liabilities 22 13 Other long-term obligations (6) (12) Net operating loss and tax credit carryforwards 15 19 Less valuation allowance (11) (11) Net Long-term deferred tax liability $ (484) $ (451) ___________________________________ (1) The deferred tax liability relates primarily to the difference in the tax versus book basis of intangible assets. We had $505 million and $507 million of deferred tax liability included in this net deferred tax l iability as of December 31, 2018 and 2017 , respectively, that will not actually be paid unless certain business unit s of the Company are sold. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Acquisitions [Abstract] | |
Schedule Of Supplemental Cash Flow Information Regarding Acquisitions | Year Ended December 31, (In millions) 2018 2017 2016 Assets acquired $ 284 $ 16 $ 44 Liabilities assumed (30) — — Net assets acquired (1) $ 254 $ 16 $ 43 Net cash paid $ 191 $ 13 $ 34 Seller financed debt 64 3 9 Purchase price $ 254 $ 16 $ 43 ___________________________________ (1) Includes approximately $1 5 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations [Abstract] | |
Financial Information for Discontinued Operations | The operating results of discontinued operations are as follows: Year Ended December 31, (In millions) 2018 2017 2016 Revenue $ 979 $ 1,157 $ 1,020 Cost of services rendered and products sold 534 591 524 Operating expenses (1) 282 296 257 Interest and net investment income (1) (2) (5) Income before income taxes 164 272 243 Provision for income taxes 43 103 90 Gain from discontinued operations, net of income taxes $ 122 $ 169 $ 153 ___________________________________ (1) Includes spin-off transaction costs incurred of $35 million and $13 million for the years ended December 31, 2018 and 2017, respectively. The following table presents the aggregate carrying amount of the major classes of assets and liabilities of discontinued operations. At December 31, 2017, these balances reflect the historical assets and liabilities of the American Home Shield business, which was spun off in the year ended December 31, 2018. (In millions) Assets of Discontinued Operations: December 31, 2017 Cash and cash equivalents $ 282 Receivables, net 408 Inventories and other current assets 50 Current assets of discontinued operations 740 Property and equipment, net 35 Goodwill 476 Intangible assets, net 165 Other long-term assets 2 Total Assets of Discontinued Operations $ 1,418 Liabilities of Discontinued Operations: Accounts payable $ 34 Accrued liabilities: Payroll and related expenses 7 Self-insured claims and related expenses 57 Accrued interest payable 1 Other 13 Deferred revenue 573 Current portion of long-term debt 9 Total Current Liabilities 693 Deferred taxes 42 Other long-term obligations 2 Total Liabilities of Discontinued Operations $ 737 ___________________________________ The following selected financial information of American Home Shield is included in the statements of cash flows: |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring Charges [Abstract] | |
Schedule Of Restructuring Charges | Year Ended December 31, (In millions) 2018 2017 2016 Terminix (1) $ 2 $ 2 $ 7 ServiceMaster Brands (2) 1 1 — Corporate (3) 7 2 5 Leadership transition (4) — 11 — Global Service Center relocation (5) 8 5 3 Total restructuring charges $ 17 $ 21 $ 15 ___________________________________ (1) For the years ended December 31, 201 8 , 201 7 and 201 6 , these charges include $2 million, $2 million and $4 million, respectively, of lease termination and severance costs driven by Terminix’s branch optimization program. Of this amount $1 million was unpaid and accrued as of December 31, 2018. For the year ended December 31, 2016, these charges include $1 million of se verance costs and $3 million of stock-based compensation expense due to the modification of non-vested stock options and RSUs as part of the severance agreement with the former president of Terminix. (2) Represents severance and other costs related to the reorganization of ServiceMaster Brands . (3) We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services for our operations. In 2017, we began taking actions to enhance capabilities and align our corporate functions with those required to support our strategic needs as two stand-alone companies in anticipation of the American Home Shield spin-off. For the years ended December 31, 2018, 201 7 and 2016, these charges include severance and other costs of $3 million, $ 2 million and $2 million, respectively. For the year ended December 31, 2018, these charges also included $4 million of costs incurred due to the Separation that were not included in discontinued operations. For the year ended December 31, 2016, these charges include professional fees of $2 million and accelerated depreciation of $2 million related to the early termination of a long-term human resources outsourcing agreement. Of this amount, $1 million was unpaid and accrued as of December 31, 2018. (4) For the year ended December 31, 2017, these charges include $5 million of severance costs and $5 million of stock-based compensation expense as part of the severance agreements with the former CEO and CFO. Of this amount, $2 million was unpaid and accrued as of December 31, 2018. (5) For the year ended December 31, 2018, these charges include future rent of $7 million and $1 million of professional and other fees. For the year ended December 31, 2017, these charges include accelerated depreciation of $2 million, redundant rent expense of $2 million and a $1 million loss recorded on the sale of an asset related to the relocation of the Company’s corporate headquarters, which we refer to as our Global Service Center. For the year ended December 31, 2016 , r epresents impairment charges of $1 million and professional fees and other costs of $1 million related to the relocation of the Company’s Global Service Center. Of this amount, $4 million was unpaid and accrued as of December 31, 2018. |
Schedule Of Reconciliation Of The Beginning And Ending Balances Of Accrued Restructuring Charges | Accrued Restructuring (In millions) Charges Balance as of December 31, 2016 $ 3 Costs incurred 21 Costs paid or otherwise settled (17) Balance as of December 31, 2017 6 Costs incurred 17 Costs paid or otherwise settled (17) Balance as of December 31, 2018 $ 7 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Self-Insured Claims, Net [Member] | |
Commitments and Contingencies [Line Items] | |
Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims | Accrued Self-insured (In millions) Claims, Net Balance as of December 31, 2016 $ 120 Provision for self-insured claims 36 Cash payments (42) Balance as of December 31, 2017 115 Provision for self-insured claims 29 Cash payments (33) Balance as of December 31, 2018 $ 111 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long-Term Debt [Abstract] | |
Schedule Of Long-Term Debt | As of December 31, (In millions) 2018 2017 Senior secured term loan facility maturing in 2023 (1) $ 637 $ 1,615 5.125% notes maturing in 2024 (2) 740 739 Revolving credit facility maturing in 2021 — — 7.10% notes maturing in 2018 (3) — 79 7.45% notes maturing in 2027 (4) 172 169 7.25% notes maturing in 2038 (4) 42 42 Vehicle capital leases (5) 90 90 Other (6) 94 45 Less current portion (49) (136) Total long-term debt $ 1,727 $ 2,642 ___________________________________ (1) As of December 31 , 201 8 and 201 7 , presented net of $ 5 million and $ 16 million, respectively, in unamortized debt issuance costs and $ 1 million and $ 3 million, respectively, in unamortized original issue discount paid as described below under “––Term Loan Facility.” (2) As of December 31, 201 8 and 201 7 , presented net of $10 million and $11 million, respectively, in unamortized debt issuance costs as described below under “––2024 Notes.” (3) On March 1, 2018, we paid $79 million upon their maturity. (4) As of December 31, 2018 and 2017, collectively presented net of $33 million and $ 3 6 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (5) We have entered into the Fleet Agreement which, among other things, allows us 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 % . (6) As of December 3, 2018, includes approximately $82 million of future payments in connection with our acquisitions of Copesan and other companies as further described in Note 7. |
Schedule of Interest Rate Swap Agreements | Weighted Notional Average Fixed (In millions) Amount Rate (1) Interest rate swap agreements in effect as of December 31, 2016 $ 650 1.493 % Terminated — Entered into effect — Interest rate swap agreements in effect as of December 31, 2017 650 1.493 % Terminated — Entered into effect — Interest rate swap agreements in effect as of December 31, 2018 $ 650 1.493 % ___________________________________ (1) Before the application of the applicable borrowing margin. |
Cash and Marketable Securities
Cash and Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 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 Available-for-sale securities, December 31, 2018: Debt securities $ 4 $ — $ — $ 4 Equity securities 15 1 — 16 Total securities $ 19 $ 1 $ — $ 21 Available-for-sale securities, December 31, 2017: Debt securities $ 4 $ — $ — $ 4 Equity securities 14 3 — 17 Total securities $ 18 $ 3 $ — $ 21 |
Comprehensive (Loss) Income (Ta
Comprehensive (Loss) Income (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Comprehensive (Loss) Income [Abstract] | |
Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects | Unrealized Gains on Foreign Unrealized Available Currency (Losses) Gains on -for-Sale Translation (In millions) Derivatives Securities (Loss) Gain Total Balance as of December 31, 2016 $ 12 $ 1 $ (15) $ (3) Other comprehensive income before reclassifications: Pre-tax amount — 2 3 5 Tax provision — 1 — 1 After-tax amount — 1 3 4 Amounts reclassified from accumulated other comprehensive (loss) income (1) 4 — — 4 Net current period other comprehensive loss 4 1 3 8 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 4 — (3) 1 Tax provision 1 — — 1 After-tax amount 3 — (3) — Amounts reclassified from accumulated other comprehensive income (1) (3) — — (3) Net current period other comprehensive income 1 — (3) (3) Balance as of December 31, 2018 $ 20 $ — $ (15) $ 5 ___________________________________ (1) Amounts are net of tax. See reclassifications out of accumul ated other comprehensive income below for further details. |
Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss) | Amounts Reclassified from Accumulated Other Comprehensive Income As of December 31, Consolidated Statements of Operations (In millions) 2018 2017 2016 and Comprehensive (Loss) Income Location Gains (losses) on derivatives: Fuel swap contracts $ 3 $ 3 $ (4) Cost of services rendered and products sold Interest rate swap contracts 1 (8) (7) Interest expense Net losses on derivatives 4 (6) (11) Impact of income taxes (1) 2 4 Provision for income taxes Total reclassifications related to derivatives $ 3 $ (4) $ (7) Gains on available-for-sale securities $ — $ — $ 3 Interest and net investment income Impact of income taxes — — (1) Provision for income taxes Total reclassifications related to securities $ — $ — $ 2 Total reclassifications for the period $ 3 $ (4) $ (5) |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows | Year Ended December 31, (In millions) 2018 2017 2016 Cash paid for or (received from): Interest expense (1) $ 123 $ 134 $ 133 Interest and dividend income (2) (1) — Income taxes, net of refunds 52 109 72 (1) For the year ended December 31, 2016, excludes $10 million paid in connection with the termination of interest rate swap agreements. As of December 31, 2018, Cash and cash equivalents of $224 million and Restricted cash of $89 million as presented on the consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and restricted cash of $313 million presented on the consolidated statements of cash f lows. As of December 31, 2017, Cash and cash equivalents of $192 million and Restricted cash of $89 million as presented on the consolidated statements of financial position and cash related to discontinued operations of $282 million represent the amounts comprising Cash and cash equivalents and restricted cash of $563 million presented on the consolid ated statements of cash flows. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation [Abstract] | |
Schedule Of Assumptions Used To Estimate Value Of Each Option Award | Year Ended December 31, Assumption 2018 2017 2016 Expected volatility 25.9 % 27.7 % 32.3 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected life (in years) 6.3 6.3 6.3 Risk-free interest rate 2.63% - 2.94 % 1.83% - 2.29 % 1.25% - 1.46 % |
Summary Of Option Activity Under The MSIP | Weighted Avg. Aggregate Remaining Weighted Avg. Intrinsic Contractual Stock Exercise Value Term Options Price (in millions) (in years) Total outstanding, December 31, 2017 1,125,162 $ 34.84 $ 18 8.15 Granted to employees 502,004 $ 55.18 Equitable Adjustment 581,231 $ 29.48 Exercised (232,527) $ 27.41 Forfeited (624,641) $ 38.21 Expired (8,386) $ 39.55 Total outstanding, December 31, 2018 1,342,843 $ 29.34 $ 10 8.01 Total exercisable, December 31, 2018 329,287 $ 21.81 $ 5 6.64 |
Summary Of RSU Activity Under The MSIP | Weighted Avg. Grant Date RSUs Fair Value Total outstanding, December 31, 2017 571,924 $ 39.26 Granted to employees 354,931 $ 52.40 Equitable Adjustment 147,082 $ 32.06 Vested (306,145) $ 36.09 Forfeited (241,048) $ 41.19 Total outstanding, December 31, 2018 526,744 $ 35.75 |
Summary Of Performance Share Activity Under The Omnibus Incentive Plan | Weighted Avg. Performance Grant Date Shares Fair Value Total outstanding, December 31, 2017 93,928 $ 38.86 Forfeited (93,928) $ 38.86 Total outstanding, December 31, 2018 — $ — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 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 December 31, 2018: Financial Assets: Deferred compensation trust assets Long-term marketable securities $ 13 $ 13 $ — $ — Investment in Frontdoor Investment in frontdoor, inc. 445 — 445 — Investments in marketable securities Long-term marketable securities 8 8 — — Interest rate swap contracts Other assets 30 — 30 — Total financial assets $ 496 $ 21 $ 475 $ — Financial Liabilities: Fuel swap contracts Other accrued liabilities $ 4 $ — $ — $ 4 Total financial liabilities $ 4 $ — $ — $ 4 As of December 31, 2017: Financial Assets: Deferred compensation trust assets Long-term marketable securities $ 12 $ 12 $ — $ — Investments in marketable securities Long-term marketable securities 9 9 — Fuel swap contracts Prepaid expenses and other assets and Other assets 3 — — 3 Interest rate swap contracts Other assets 25 — 25 — Total financial assets $ 49 $ 21 $ 25 $ 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 Loss included in Earnings Balance as of December 31, 2016 $ 5 Total (losses) gains (realized and unrealized) Included in earnings 3 Cost of services rendered and products sold Included in other comprehensive income (2) Settlements (3) Balance as of December 31, 2017 3 Total gains (losses) (realized and unrealized) Included in earnings 3 Cost of services rendered and products sold Included in other comprehensive income (7) Settlements (3) Balance as of December 31, 2018 $ (4) |
Schedule Of Level 3 Financial Instruments | Fair Value Valuation Weighted (in millions) Technique Unobservable Input Range Average As of December 31, 2018: Fuel swap contracts $ (4) Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.09 - $2.43 $ 2.26 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 an increase in the fair value liability of the fuel swap contracts. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 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 | Year Ended December 31, (In millions, except per share data) 2018 2017 2016 (Loss) income from continuing operations $ (163) $ 341 $ 2 Weighted-average common shares outstanding 135.5 134.4 135.3 Effect of dilutive securities: RSUs — 0.1 0.2 Stock options (1) — 0.9 1.8 Weighted-average common shares outstanding - assuming dilution 135.5 135.4 137.3 Basic (loss) earnings per share from continuing operations $ (1.20) $ 2.54 $ 0.01 Diluted (loss) earnings per share from continuing operations $ (1.20) $ 2.52 $ 0.01 ___________________________________ (1) Options to purchase 0. 9 million and 0. 3 million shares for the ye ars ended December 31, 2017 and 2016 , respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. Securities are not included in the table in periods when antidilutive. For the year ended December 31, 2018, weighted average potentially dilutive shares from RSUs of 0.2 million and weighted average potentially dilutive shares from stock options of 0.4 million with a weighted average exercise price of $29.34 were excluded from the dilutive (loss) earnings per share calculation due to the antidilutive effect such shares would have had on net loss per common share. |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) | Oct. 01, 2018 | Dec. 31, 2018segment | Sep. 30, 2018segment | Dec. 31, 2018segmentitemshares |
Number of reportable segments | segment | 2 | 3 | 2 | |
Frontdoor, inc. [Member] | ||||
Pro rata dividend to the Company's stockholders, percent of outstanding shares of common stock | 80.20% | |||
Number of shares of Parent common stock exchanged for shares of Spinoff Company | item | 2 | |||
Distributed shares of common stock | 67,781,527 | |||
Shares of common stock retained by Company | 16,734,092 | |||
Percent of common stock retained by Company | 19.80% |
Significant Accounting Polici_4
Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2019 | Jan. 01, 2018 | |
Significant Accounting Policies [Line Items] | |||||
Advertising expense | $ 85 | $ 71 | $ 66 | ||
Depreciation of property and equipment, including depreciation of assets held under capital leases | 73 | 68 | 53 | ||
Impairment charge | 2 | 1 | |||
Goodwill | 1,956 | 1,780 | 1,776 | ||
Indefinite-lived trade names | 1,482 | 1,468 | |||
Other intangible assets | 106 | 59 | |||
Equity Restrictions | 23 | ||||
Accounting Standards Update 2018-02 [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Adjustment to equity | $ 4 | ||||
Accounting Standards Update 2016-01 [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Reclassification from OCI to Retained Earnings related to unrealized gains and losses on available-for-sale equity securities | 2 | ||||
Subsequent Event [Member] | ASU 2018-10 and ASU 2018-11 [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Operating Lease, Liability | $ 230 | ||||
Operating Lease, Right-of-Use Asset | $ 195 | ||||
Trade Names [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Goodwill and trade name impairment | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici_5
Significant Accounting Policies (Schedule Of Property And Equipment) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 521 | $ 480 |
Less accumulated depreciation | (320) | (277) |
Net Property and Equipment | 201 | 202 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | 5 | 4 |
Buildings And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 47 | 50 |
Buildings And Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 10 years | |
Buildings And Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 40 years | |
Technology And Communications [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 208 | 190 |
Technology And Communications [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Technology And Communications [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years | |
Machinery, Production Equipment And Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 242 | 222 |
Machinery, Production Equipment And Vehicles [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 3 years | |
Machinery, Production Equipment And Vehicles [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 9 years | |
Office Equipment, Furniture And Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Gross Property and equipment | $ 19 | $ 13 |
Office Equipment, Furniture And Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Office Equipment, Furniture And Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives | 7 years |
Significant Accounting Polici_6
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 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity | $ 2,204 | $ 1,167 | $ 686 | $ 545 | |
Accumulated Other Comprehensive Income (Loss) [Member] | |||||
Stockholders' equity | 5 | $ 7 | 5 | (3) | (21) |
Accumulated Other Comprehensive Income (Loss) [Member] | Under Prior Revenue Recognition Guidance [Member] | |||||
Stockholders' equity | 5 | ||||
Accumulated Other Comprehensive Income (Loss) [Member] | Accounting Standards Update 2016-01 [Member] | |||||
Stockholders' equity | (2) | ||||
Accumulated Other Comprehensive Income (Loss) [Member] | Accounting Standards Update 2018-02 [Member] | |||||
Stockholders' equity | 4 | ||||
Retained Earnings (Accumulated Deficit) [Member] | |||||
Stockholders' equity | $ 156 | (881) | (895) | $ (1,405) | $ (1,560) |
Retained Earnings (Accumulated Deficit) [Member] | Under Prior Revenue Recognition Guidance [Member] | |||||
Stockholders' equity | $ (895) | ||||
Retained Earnings (Accumulated Deficit) [Member] | Impact of adopting ASC 606 [Member] | |||||
Stockholders' equity | 16 | ||||
Retained Earnings (Accumulated Deficit) [Member] | Accounting Standards Update 2016-01 [Member] | |||||
Stockholders' equity | 2 | ||||
Retained Earnings (Accumulated Deficit) [Member] | Accounting Standards Update 2018-02 [Member] | |||||
Stockholders' equity | $ (4) |
Revenues (Narrative) (Details)
Revenues (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Notes receivable, net of allowances | $ 42 | $ 42 | |
Revenue recognized | 67 | ||
Impact of adopting ASC 606 [Member] | |||
Adjustment to equity | $ 16 | ||
Impact to revenues | 14 | ||
Accounting Standards Update 2018-02 [Member] | |||
Adjustment to equity | 4 | ||
Terminix [Member] | |||
Capitalized Contract Cost, Net | 75 | ||
Capitalized Contract Cost, Amortization | 69 | ||
Capitalized Contract Cost, Impairment Loss | 0 | ||
Terminix [Member] | Impact of adopting ASC 606 [Member] | |||
Capitalized Contract Cost, Net | 61 | ||
ServiceMaster Brands [Member] | |||
Capitalized Contract Cost, Net | 1 | $ 1 | |
Capitalized Contract Cost, Amortization | 1 | ||
Capitalized Contract Cost, Impairment Loss | $ 0 |
Revenues (Disaggregation of Rev
Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reportable segment revenues | $ 1,900 | $ 1,755 | $ 1,726 |
Corporate Non-Segment [Member] | |||
Reportable segment revenues | 1 | 2 | 2 |
Residential Pest Control [Member] | |||
Reportable segment revenues | 655 | 613 | 621 |
Commercial Pest Control [Member] | |||
Reportable segment revenues | 317 | 255 | 255 |
Termite and Home Services [Member] | |||
Reportable segment revenues | 599 | 593 | 571 |
Royalty Fees [Member] | |||
Reportable segment revenues | 132 | 127 | 197 |
Commercial Clearing National Accounts [Member] | |||
Reportable segment revenues | 65 | 53 | 43 |
Sales of Products and Other [Member] | |||
Reportable segment revenues | 132 | 113 | 37 |
Terminix [Member] | |||
Reportable segment revenues | 1,655 | 1,541 | 1,524 |
Terminix [Member] | Residential Pest Control [Member] | |||
Reportable segment revenues | 655 | 613 | 621 |
Terminix [Member] | Commercial Pest Control [Member] | |||
Reportable segment revenues | 317 | 255 | 255 |
Terminix [Member] | Termite and Home Services [Member] | |||
Reportable segment revenues | 599 | 593 | 571 |
Terminix [Member] | Royalty Fees [Member] | |||
Reportable segment revenues | 77 | ||
Terminix [Member] | Sales of Products and Other [Member] | |||
Reportable segment revenues | 84 | 81 | |
ServiceMaster Brands [Member] | |||
Reportable segment revenues | 244 | 212 | 200 |
ServiceMaster Brands [Member] | Royalty Fees [Member] | |||
Reportable segment revenues | 132 | 127 | 120 |
ServiceMaster Brands [Member] | Commercial Clearing National Accounts [Member] | |||
Reportable segment revenues | 65 | 53 | 43 |
ServiceMaster Brands [Member] | Sales of Products and Other [Member] | |||
Reportable segment revenues | $ 48 | $ 32 | $ 37 |
Revenues (Deferred Revenue By S
Revenues (Deferred Revenue By Segment) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred revenue | $ 101 | $ 101 | |
ServiceMaster Brands [Member] | Royalty Arrangement [Member] | |||
Deferred revenue | 7 | ||
Operating Segment [Member] | |||
Deferred revenue | 101 | 90 | |
Operating Segment [Member] | Terminix [Member] | |||
Deferred revenue | 91 | $ 90 | |
Operating Segment [Member] | ServiceMaster Brands [Member] | |||
Deferred revenue | [1] | $ 11 | |
[1] | Includes approximately $7 million of Deferred revenue included within Other long-term obligations, primarily self-insured claims on the consolidated statement of financial position as of December 31, 2018. |
Revenues (Movement In Deferred
Revenues (Movement In Deferred Revenue) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Revenues[Abstract] | |
Balance at beginning of period | $ 101 |
Deferral of revenue | 149 |
Recognition of deferred revenue | (149) |
Balance at end of period | $ 101 |
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 | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Receivables | $ 186 | $ 162 | ||
Prepaid expenses and other assets | 61 | 88 | ||
Deferred customer acquisition costs | 18 | |||
Deferred customer acquisition costs | 77 | |||
Total Assets | 5,023 | 5,646 | ||
Deferred revenue | 95 | 90 | ||
Deferred taxes | 484 | 451 | ||
Other long-term obligations, primarily self-insured claims | 182 | 168 | ||
Total Liabilities | 666 | 663 | ||
Retained earnings (accumulated deficit) | 156 | (895) | ||
Accumulated other comprehensive income | 5 | 5 | $ (3) | $ 7 |
Reportable segment revenues | 1,900 | 1,755 | 1,726 | |
Cost of services rendered and products sold | 1,041 | 962 | 924 | |
Selling and administrative expenses | 555 | 500 | 462 | |
Provision (benefit) for income taxes | 37 | (242) | (5) | |
Net Income | (41) | 510 | $ 155 | |
Liabilities and Equity | 5,023 | $ 5,646 | ||
Under Prior Revenue Recognition Guidance [Member] | ||||
Reportable segment revenues | 1,886 | |||
Cost of services rendered and products sold | 1,041 | |||
Selling and administrative expenses | 548 | |||
Provision (benefit) for income taxes | 35 | |||
Net Income | (46) | |||
Impact of adopting ASC 606 [Member] | ||||
Receivables | 186 | |||
Prepaid expenses and other assets | 61 | |||
Deferred customer acquisition costs | 77 | |||
Total Assets | 5,023 | |||
Deferred revenue | 95 | |||
Deferred taxes | 484 | |||
Other long-term obligations, primarily self-insured claims | 182 | |||
Total Liabilities | 2,818 | |||
Retained earnings (accumulated deficit) | 156 | |||
Accumulated other comprehensive income | 5 | |||
Reportable segment revenues | 1,900 | |||
Cost of services rendered and products sold | 1,041 | |||
Selling and administrative expenses | 555 | |||
Provision (benefit) for income taxes | 37 | |||
Net Income | (41) | |||
Liabilities and Equity | 5,023 | |||
Impact of adopting ASC 606 [Member] | Under Prior Revenue Recognition Guidance [Member] | ||||
Receivables | 186 | |||
Prepaid expenses and other assets | 74 | |||
Deferred customer acquisition costs | 22 | |||
Total Assets | 4,982 | |||
Deferred revenue | 91 | |||
Deferred taxes | 473 | |||
Other long-term obligations, primarily self-insured claims | 176 | |||
Total Liabilities | 2,798 | |||
Retained earnings (accumulated deficit) | 141 | |||
Accumulated other comprehensive income | 5 | |||
Net Income | (46) | |||
Liabilities and Equity | $ 4,982 |
Business Segment Reporting (Nar
Business Segment Reporting (Narrative) (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2018segmentcustomer | Sep. 30, 2018segment | Dec. 31, 2018USD ($)segmentcustomer | Dec. 31, 2017USD ($)customer | Dec. 31, 2016USD ($)customer | |
Business segment reporting [Line Items] | |||||
Number of reportable segments | segment | 2 | 3 | 2 | ||
Maximum percentage of revenue from customers and franchisees generated in foreign market | 2.00% | ||||
Number of customers exceeding 10 percent of global sales | customer | 0 | 0 | 0 | 0 | |
Corporate [Member] | American Home Shield [Member] | |||||
Business segment reporting [Line Items] | |||||
Other expense | $ | $ 33 | $ 44 | $ 42 |
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 | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Revenue | $ 1,900 | $ 1,755 | $ 1,726 |
Reportable Segment Adjusted EBITDA | 422 | 417 | 450 |
Identifiable Assets | 5,023 | 5,646 | |
Depreciation & Amortization Expense | 91 | 86 | 80 |
Capital Expenditures | 49 | 68 | 46 |
Continuing Operations [Member] | |||
Segment Reporting Information [Line Items] | |||
Identifiable Assets | 5,023 | 4,228 | 4,109 |
Operating Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 1,899 | 1,754 | 1,724 |
Reportable Segment Adjusted EBITDA | 422 | 417 | 450 |
Identifiable Assets | 3,653 | 3,310 | 3,300 |
Depreciation & Amortization Expense | 67 | 65 | 65 |
Capital Expenditures | 14 | 15 | 13 |
Terminix [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 1,655 | 1,541 | 1,524 |
Terminix [Member] | Operating Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 1,655 | 1,541 | 1,524 |
Reportable Segment Adjusted EBITDA | 333 | 330 | 372 |
Identifiable Assets | 3,162 | 2,821 | 2,820 |
Depreciation & Amortization Expense | 59 | 58 | 58 |
Capital Expenditures | 12 | 12 | 11 |
ServiceMaster Brands [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 244 | 212 | 200 |
ServiceMaster Brands [Member] | Operating Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 244 | 212 | 200 |
Reportable Segment Adjusted EBITDA | 89 | 87 | 79 |
Identifiable Assets | 491 | 489 | 480 |
Depreciation & Amortization Expense | 8 | 7 | 7 |
Capital Expenditures | 2 | 2 | 2 |
Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | 1 | 2 | 2 |
Identifiable Assets | 1,370 | 917 | 808 |
Depreciation & Amortization Expense | 24 | 21 | 15 |
Capital Expenditures | $ 34 | $ 53 | $ 33 |
Business Segment Reporting (S_2
Business Segment Reporting (Schedule Of Reconciliation Of Net Income (Loss) To Reportable Segment Adjusted EBITDA) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||
Net Income | $ (41) | $ 510 | $ 155 |
Depreciation and amortization expense | 91 | 86 | 80 |
Acquisition-related costs | 5 | 1 | |
401(k) Plan corrective contribution | (3) | 2 | |
Fumigation related matters | 3 | 4 | 93 |
Insurance reserve adjustment | 23 | ||
Non-cash stock-based compensation expense | 14 | 10 | 12 |
Restructuring charges | 17 | 21 | 15 |
Gain on sale of Merry Maids branches | (2) | ||
Non-cash impairment of software and other related costs | 2 | 1 | |
Mark-to-market loss on investment in frontdoor, inc. | 249 | ||
Gain from discontinued operations, net of income taxes | (122) | (169) | (153) |
Provision (benefit) for income taxes | 37 | (242) | (5) |
Loss on extinguishment of debt | 10 | 6 | 32 |
Interest expense | 133 | 150 | 153 |
Reportable Segment Adjusted EBITDA | 422 | 417 | 450 |
Operating Segment [Member] | |||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||
Depreciation and amortization expense | 67 | 65 | 65 |
Reportable Segment Adjusted EBITDA | 422 | 417 | 450 |
Terminix [Member] | Operating Segment [Member] | |||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||
Depreciation and amortization expense | 59 | 58 | 58 |
Reportable Segment Adjusted EBITDA | 333 | 330 | 372 |
American Home Shield [Member] | |||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||
Costs historically allocated to American Home Shield | 33 | 44 | 42 |
Corporate [Member] | |||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||
Net Income | (9) | (1) | 3 |
Depreciation and amortization expense | $ 24 | $ 21 | $ 15 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Accumulated impairment losses recorded in continuing operations | $ 0 | $ 0 | $ 0 |
Amortization expense | 18 | 18 | 27 |
Amortization expense, 2019 | 20 | ||
Amortization expense, 2020 | 18 | ||
Amortization expense, 2021 | 17 | ||
Amortization expense, 2022 | 15 | ||
Amortization expense, 2023 | 12 | ||
Trade Names [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill and trade name impairment | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Goodwill balances by segment for continuing operations | |||
Balance at the beginning of the period | $ 1,780 | $ 1,776 | |
Acquisitions | 179 | 2 | |
Other | [1] | (2) | 2 |
Balance at the end of the period | 1,956 | 1,780 | |
Terminix [Member] | |||
Goodwill balances by segment for continuing operations | |||
Balance at the beginning of the period | 1,605 | 1,601 | |
Acquisitions | 179 | 2 | |
Other | [1] | (2) | 1 |
Balance at the end of the period | 1,781 | 1,605 | |
Franchise Services Group [Member] | |||
Goodwill balances by segment for continuing operations | |||
Balance at the beginning of the period | 176 | 175 | |
Balance at the end of the period | $ 175 | $ 176 | |
[1] | Reflects the impact of foreign exchange rates. |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Schedule Of Other Intangible Asset Balances For Continuing Operations) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | $ 2,101 | $ 2,022 | |
Accumulated Amortization | (513) | (496) | |
Net | 1,588 | 1,526 | |
Customer Relationships [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | 469 | 417 | |
Accumulated Amortization | (406) | (395) | |
Net | 64 | 22 | |
Franchise Agreements [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | 88 | 88 | |
Accumulated Amortization | (73) | (70) | |
Net | 15 | 18 | |
Other [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | 62 | 49 | |
Accumulated Amortization | (35) | (30) | |
Net | 27 | 19 | |
Trade Names [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Gross | [1] | 1,482 | 1,468 |
Net | [1] | $ 1,482 | $ 1,468 |
[1] | Not subject to amortization. |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Income Taxes [Abstract] | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | 35.00% | |
Income tax remeasurement from tax rate change | $ 3 | $ (271) | ||
One-time transition tax liability for the deemed distribution of earnings from our foreign subsidiaries | 1 | |||
Unrecognized tax benefits | 15 | 14 | $ 13 | $ 16 |
Unrecognized tax benefits that would impact effective tax rate if recognized | 14 | 13 | ||
GILTI, tax expense | 1 | |||
Unrecognized tax benefits, reasonably possible decrease within the next 12 months | $ 3 | |||
Number of state tax authorities that are in the process of auditing state income tax returns of various subsidiaries | item | 4 | |||
Accrued interest and penalties | $ 2 | $ 2 | ||
Effective tax rate on loss from discontinued operations (as a percent) | 26.00% | 37.90% | 37.00% | |
Valuation allowance for deferred tax assets | $ 11 | $ 11 | ||
Deferred tax assets, net of valuation allowance, for federal and state net operating loss and capital loss carryforwards | 6 | |||
Deferred tax assets, net of valuation allowance, for federal and state credit carryforwards | 1 | |||
Cumulative undistributed earnings of the Company’s foreign subsidiaries | 70 | |||
Transition tax, income tax provision | 1 | |||
Cash associated with indefinitely reinvested foreign earnings | $ 30 | $ 29 |
Income Taxes (Reconciliation Of
Income Taxes (Reconciliation Of Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | |||
Gross unrecognized tax benefits at beginning of period | $ 14 | $ 13 | $ 16 |
Decreases in tax positions for prior years | (5) | ||
Increases in tax positions for current year | 3 | 3 | 3 |
Lapse in statute of limitations | (1) | (1) | (1) |
Gross unrecognized tax benefits at end of period | $ 15 | $ 14 | $ 13 |
Income Taxes (Components Of Inc
Income Taxes (Components Of Income (Loss) From Continuing Operations Before Income Taxes) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Components of (loss) income from continuing operations before income taxes | |||
(Loss) Income from Continuing Operations before Income Taxes | $ (126) | $ 99 | $ (2) |
Continuing Operations [Member] | |||
Components of (loss) income from continuing operations before income taxes | |||
U.S. | (130) | 94 | (5) |
Foreign | 4 | 5 | 3 |
(Loss) Income from Continuing Operations before Income Taxes | $ (126) | $ 99 | $ (2) |
Income Taxes (Reconciliation _2
Income Taxes (Reconciliation Of Effective Income Tax Rate) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of income tax computed at the U.S. federal statutory tax rate to the entity's effective income tax rate for continuing operations | |||
Tax at U.S. federal statutory rate (as a percent) | 21.00% | 35.00% | 35.00% |
State and local income taxes, net of U.S. federal benefit (as a percent) | (7.10%) | 5.70% | (297.80%) |
Tax credits (as a percent) | 1.50% | (1.30%) | 91.50% |
Investment in frontdoor, inc. mark-to-market adjustment (as a percent) | (41.50%) | ||
Other permanent items (as a percent) | (2.10%) | 1.80% | (156.10%) |
U.S. Tax Reform rate change (as a percent) | (2.70%) | (273.60%) | |
Remeasurment of prior year tax positions (as a percent) | (0.90%) | 205.10% | |
Excess tax benefits from stock-based compensation (as a percent) | 1.10% | (14.50%) | 274.00% |
Other, including foreign rate differences and reserves (as a percent) | 1.70% | 1.40% | 51.90% |
Effective rate (as a percent) | (29.10%) | (245.60%) | 203.50% |
Income tax remeasurement from tax rate change | $ 3 | $ (271) | |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount | $ 11 |
Income Taxes (Income Tax Expens
Income Taxes (Income Tax Expense From Continuing Operations) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred: | |||
Total deferred | $ 8 | $ (233) | $ 20 |
(Benefit) provision for income taxes | 37 | (242) | (5) |
Continuing Operations [Member] | |||
Current: | |||
U.S. federal | 23 | (14) | (28) |
Foreign | 1 | 3 | 2 |
State and local | 6 | 5 | 4 |
Total current | 29 | (6) | (22) |
Deferred: | |||
U.S. federal | 1 | (242) | 14 |
Foreign | 1 | 2 | (2) |
State and local | 6 | 4 | 5 |
Total deferred | 8 | (235) | 17 |
(Benefit) provision for income taxes | $ 37 | $ (242) | $ (5) |
Income Taxes (Deferred Tax Bala
Income Taxes (Deferred Tax Balances) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term deferred tax assets (liabilities): | ||
Intangible assets | $ (471) | $ (446) |
Property and equipment | (25) | (22) |
Prepaid expenses and deferred customer acquisition costs | (20) | (8) |
Receivables allowances | 5 | 9 |
Self-insured claims and related expenses | 7 | 7 |
Accrued liabilities | 22 | 13 |
Other long-term obligations | (6) | (12) |
Net operating loss and tax credit carryforwards | 15 | 19 |
Less valuation allowance | (11) | (11) |
Net Long-term deferred tax liability | (484) | (451) |
Deferred tax liability related primarily to the difference in the tax versus book basis of intangible assets | $ 505 | $ 507 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Acquisitions [Line Items] | |||
Net purchase price | $ 254 | $ 16 | $ 43 |
Net cash paid | 191 | 13 | 34 |
Goodwill | 1,956 | 1,780 | 1,776 |
Acquisition related costs | $ 5 | $ 0 | 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 | 99 | ||
Other intangibles related to acquisitions | $ 55 | ||
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 | item | 17 | 4 | |
Net purchase price | $ 86 | $ 16 | 43 |
Goodwill | 80 | 2 | 34 |
Other intangibles related to acquisitions | 25 | $ 13 | $ 6 |
Average useful life for each class of definite lived intangible asset recorded for acquisitions | 3 years | 5 years | |
Pest control, termite and franchise acquisitions [Member] | Deferred Purchase Price [Member] | |||
Acquisitions [Line Items] | |||
Contingent consideration | $ 20 | ||
Minimum [Member] | Copesan Services, Inc. (“Copesan”) [Member] | |||
Acquisitions [Line Items] | |||
Average useful life for each class of definite lived intangible asset recorded for acquisitions | 3 years | ||
Minimum [Member] | Pest control, termite and franchise acquisitions [Member] | |||
Acquisitions [Line Items] | |||
Average useful life for each class of definite lived intangible asset recorded for acquisitions | 3 years | ||
Contingent consideration, term | 1 year | ||
Maximum [Member] | Copesan Services, Inc. (“Copesan”) [Member] | |||
Acquisitions [Line Items] | |||
Average useful life for each class of definite lived intangible asset recorded for acquisitions | 5 years | ||
Maximum [Member] | Pest control, termite and franchise acquisitions [Member] | |||
Acquisitions [Line Items] | |||
Average useful life for each class of definite lived intangible asset recorded for acquisitions | 5 years | ||
Contingent consideration, term | 5 years |
Acquisitions (Schedule Of Suppl
Acquisitions (Schedule Of Supplemental Cash Flow Information Regarding Acquisitions) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Supplemental cash flow information regarding acquisitions | ||||
Assets acquired | $ 284 | $ 16 | $ 44 | |
Liabilities assumed | (30) | |||
Net assets acquired | [1] | 254 | 16 | 43 |
Net cash paid | 191 | 13 | 34 | |
Seller financed debt | 64 | 3 | 9 | |
Purchase price | 254 | $ 16 | $ 43 | |
Deferred tax liabilities | $ 15 | |||
[1] | Includes approximately $15 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets. |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) - USD ($) $ in Millions | Oct. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Details of assets and liabilities and operating results of discontinued operations | ||||
Sublease Income | $ 1 | |||
Frontdoor, inc. [Member] | ||||
Details of assets and liabilities and operating results of discontinued operations | ||||
Pro rata dividend to the Company's stockholders, percent of outstanding shares of common stock | 80.20% | |||
Shares of common stock retained by Company | 16,734,092 | |||
Common stock with a fair value | $ 445 | |||
Selling and administrative expenses | 1 | |||
Amount owned to Frontdoor under agreement | 1 | |||
Accounts Payable Paid On Behalf Of Spin-Off Entity | 2 | |||
Amount Repaid From Payment Of Accounts Payable | 1 | |||
Rental income | 1 | |||
Sublease Income | 1 | |||
American Home Shield [Member] | ||||
Details of assets and liabilities and operating results of discontinued operations | ||||
Goodwill and indefinite lived intangible asset impairment | $ 0 | $ 0 | $ 0 |
Discontinued Operations (Schedu
Discontinued Operations (Schedule Of Operating Results Of Discontinued Operations) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Operating results of discontinued operations | ||||
Revenue | $ 979 | $ 1,157 | $ 1,020 | |
Cost of services rendered and products sold | 534 | 591 | 524 | |
Operating expenses | [1] | 282 | 296 | 257 |
Interest and net investment income | (1) | (2) | (5) | |
Income before income taxes | 164 | 272 | 243 | |
Provision for income taxes | 43 | 103 | 90 | |
Gain from discontinued operations, net of income taxes | 122 | 169 | $ 153 | |
American Home Shield Spin-off [Member] | ||||
Operating results of discontinued operations | ||||
Spin-off transaction costs incurred | $ 35 | $ 13 | ||
[1] | Includes spin-off transaction costs incurred of $35 million and $13 million for the years ended December 31, 2018 and 2017, respectively. |
Discontinued Operations (Sche_2
Discontinued Operations (Schedule Of Assets And Liabilities Of Discontinued Operations) (Details) $ in Millions | Dec. 31, 2017USD ($) |
Carrying Amounts of Assets Included as Part of Discontinued Operations: | |
Cash and cash equivalents | $ 282 |
Receivables, net | 408 |
Inventories and other current assets | 50 |
Current assets of discontinued operations | 740 |
Property and equipment, net | 35 |
Goodwill | 476 |
Intangible assets, net | 165 |
Other long-term assets | 2 |
Total Assets of Discontinued Operations | 1,418 |
Liabilities of Discontinued Operations: | |
Accounts payable | 34 |
Payroll and related expenses | 7 |
Self-insured claims and related expenses | 57 |
Accrued interest payable | 1 |
Other | 13 |
Deferred revenue | 573 |
Current portion of long-term debt | 9 |
Total Current Liabilities | 693 |
Deferred taxes | 42 |
Other long-term obligations | 2 |
Total Liabilities of Discontinued Operations | $ 737 |
Restructuring Charges (Narrativ
Restructuring Charges (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Charges [Abstract] | |||
Restructuring charges | $ 17 | $ 21 | $ 15 |
Restructuring charges, net of tax | $ 13 | $ 15 | $ 9 |
Restructuring Charges (Schedule
Restructuring Charges (Schedule Of Restructuring Charges) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 17 | $ 21 | $ 15 | |
Stock-based compensation expense | 14 | 10 | 12 | |
Terminix [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | [1] | 2 | 2 | 7 |
Severance costs | 1 | |||
Lease termination costs | 2 | 2 | 4 | |
Unpaid and accrued costs | 1 | |||
ServiceMaster Brands [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | [2] | 1 | 1 | |
Corporate [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | [3] | 7 | 2 | 5 |
Professional fees | 2 | |||
Accelerated depreciation | 2 | |||
Other costs | 4 | |||
Severance and other restructuring costs | 3 | 2 | 2 | |
Unpaid and accrued costs | 1 | |||
Global Service Center Relocation [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | [4] | 8 | 5 | 3 |
Impairment charges | 1 | |||
Operating Leases, Rent Expense | 7 | |||
Professional fees | 1 | |||
Accelerated depreciation | 2 | |||
Professional fees, employee retention costs and other costs | 1 | |||
Redundant rent expense | 2 | |||
Loss on sale of asset related to the relocation of the Company's Global Service Center | 1 | |||
Unpaid and accrued costs | 4 | |||
Leadership Transition [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | [5] | 11 | ||
Severance costs | 5 | |||
Stock-based compensation expense | $ 5 | |||
Unpaid and accrued costs | $ 2 | |||
Leadership Transition [Member] | Terminix [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Stock-based compensation expense | $ 3 | |||
[1] | For the years ended December 31, 2018, 2017 and 2016, these charges include $2 million, $2 million and $4 million, respectively, of lease termination and severance costs driven by Terminix's branch optimization program. Of this amount $1 million was unpaid and accrued as of December 31, 2018. For the year ended December 31, 2016, these charges include $1 million of severance costs and $3 million of stock-based compensation expense due to the modification of non-vested stock options and RSUs as part of the severance agreement with the former president of Terminix. | |||
[2] | Represents severance and other costs related to the reorganization of ServiceMaster Brands. | |||
[3] | We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services for our operations. In 2017, we began taking actions to enhance capabilities and align our corporate functions with those required to support our strategic needs as two stand-alone companies in anticipation of the American Home Shield spin-off. For the years ended December 31, 2018, 2017 and 2016, these charges include severance and other costs of $3 million, $2 million and $2 million, respectively. For the year ended December 31, 2018, these charges also included $4 million of costs incurred due to the Separation that were not included in discontinued operations. For the year ended December 31, 2016, these charges include professional fees of $2 million and accelerated depreciation of $2 million related to the early termination of a long-term human resources outsourcing agreement. Of this amount, $1 million was unpaid and accrued as of December 31, 2018. | |||
[4] | For the year ended December 31, 2018, these charges include future rent of $7 million and $1 million of professional and other fees. For the year ended December 31, 2017, these charges include accelerated depreciation of $2 million, redundant rent expense of $2 million and a $1 million loss recorded on the sale of an asset related to the relocation of the Company's corporate headquarters, which we refer to as our Global Service Center. For the year ended December 31, 2016, represents impairment charges of $1 million and professional fees and other costs of $1 million related to the relocation of the Company's Global Service Center. Of this amount, $4 million was unpaid and accrued as of December 31, 2018. | |||
[5] | For the year ended December 31, 2017, these charges include $5 million of severance costs and $5 million of stock-based compensation expense as part of the severance agreements with the former CEO and CFO. Of this amount, $2 million was unpaid and accrued as of December 31, 2018. |
Restructuring Charges (Schedu_2
Restructuring Charges (Schedule Of Reconciliation Of The Beginning And Ending Balances Of Accrued Restructuring Charges) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the beginning and ending balances of accrued restructuring charges | |||
Balance at the beginning of the period | $ 6 | $ 3 | |
Costs incurred | 17 | 21 | $ 15 |
Costs paid or otherwise settled | (17) | (17) | |
Balance at the end of the period | $ 7 | $ 6 | $ 3 |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Loss Contingencies [Line Items] | ||||
Rent expense | $ 33 | $ 29 | $ 28 | |
Future long-term non-cancelable operating lease payments in 2019 | 26 | |||
Future long-term non-cancelable operating lease payments in 2020 | 23 | |||
Future long-term non-cancelable operating lease payments in 2021 | 20 | |||
Future long-term non-cancelable operating lease payments in 2022 | 18 | |||
Future long-term non-cancelable operating lease payments in 2023 | 14 | |||
Future long-term non-cancelable operating lease payments in 2024 and thereafter | 92 | |||
Sublease Income | $ 1 | |||
Number of misdemeanor violations | item | 4 | |||
Gain (Loss) Related to Litigation Settlement | $ (3) | $ (4) | (93) | |
Florida Fumigation Matter [Member] | ||||
Loss Contingencies [Line Items] | ||||
Litigation Settlement, Amount | 3 | |||
Net charge related to unasserted civil claims | 3 | |||
Terminix International USVI, LLC (“TMX USVI”) [Member] | Plea Agreement [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | 5 | |||
The Terminix International Company Limited Partnership (“TMX LP”) [Member] | Plea Agreement [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | 5 | |||
TMX USVI and TMX LP [Member] | Plea Agreement [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | $ 10 | |||
Training certification courses with respect to pesticide application and safety in the U.S. Virgin Islands | 5 years | |||
Gain (Loss) Related to Litigation Settlement | $ 1 | $ 10 |
Commitments and Contingencies_3
Commitments and Contingencies (Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims) (Details) - Accrued Self-Insured Claims, Net [Member] - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies [Line Items] | ||
Balance at the beginning of the period | $ 115 | $ 120 |
Provision for self-insured claims | 29 | 36 |
Cash payments | (33) | (42) |
Balance at the end of the period | $ 111 | $ 115 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Benefit Plans [Abstract] | |||
Discretionary contributions to qualified profit sharing and non qualified deferred compensation plan | $ 13 | $ 13 | $ 12 |
Long-Term Debt (Schedule Of Lon
Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions | Mar. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Long-term debt [Line Items] | ||||
Less current portion | $ (49) | $ (136) | ||
Total long-term debt | 1,727 | 2,642 | ||
Vehicle Capital Leases [Member] | ||||
Long-term debt [Line Items] | ||||
Vehicle capital leases | [1] | $ 90 | 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] | $ 637 | 1,615 | |
Unamortized debt issuance costs | 5 | 16 | ||
Unamortized original issue discount | 1 | 3 | ||
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% | 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% | |||
Repayment of long-term debt | $ 79 | |||
7.45% Notes Maturing In 2027 [Member] | ||||
Long-term debt [Line Items] | ||||
Long-term debt | [5] | $ 172 | 169 | |
Interest rate (as a percent) | 7.45% | |||
Unamortized fair value adjustments related to purchase accounting | $ 33 | 36 | ||
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% | |||
Other [Member] | ||||
Long-term debt [Line Items] | ||||
Long-term debt | [6] | $ 94 | $ 45 | |
Repayment of long-term debt | $ 82 | |||
[1] | We have entered into the Fleet Agreement which, among other things, allows us 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%. | |||
[2] | As of December 31, 2018 and 2017, presented net of $5 million and $16 million, respectively, in unamortized debt issuance costs and $1 million and $3 million, respectively, in unamortized original issue discount paid as described below under "--Term Loan Facility." | |||
[3] | As of December 31, 2018 and 2017, presented net of $10 million and $11 million, respectively, in unamortized debt issuance costs as described below under "--2024 Notes." | |||
[4] | On March 1, 2018, we paid $79 million upon their maturity. | |||
[5] | As of December 31, 2018 and 2017, collectively presented net of $33 million and $36 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 December 3, 2018, includes approximately $82 million of future payments in connection with our acquisitions of Copesan and other companies as further described in Note 7. |
Long-Term Debt (Term Loan Facil
Long-Term Debt (Term Loan Facility Narrative) (Details) - USD ($) | Nov. 08, 2016 | Nov. 07, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Long-term debt [Line Items] | ||||||
Repayment of principal amount | $ 7,000,000 | |||||
Debt issuance costs | $ 34,000,000 | |||||
Percentage of capital stock of direct foreign subsidiaries | 65.00% | |||||
Loss on extinguishment of debt | (10,000,000) | $ (6,000,000) | (32,000,000) | |||
Notional amount | $ 650,000,000 | $ 650,000,000 | 650,000,000 | |||
Interest rate swap agreement termination fee | $ 10,000,000 | $ 10,000,000 | ||||
Weighted Average Fixed Rate (as a percent) | [1] | 1.493% | 1.493% | 1.493% | ||
Interest rate swap agreements effective November 8, 2016 [Member] | ||||||
Long-term debt [Line Items] | ||||||
Derivative, floor interest rate | 0.00% | |||||
Borrowing margin (as a percent) | 2.50% | |||||
Term of agreement | 7 years | |||||
Derivative, inception date | Nov. 8, 2016 | |||||
Notional amount | $ 650,000,000 | |||||
Weighted Average Fixed Rate (as a percent) | 1.493% | |||||
Old Term Loan Facility [Member] | ||||||
Long-term debt [Line Items] | ||||||
Debt repaid in full | 2,356,000,000 | |||||
Loss on extinguishment of debt | 32,000,000 | |||||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | ||||||
Long-term debt [Line Items] | ||||||
Face amount of debt instrument | 1,650,000,000 | |||||
Write-off of original issue discount | 14,000,000 | |||||
Write-off of debt issuance costs | $ 18,000,000 | |||||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | LIBOR [Member] | ||||||
Long-term debt [Line Items] | ||||||
Interest rate (as a percent) | 0.00% | |||||
Borrowing margin (as a percent) | 2.50% | |||||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | Alternative Base Rate [Member] | ||||||
Long-term debt [Line Items] | ||||||
Interest rate (as a percent) | 1.00% | |||||
Borrowing margin (as a percent) | 1.50% | |||||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | Interest rate swap agreements effective November 8, 2016 [Member] | ||||||
Long-term debt [Line Items] | ||||||
Face amount of debt instrument | $ 650,000,000 | |||||
Effective interest rate | 1.493% | |||||
Term Loan Facility, the Revolving Credit Facility and the 2024 Notes [Member] | ||||||
Long-term debt [Line Items] | ||||||
Debt issuance costs | $ 34,000,000 | |||||
Payment of debt issuance costs and original issue discount costs | 38,000,000 | |||||
Original debt issue discount | $ 4,000,000 | |||||
[1] | Before the application of the applicable borrowing margin. |
Long-Term Debt ( Extinguishment
Long-Term Debt ( Extinguishment of Debt and Repurchase of Notes Narrative) (Details) - USD ($) | Oct. 01, 2018 | Aug. 01, 2018 | Nov. 08, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 16, 2018 |
Debt Instrument [Line Items] | |||||||
Repayment of principal amount | $ 7,000,000 | ||||||
Loss on extinguishment of debt | 10,000,000 | $ 6,000,000 | $ 32,000,000 | ||||
Amount borrowed | 1,000,000,000 | $ 2,400,000,000 | |||||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Write-off of debt issuance costs | $ 18,000,000 | ||||||
Face amount of debt instrument | $ 1,650,000,000 | ||||||
American Home Shield Spin-off [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Reduction of long term debt | $ 1,000,000 | ||||||
American Home Shield Spin-off [Member] | Short-term Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Amount borrowed | $ 1,000,000,000 | ||||||
American Home Shield Spin-off [Member] | Frontdoor Term Loan Facility [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | $ 650,000,000 | ||||||
American Home Shield Spin-off [Member] | Revolving Credit Facility Maturing In 2023 [Member] | Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowings | $ 250,000,000 | ||||||
Secured Debt [Member] | American Home Shield Spin-off [Member] | Senior Secured Term Loan Facility Maturing In 2023 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Repayment of principal amount | $ 982,000,000 | ||||||
Loss on extinguishment of debt | $ 10,000,000 | ||||||
Loans Payable [Member] | American Home Shield Spin-off [Member] | Frontdoor Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate (as a percent) | 6.75% | ||||||
Face amount of debt instrument | $ 350,000,000 |
Long-Term Debt (Schedule of Int
Long-Term Debt (Schedule of Interest Rate Swap Agreements) (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Aug. 01, 2018 | Dec. 31, 2016 | ||
Aggregate notional amount | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | ||
Weighted Average Fixed Rate (as a percent) | [1] | 1.493% | 1.493% | 1.493% | |
Entered into effect | |||||
Terminated | |||||
Repayment of principal amount | 7,000,000 | ||||
Interest expense | 1,000,000 | ||||
American Home Shield Spin-off [Member] | Senior Secured Term Loan Facility Maturing In 2023 [Member] | Secured Debt [Member] | |||||
De-designate portion of interest rate swap | $ 982,000,000 | ||||
Repayment of principal amount | $ 982,000,000 | ||||
[1] | Before the application of the applicable borrowing margin. |
Long-Term Debt (Revolving Credi
Long-Term Debt (Revolving Credit Facility Narrative) (Details) - Revolving Credit Facility Maturing In 2021 [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2018 | Nov. 08, 2016 | |
Long-term debt [Line Items] | |||
Maximum borrowings | $ 300,000,000 | ||
Available borrowing capacity | $ 267,000,000 | ||
LIBOR [Member] | |||
Long-term debt [Line Items] | |||
Borrowing margin (as a percent) | 2.50% | ||
Alternative Base Rate [Member] | |||
Long-term debt [Line Items] | |||
Borrowing margin (as a percent) | 1.50% | ||
Letter of Credit [Member] | |||
Long-term debt [Line Items] | |||
Maximum borrowings | $ 225,000,000 | ||
Borrowings outstanding | $ 33,000,000 |
Long-Term Debt (2024 & 2038 Not
Long-Term Debt (2024 & 2038 Notes Narrative) (Details) - USD ($) | Nov. 08, 2016 | Sep. 30, 2017 | May 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||||
Repayment of principal amount | $ 7,000,000 | |||||
Loss on extinguishment of debt | $ 10,000,000 | $ 6,000,000 | $ 32,000,000 | |||
5.125% Notes Maturing In 2024 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate (as a percent) | 5.125% | 5.125% | ||||
Face amount of debt instrument | $ 750,000,000 | |||||
7.25% Notes Maturing In 2038 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate (as a percent) | 7.25% | |||||
Repayment of principal amount | $ 13,000,000 | $ 17,000,000 | ||||
Loss on extinguishment of debt | $ 6,000,000 | |||||
Redemption percentage | 104.625% | 97.00% | ||||
Old Term Loan Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ (32,000,000) |
Long-Term Debt (Other Narrative
Long-Term Debt (Other Narrative) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Long-Term Debt [Abstract] | |
Future scheduled long term debt payments in 2019 | $ 61 |
Future scheduled long term debt payments in 2020 | 38 |
Future scheduled long term debt payments in 2021 | 67 |
Future scheduled long term debt payments in 2022 | 12 |
Future scheduled long term debt payments in 2023 | 649 |
Capital lease obligations | 90 |
Future capital lease payments in 2019 | 31 |
Future capital lease payments in 2020 | 27 |
Future capital lease payments in 2021 | 19 |
Future capital lease payments in 2022 | 10 |
Future capital lease payments in 2023 | $ 4 |
Cash and Marketable Securitie_2
Cash and Marketable Securities (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Cash and Marketable Securities [Abstract] | |
Maximum maturity term of cash, money market funds and certificates of deposits | 3 months |
Investment Income, Interest | $ 2 |
Minority interests in several strategic investments | 4 |
Increase in minority interests in several strategic investments | $ 1 |
Cash and Marketable Securitie_3
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 | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 19 | $ 18 |
Gross Realized and Unrealized Gains | 1 | 3 |
Fair Value | 21 | 21 |
Debt Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 4 | 4 |
Fair Value | 4 | 4 |
Equity Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 15 | 14 |
Gross Realized and Unrealized Gains | 1 | 3 |
Fair Value | $ 16 | $ 17 |
Comprehensive (Loss) Income (Na
Comprehensive (Loss) Income (Narrative) (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2018 |
Comprehensive (Loss) 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 (Loss) Income (Su
Comprehensive (Loss) Income (Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects) (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
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 | 1 | 5 | ||
Tax provision | 1 | 1 | ||
After-tax amount | 4 | |||
Amounts reclassified from accumulated other comprehensive income | (3) | 4 | ||
Net current period other comprehensive income | (3) | 8 | $ 18 | |
Balance at the end of period | 7 | 5 | 5 | (3) |
Unrealized 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 | 4 | |||
Tax provision | 1 | |||
After-tax amount | 3 | |||
Amounts reclassified from accumulated other comprehensive income | (3) | 4 | ||
Net current period other comprehensive income | 1 | 4 | ||
Balance at the end of period | 19 | 20 | 16 | 12 |
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 | |||
Tax provision | 1 | |||
After-tax amount | 1 | |||
Net current period other comprehensive income | 1 | |||
Balance at the end of period | 2 | 1 | ||
Foreign Currency Translation (Loss) Gain [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 | (3) | 3 | ||
After-tax amount | (3) | 3 | ||
Net current period other comprehensive income | (3) | 3 | ||
Balance at the end of period | $ (12) | $ (15) | $ (12) | $ (15) |
Comprehensive (Loss) Income (Sc
Comprehensive (Loss) Income (Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Cost of services rendered and products sold | $ (1,041) | $ (962) | $ (924) |
Interest expense | (133) | (150) | (153) |
Interest and net investment income | 5 | 2 | 1 |
(Loss) Income from Continuing Operations before Income Taxes | (126) | 99 | (2) |
Provision for income taxes | (37) | 242 | 5 |
Net (Loss) Income | (41) | 510 | 155 |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Net (Loss) Income | 3 | (4) | (5) |
Unrealized 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 | 4 | (6) | (11) |
Provision for income taxes | (1) | 2 | 4 |
Net (Loss) Income | 3 | (4) | (7) |
Unrealized 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 | 3 | 3 | (4) |
Unrealized 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 | $ 1 | $ (8) | (7) |
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 | 3 | ||
Provision for income taxes | (1) | ||
Net (Loss) Income | $ 2 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash paid for or (received from): | |||
Cash and cash equivalents | $ 224 | $ 192 | $ 123 |
Restricted cash | 89 | 89 | 95 |
Cash related to discontinued operations | 282 | 168 | |
Cash and Cash Equivalents Including Restricted Cash, at Carrying Value | 313 | 563 | 386 |
Capital lease and other non-cash financing transactions | 36 | 41 | 60 |
Cash received for franchise | $ 2 | $ 4 | 8 |
Merry Maids [Member] | |||
Cash paid for or (received from): | |||
Total purchase price for conversion of certain company-owned Merry Maids branches to franchises | 9 | ||
Cash received for franchise | 6 | ||
Financing provided for franchise | $ 2 |
Supplemental Cash Flow Inform_4
Supplemental Cash Flow Information (Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows) (Details) - USD ($) $ in Millions | Nov. 08, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash paid for or (received from): | |||||
Interest expense | [1] | $ 123 | $ 134 | $ 133 | |
Interest and dividend income | (2) | (1) | |||
Income taxes, net of refunds | $ 52 | $ 109 | 72 | ||
Interest rate swap agreement termination fee | $ 10 | $ 10 | |||
[1] | Year Ended December 31,(In millions)201820172016Cash paid for or (received from):Interest expense(1) $ 123$ 134$ 133Interest and dividend income (2) (1) -Income taxes, net of refunds 52 109 72For the year ended December 31, 2016, excludes $10 million paid in connection with the termination of interest rate swap agreements. |
Capital Stock (Details)
Capital Stock (Details) - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Capital Stock [Abstract] | ||
Common stock registered for offering and sale | 2,000,000,000 | 2,000,000,000 |
Shares of common stock issued | 147,209,928 | 146,662,232 |
Shares of common stock outstanding | 135,687,558 | 135,141,048 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)item$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Stock-Based Compensation [Line Items] | |||
Number of shares of common stock available for issuance | 16,396,667 | ||
Number of shares of common stock remaining for future grant | 6,661,265 | ||
Number of shares of entity's common stock based on the fair market value of which maximum per-share exercise price is determined | $ / shares | $ 1 | ||
Period for which vested options will remain exercisable following termination of employment without cause | 3 months | ||
Period for which vested options will remain exercisable following termination of employment without cause in case of death, disability or retirement at normal retirement age | 1 year | ||
Stock-based compensation expense | $ | $ 14 | $ 10 | $ 12 |
Stock-based compensation expense, net of tax | $ | 11 | $ 6 | $ 8 |
Total unrecognized compensation costs related to non-vested stock options and restricted share units | $ | $ 20 | ||
Weighted-average period of recognition of stock-based compensation cost | 2 years 2 months 23 days | ||
MSIP and Omnibus Incentive Plan [Member] | |||
Stock-Based Compensation [Line Items] | |||
Number of shares of Common Stock offered | 0 | 0 | 0 |
Employee Stock Purchase Plan [Member] | |||
Stock-Based Compensation [Line Items] | |||
Discount established by the Company, maximum percent of the then-current fair market value | 10.00% | ||
Employee stock purchase plan, number of shares sold | 52,051 | 70,063 | |
Number of shares of common stock available for issuance | 1,000,000 | ||
Stock Options [Member] | |||
Stock-Based Compensation [Line Items] | |||
Granted to employees (in shares) | 502,004 | 747,761 | 684,329 |
Granted to employees (in dollars per share) | $ / shares | $ 55.18 | $ 39.27 | $ 39.54 |
Weighted-average grant-date fair value (in dollars per share) | $ / shares | $ 17.68 | $ 12.45 | $ 13.58 |
Number of equal annual vesting installments | item | 4 | ||
Vesting period | 4 years | ||
Forfeiture rate (as a percent) | 19.22% | ||
Total intrinsic value of stock options exercised | $ | $ 6 | $ 60 | $ 20 |
Total fair value of stock options vested | $ | $ 3 | 6 | 6 |
Stock Options [Member] | MSIP and Omnibus Incentive Plan [Member] | |||
Stock-Based Compensation [Line Items] | |||
Granted to employees (in shares) | 502,004 | ||
Granted to employees (in dollars per share) | $ / shares | $ 55.18 | ||
Vesting period | 10 years | ||
Super performance options granted to CEO | |||
Stock-Based Compensation [Line Items] | |||
Forfeiture rate (as a percent) | 0.00% | ||
RSUs [Member] | |||
Stock-Based Compensation [Line Items] | |||
Number of equal annual vesting installments | item | 3 | ||
Granted to employees (in shares) | 354,931 | ||
Granted to employees (in dollars per share) | $ / shares | $ 52.40 | ||
Total fair value of RSUs vested | $ | $ 18 | $ 7 | $ 10 |
Number of shares of common stock into which each award will be converted upon vesting | 1 | ||
RSUs [Member] | Executives, Officers And Employees [Member] | |||
Stock-Based Compensation [Line Items] | |||
Granted to employees (in shares) | 416,604 | 267,739 | |
Granted to employees (in dollars per share) | $ / shares | $ 40.51 | $ 39.15 | |
Performance Shares [Member] | |||
Stock-Based Compensation [Line Items] | |||
Vesting period | 3 years | ||
Granted to employees (in shares) | 0 | 120,778 | 131,352 |
Granted to employees (in dollars per share) | $ / shares | $ 38.98 | $ 39.59 | |
Non-vested Stock Options and RSUs (Part of Severance Agreement with Former President of Terminix [Member] | |||
Stock-Based Compensation [Line Items] | |||
Stock-based compensation expense | $ | $ 5 | $ 3 | |
American Home Shield Spin-off [Member] | |||
Stock-Based Compensation [Line Items] | |||
Stock-based compensation expense | $ | $ 3 | ||
American Home Shield Spin-off [Member] | RSUs [Member] | |||
Stock-Based Compensation [Line Items] | |||
Granted to employees (in shares) | 97,920 |
Stock-Based Compensation (Sched
Stock-Based Compensation (Schedule Of Assumptions Used To Estimate Value Of Each Option Award) (Details) - Stock Options [Member] | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Assumptions used to estimate value of each option award | |||
Expected volatility (as a percent) | 25.90% | 27.70% | 32.30% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Expected life | 6 years 3 months 18 days | 6 years 3 months 18 days | 6 years 3 months 18 days |
Risk-free interest rate, minimum (as a percent) | 2.63% | 1.83% | 1.25% |
Risk-free interest rate, maximum (as a percent) | 2.94% | 2.29% | 1.46% |
Stock-Based Compensation (Summa
Stock-Based Compensation (Summary Of Option Activity Under The MSIP) (Details) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | |||
Granted to employees (in shares) | 502,004 | 747,761 | 684,329 |
Weighted Average Exercise Price | |||
Granted to employees (in dollars per share) | $ 55.18 | $ 39.27 | $ 39.54 |
MSIP and Omnibus Incentive Plan [Member] | |||
Stock Options | |||
Total outstanding at the beginning of the period (in shares) | 1,125,162 | ||
Granted to employees (in shares) | 502,004 | ||
Equitable Adjustment | 581,231 | ||
Exercised (in shares) | (232,527) | ||
Forfeited (in shares) | (624,641) | ||
Expired (in shares) | (8,386) | ||
Total outstanding at the end of the period (in shares) | 1,342,843 | 1,125,162 | |
Total exercisable at the end of the period (in shares) | 329,287 | ||
Weighted Average Exercise Price | |||
Total outstanding at the beginning of the period (in dollars per share) | $ 34.84 | ||
Granted to employees (in dollars per share) | 55.18 | ||
Equitable Adjustment (in dollars per share) | 29.48 | ||
Exercised (in dollars per share) | 27.41 | ||
Forfeited (in dollars per share) | 38.21 | ||
Expired (in dollars per share) | 39.55 | ||
Total outstanding at the end of the period (in dollars per share) | 29.34 | $ 34.84 | |
Total exercisable at the end of the period (in dollars per share) | $ 21.81 | ||
Total Outstanding, Beginning of Period | $ 18 | ||
Total Outstanding, End of Period | 10 | $ 18 | |
Total exercisable, End of Period | $ 5 | ||
Weighted Average Remaining Contractual Term | |||
Total outstanding at the end of the period | 8 years 4 days | 8 years 1 month 24 days | |
Total exercisable at the end of the period | 6 years 7 months 21 days |
Stock-Based Compensation (Sum_2
Stock-Based Compensation (Summary Of RSU Activity Under The MSIP) (Details) - RSUs [Member] | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
RSUs | |
Total outstanding at the beginning of the period (in shares) | 571,924 |
Granted to employees (in shares) | 354,931 |
Equitable Adjustment | 147,082 |
Vested (in shares) | (306,145) |
Forfeited (in shares) | (241,048) |
Total outstanding at the end of the period (in shares) | 526,744 |
Weighted Average Grant Date Fair Value | |
Total outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 39.26 |
Granted to employees (in dollars per share) | $ / shares | 52.40 |
Vested (in dollars per share) | $ / shares | 36.09 |
Forfeited (in dollars per share) | $ / shares | 41.19 |
Total outstanding at the end of the period (in dollars per share) | $ / shares | $ 35.75 |
Stock-Based Compensation (Sum_3
Stock-Based Compensation (Summary Of Performance Share Activity Under The Omnibus Incentive Plan) (Details) - Performance Shares [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Performance Shares | |||
Total outstanding at the beginning of the period (in shares) | 93,928 | ||
Granted to employees (in shares) | 0 | 120,778 | 131,352 |
Forfeited (in shares) | (93,928) | ||
Total outstanding at the end of the period (in shares) | 93,928 | ||
Weighted Average Grant Date Fair Value | |||
Total outstanding at the beginning of the period (in dollars per share) | $ 38.86 | ||
Granted to employees (in dollars per share) | $ 38.98 | $ 39.59 | |
Forfeited (in dollars per share) | $ 38.86 | ||
Total outstanding at the end of the period (in dollars per share) | $ 38.86 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Aggregate notional amount | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 |
Hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings, net of tax | 8,000,000 | ||
Investment in frontdoor, inc. | 445,000,000 | ||
Carrying Value [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Total debt | 1,776,000,000 | 2,778,000,000 | |
Estimated Fair Value [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Fair value of total debt | 1,791,000,000 | $ 2,879,000,000 | |
Fuel Swap Contracts [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Aggregate notional amount | 30,000,000 | ||
Letters of credit posted as collateral under fuel hedging program | 2,000,000 | ||
Significant Other Observable Inputs (Level 2) [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Investment in frontdoor, inc. | $ 445,000,000 |
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 | Dec. 31, 2018 | Dec. 31, 2017 |
Quoted Price In Active Markets (Level 1) [Member] | ||
Financial Assets: | ||
Deferred compensation trust | $ 13 | $ 12 |
Investments | 9 | |
Total financial assets | 21 | 21 |
Quoted Price In Active Markets (Level 1) [Member] | Investment In Marketable Securities [Member] | ||
Financial Assets: | ||
Investments | 8 | |
Significant Other Observable Inputs (Level 2) [Member] | ||
Financial Assets: | ||
Total financial assets | 475 | 25 |
Significant Other Observable Inputs (Level 2) [Member] | Investment In Frontdoor, Inc. [Member] | ||
Financial Assets: | ||
Investments | 445 | |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Noncurrent | 30 | 25 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Financial Assets: | ||
Total financial assets | 3 | |
Total financial liabilities | 4 | |
Significant Unobservable Inputs (Level 3) [Member] | Fuel Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 3 | |
Derivative liability, Current | 4 | |
Carrying Value [Member] | ||
Financial Assets: | ||
Deferred compensation trust | 13 | 12 |
Investments | 9 | |
Total financial assets | 496 | 49 |
Total financial liabilities | 4 | |
Carrying Value [Member] | Investment In Frontdoor, Inc. [Member] | ||
Financial Assets: | ||
Investments | 445 | |
Carrying Value [Member] | Investment In Marketable Securities [Member] | ||
Financial Assets: | ||
Investments | 8 | |
Carrying Value [Member] | Fuel Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 3 | |
Derivative liability, Current | 4 | |
Carrying Value [Member] | Interest Rate Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Noncurrent | $ 30 | $ 25 |
Fair Value Measurements (Sche_2
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 | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 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 | 3 | 3 |
Included in other comprehensive income | (7) | (2) |
Settlements | (3) | (3) |
Balance at the end of the period | $ (4) | $ 3 |
Fair Value Measurements (Sche_3
Fair Value Measurements (Schedule Of Level 3 Financial Instruments) (Details) - Fuel Swap Contracts [Member] $ in Millions | Dec. 31, 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) | 2.09 | 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) | 2.43 | 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) | 2.26 | 2.66 |
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 | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
(Loss) income from continuing operations | $ (163) | $ 341 | $ 2 |
Weighted-average common shares outstanding | 135.5 | 134.4 | 135.3 |
Effect of dilutive securities: | |||
Weighted-average common shares outstanding-assuming dilution | 135.5 | 135.4 | 137.3 |
Basic (loss) earnings per share from continuing operations (in dollars per share) | $ (1.20) | $ 2.54 | $ 0.01 |
Diluted (loss) earnings per share from continuing operations (in dollars per share) | (1.20) | $ 2.52 | $ 0.01 |
Weighted Average Potentially Dilutive Shares Excluded From EPS Calculation, Exercise Price | $ 29.34 | ||
RSUs [Member] | |||
Effect of dilutive securities: | |||
Dilutive securities | 0.1 | 0.2 | |
Weighted Average Potentially Dilutive Shares Excluded From EPS Calculation | 0.2 | ||
Stock Options [Member] | |||
Effect of dilutive securities: | |||
Dilutive securities | 0.9 | 1.8 | |
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 0.9 | 0.3 | |
Weighted Average Potentially Dilutive Shares Excluded From EPS Calculation | 0.4 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) $ in Millions | 2 Months Ended | 12 Months Ended | ||
Feb. 27, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Subsequent Event [Line Items] | ||||
Preliminary purchase price | $ 254 | $ 16 | $ 43 | |
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of Businesses Acquired | item | 1 | |||
Preliminary purchase price | $ 94 |
Schedule II Valuation And Qua_2
Schedule II Valuation And Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Allowance For Doubtful Accounts, Accounts Receivable [Member] | ||||
Allowance for doubtful accounts | ||||
Balance at Beginning of Period | $ 21 | $ 19 | $ 19 | |
Additions Charged to Costs and Expenses | 24 | 31 | 28 | |
Deductions | [1] | 24 | 30 | 28 |
Balance at End of Period | 20 | 21 | 19 | |
Allowance For Doubtful Accounts, Notes Feceivable [Member] | ||||
Allowance for doubtful accounts | ||||
Balance at Beginning of Period | 1 | 2 | 2 | |
Additions Charged to Costs and Expenses | (1) | |||
Deductions | [1] | 1 | ||
Balance at End of Period | 1 | 1 | 2 | |
Income Tax Valuation Allowance [Member] | ||||
Allowance for doubtful accounts | ||||
Balance at Beginning of Period | 11 | 7 | 7 | |
Additions Charged to Costs and Expenses | 4 | 2 | ||
Deductions | [1] | 2 | ||
Balance at End of Period | $ 11 | $ 11 | $ 7 | |
[1] | Deductions in the allowance for doubtful accounts for accounts and notes receivable reflect write-offs of uncollectible accounts. Deductions for the income tax valuation allowance in 2018, 2017 and 2016 are primarily attributable to the reduction of net operating loss carryforwards and other deferred tax assets related to the uncertainty of future taxable income in certain jurisdictions. |