Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 28, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SERVICEMASTER GLOBAL HOLDINGS INC | |
Entity Central Index Key | 1,428,875 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 133,441,487 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | serv |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract] | ||||
Revenue | $ 807 | $ 747 | $ 1,450 | $ 1,355 |
Cost of services rendered and products sold | 415 | 379 | 761 | 704 |
Selling and administrative expenses | 206 | 187 | 392 | 360 |
Amortization expense | 7 | 8 | 14 | 16 |
401(k) Plan corrective contribution | 1 | 1 | ||
Fumigation related matters (Note 3) | 1 | 88 | 2 | 91 |
Insurance reserve adjustment | 23 | 23 | ||
Impairment of software and other related costs | 1 | 2 | 1 | |
Restructuring charges | 1 | 4 | 3 | 5 |
Gain on sale of Merry Maids branches | (2) | |||
Interest expense | 38 | 38 | 75 | 76 |
Interest and net investment income | (1) | (4) | (1) | (4) |
Loss on extinguishment of debt | 3 | 3 | ||
Income from Continuing Operations before Income Taxes | 137 | 23 | 199 | 85 |
Provision for income taxes | 52 | 7 | 76 | 30 |
Income from Continuing Operations | 85 | 16 | 123 | 54 |
Income from discontinued operations, net of income taxes | 1 | |||
Net Income | 85 | 16 | 124 | 54 |
Total Comprehensive Income | $ 84 | $ 15 | $ 124 | $ 55 |
Weighted-average common shares outstanding - Basic | 133.7 | 135.5 | 134.1 | 135.6 |
Weighted-average common shares outstanding - Diluted | 135 | 137.7 | 135.5 | 137.7 |
Basic Earnings Per Share: | ||||
Income from Continuing Operations (in dollars per share) | $ 0.64 | $ 0.11 | $ 0.92 | $ 0.40 |
Income from discontinued operations, net of income taxes (in dollars per share) | ||||
Net Income (in dollars per share) | 0.64 | 0.12 | 0.92 | 0.40 |
Diluted Earnings Per Share: | ||||
Income from Continuing Operations (in dollars per share) | 0.63 | 0.11 | 0.91 | 0.40 |
Income from discontinued operations, net of income taxes (in dollars per share) | ||||
Net Income (in dollars per share) | $ 0.63 | $ 0.11 | $ 0.91 | $ 0.39 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Position - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 378,000,000 | $ 291,000,000 |
Marketable securities | 25,000,000 | 25,000,000 |
Receivables, less allowances of $22 and $22, respectively | 562,000,000 | 536,000,000 |
Inventories | 45,000,000 | 43,000,000 |
Prepaid expenses and other assets | 92,000,000 | 70,000,000 |
Deferred customer acquisition costs | 37,000,000 | 34,000,000 |
Total Current Assets | 1,140,000,000 | 998,000,000 |
Other Assets: | ||
Property and equipment, net | 224,000,000 | 210,000,000 |
Goodwill | 2,254,000,000 | 2,247,000,000 |
Intangible assets, primarily trade names, service marks and trademarks, net | 1,704,000,000 | 1,708,000,000 |
Restricted cash | 89,000,000 | 95,000,000 |
Notes receivable | 40,000,000 | 37,000,000 |
Long-term marketable securities | 27,000,000 | 19,000,000 |
Other assets | 63,000,000 | 71,000,000 |
Total Assets | 5,541,000,000 | 5,386,000,000 |
Current Liabilities: | ||
Accounts payable | 128,000,000 | 112,000,000 |
Accrued liabilities: | ||
Payroll and related expenses | 51,000,000 | 54,000,000 |
Self-insured claims and related expenses | 128,000,000 | 111,000,000 |
Accrued interest payable | 15,000,000 | 16,000,000 |
Other | 97,000,000 | 60,000,000 |
Deferred revenue | 658,000,000 | 629,000,000 |
Current portion of long-term debt | 141,000,000 | 59,000,000 |
Total Current Liabilities | 1,219,000,000 | 1,042,000,000 |
Long-Term Debt | 2,678,000,000 | 2,772,000,000 |
Other Long-Term Liabilities: | ||
Deferred taxes | 714,000,000 | 719,000,000 |
Other long-term obligations, primarily self-insured claims | 189,000,000 | 167,000,000 |
Total Other Long-Term Liabilities | 903,000,000 | 886,000,000 |
Commitments and Contingencies (Note 3) | ||
Shareholders' Equity: | ||
Common stock $0.01 par value (authorized 2,000,000,000 shares with 144,950,350 shares issued and 133,431,298 outstanding at June 30, 2017 and 144,339,338 shares issued and 135,030,283 outstanding at December 31, 2016) | 2,000,000 | 2,000,000 |
Additional paid-in capital | 2,289,000,000 | 2,274,000,000 |
Accumulated deficit | (1,281,000,000) | (1,405,000,000) |
Accumulated other comprehensive loss | (2,000,000) | (3,000,000) |
Less common stock held in treasury, at cost (11,519,052 shares at June 30, 2017 and 9,309,055 shares at December 31, 2016) | (267,000,000) | (182,000,000) |
Total Shareholders' Equity | 741,000,000 | 686,000,000 |
Total Liabilities and Shareholders' Equity | $ 5,541,000,000 | $ 5,386,000,000 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Statements of Financial Position [Abstract] | ||
Allowance for receivables (in dollars) | $ 22 | $ 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) | 144,950,350 | 144,339,338 |
Common stock, shares outstanding (in shares) | 133,431,298 | 135,030,283 |
Treasury stock (in shares) | 11,519,052 | 9,309,055 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements of Cash Flows [Abstract] | ||
Cash and Cash Equivalents and Restricted Cash at Beginning of Period | $ 386 | $ 296 |
Cash Flows from Operating Activities from Continuing Operations: | ||
Net Income | 124 | 54 |
Adjustments to reconcile net income to net cash provided from operating activities: | ||
Income from discontinued operations, net of income taxes | (1) | |
Depreciation expense | 37 | 27 |
Amortization expense | 14 | 16 |
Amortization of debt issuance costs | 3 | 2 |
401(k) Plan corrective contribution | 1 | |
Fumigation related matters (Note 3) | 2 | 91 |
Payments on fumigation related matters | (1) | (2) |
Insurance reserve adjustment | 23 | |
Impairment of software and other related costs | 2 | 1 |
Gain on sale of Merry Maids branches | (2) | |
Loss on extinguishment of debt | 3 | |
Deferred income tax (benefit) provision | (2) | 5 |
Stock-based compensation expense | 9 | 7 |
Gain on sales of marketable securities | (3) | |
Other | 7 | 3 |
Change in working capital, net of acquisitions: | ||
Receivables | (24) | (18) |
Inventories and other current assets | (13) | (20) |
Accounts payable | 18 | 34 |
Deferred revenue | 28 | 24 |
Accrued liabilities | 18 | 10 |
Accrued interest payable | (1) | |
Accrued restructuring charges | 3 | |
Current income taxes | 37 | (13) |
Net Cash Provided from Operating Activities from Continuing Operations | 260 | 244 |
Cash Flows from Investing Activities from Continuing Operations: | ||
Property additions | (34) | (31) |
Sale of equipment and other assets | 1 | 7 |
Business acquisitions, net of cash acquired | (12) | (73) |
Purchases of available-for-sale securities | (7) | (2) |
Sales and maturities of available-for-sale securities | 2 | 48 |
Origination of notes receivable | (54) | (53) |
Collections on notes receivable | 50 | 48 |
Other investments | (1) | (3) |
Net Cash Used for Investing Activities from Continuing Operations | (56) | (58) |
Cash Flows from Financing Activities from Continuing Operations: | ||
Payments of debt | (46) | (33) |
Repurchase of common stock | (85) | (17) |
Issuance of common stock | 7 | 5 |
Net Cash Used for Financing Activities from Continuing Operations | (124) | (45) |
Cash Flows from Discontinued Operations: | ||
Cash provided from operating activities | 1 | |
Net Cash Provided from Discontinued Operations | 1 | |
Effect of Exchange Rate Changes on Cash | 1 | |
Cash Increase During the Period | 81 | 141 |
Cash and Cash Equivalents and Restricted Cash at End of Period | $ 467 | $ 437 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation ServiceMaster Global Holdings, Inc. and its majority-owned subsidiary partnerships, limited liability companies and corporations (collectively, “ServiceMaster,” the “ Company,” “we,” “us, and “our”) is a leading provider of essential residential and commercial services. The Company’s services include termite and pest control, home warranties, disaster restoration, janitorial, residential cleaning, cabinet and wood furniture repair and home inspection. The Company provides these services through an extensive service network of company-owned, franchised and licensed locations operating primarily under the following leading brands: Terminix, American Home Shield, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. All consolidated Company subsidiaries are wholly-owned. Intercompany transactions and balances have been eliminated. The unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The Company recommends that the quarterly unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 201 6 , as filed with the SEC (the “201 6 Form 10-K”). The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for any interim period are not indicative of the results that might be achieved for a full year. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Company’s 2016 Form 10-K. There have been no material changes to the significant accounting policies for the three and six months ended June 30, 2017. Ne wly Issued 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. This model supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” Entities have the option of using either a full retrospective or modified approach to adopt the guidance. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2016. To date, the Company has performed the following: A transition team has been established to implement the required changes; an initial assessment of the Company’s revenue streams has been initiated; the Company has substantially completed its inventory of all outstanding contracts; and the Company has begun the process of applying the five-step model to those contracts and revenue streams to evaluate the quantitative and qualitative impacts the new standard will have on its business and reported revenues. The Company plans to adopt the new revenue standard in the first quarter of 2018 utilizing the full retrospective transition method . The Company does not expect adoption of the new revenue standard to have a material impact on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” to change how entities measure certain equity investments, to require the disclosure of changes in the fair value of financial liabilities measured under the fair value option that are attributable to a company’s own credit, and to change certain other disclosure requirements. The changes in ASU 2016-01 specifically require that the changes in fair value of all investments in equity securities be recognized in net income. The amendments in ASU 2016-01 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and will be adopted prospectively. Upon adoption, changes in fair value of the Company’s available-for-sale securities, which are currently recognized in other comprehensive income, will be recognized in net income. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which is the final standard on accounting for leases. While both lessees and lessors are affected by the new guidance, the effects on lessees are much more significant. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. Entities are required to use a modified retrospective approach to adopt the guidance. The amendments in ASU 2016-02 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the Company’s consolidated financial statements and currently expects that most of the operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption of ASU 2016-02, which will increase the amount of total assets and total liabilities that is reported relative to such amounts prior to adoption. [ |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 3. Commitments and Contingencies The Company carries insurance policies on insurable risks at levels that it believes to be appropriate, including workers’ compensation, automobile and general liability risks. The Company purchases insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. The Company is responsible for all claims that fall below the retention limits, exceed our coverage limits or are otherwise not covered by our insurance policies. In determining the Company’s accrual for self-insured claims, the Company uses historical claims experience to establish both the current year accrual and the underlying provision for future losses. This actuarially determined provision and related accrual include known claims, as well as incurred but not reported claims. The Company adjusts its estimate of accrued self-insured claims when required to reflect changes based on factors such as changes in health care costs, accident frequency and claim severity. A reconciliation of beginning and ending accrued self-insured claims, which are included in Accrued liabilities—Self-insured claims and related expenses and Other long-term obligations, primarily self-insured claims on the condensed consolidated statements of financial position, net of insurance recoverables, which are included in Prepaid expenses and other assets and Other assets on the condensed consolidated statements of financial position, is presented as follows: Accrued Self-insured (In millions) Claims, Net Balance as of December 31, 2016 $ 120 Provision for self-insured claims 18 Cash payments (17) Balance as of June 30, 2017 $ 122 Balance as of December 31, 2015 $ 114 Provision for self-insured claims (1) 44 Cash payments (24) Balance as of June 30, 2016 $ 133 ___________________________________ (1) Includes a charge of $23 million recorded in the three and six months ended June 30, 2016 for an adjustment to the Company’s accrued self-insured claims related to automobile, general liability and workers’ compensation risks. The adjustment was based on the Company’s detailed annual assessment of this actuarially determined accrual, which the Company completes in the second quarter of each year. This adjustment related to coverage periods of 2015 and prior. Accruals for home warranty claims in the American Home Shield business are made based on the Company’s claims experience and actuarial projections. Termite damage claim accruals in the Terminix business are recorded based on both the historical rates of claims incurred within a contract year and the cost per claim. Current activity could differ causing a change in estimates. The Company has certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. The Company accrues for these liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified. In 2008, the Company amended its Profit Sharing and Retirement Plan, a tax qualified 401(k) defined contribution plan available to substantially all of its employees (the “401(k) Plan”), to implement a qualified automatic contribution arrangement (“QACA”) under the safe harbor provisions of the Internal Revenue Code of 1986, as amended (the “Code”). QACA plans, in general, require automatic enrollment of employees into the retirement plan absent an affirmative election that such employees do not wish to participate. Although the Company implemented processes to auto-enroll new hires after adopting the QACA plan in 2008, it discovered that it did not auto-enroll then existing employees who were not participating in the 401(k) Plan. In response, the Company implemented an auto-enrollment process for affected active employees and submitted to the Internal Revenue Service (the “IRS”) a voluntary correction proposal to remedy the issue for prior years. The Company’s current estimate of the cost of the correction ranges from $2 5 million to approximately $93 million. The Company has recorded in the condensed consolidated statement of operations and comprehensive income charges of $25 million, of which $1 million was recorded in the three and six months ended June 30, 2016. Charges for 401(k) Plan corrective contributions recorded in the three and six months ended June 30, 2017 were less than $1 million. However, there can be no assurances as to the ultimate cost of the correction. In addition to the matter discussed above and the fumigation related matters discussed below, in the ordinary course of conducting business activities, the Company and its subsidiaries become involved in judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured matters that are brought on an individual, collective, representative and class action basis, or other proceedings involving regulatory, employment, general and commercial liability, automobile liability, wage and hour, environmental and other matters. The Company has entered into settlement agreements in certain cases, including with respect to putative collective and class actions, which are subject to court or other approvals. If one or more of the Company’s settlements are not finally approved, the Company could have additional or different exposure, which could be material. Subject to the paragraphs below, the Company does not expect any of these proceedings to have a material effect on its reputation, business, financial position, results of operations or cash flows; however, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial position, results of operations and cash flows . F umigation Related Matters On July 21, 2016, Terminix International USVI, LLC (“TMX USVI”) and The Terminix International Company Limited Partnership (“TMX LP”), each an indirect, wholly-owned subsidiary of the Company, entered into a superseding Plea Agreement (the “Superseding Plea Agreement”) in connection with the investigation initiated by the United States Department of Justice Environmental Crimes Section (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 Superseding 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. Those charges were set forth in an Information, dated March 29, 2016, in the matter styled United States of America v. The Terminix International Company Limited Partnership and Terminix International USVI, LLC. At a hearing held on August 25, 2016, the United States District Court of the U.S. Virgin Islands (the “District Court”) rejected the Superseding Plea Agreement. On August 31, 2016, the DOJ requested that the charges be dismissed, reserving its right to re-file the charges, in light of ongoing discussions to resolve the matter. The District Court granted that request, and the March 29, 2016 Information was dismissed. On January 20, 2017, TMX USVI and TMX LP entered into a new Plea Agreement (the “New Plea Agreement”) with the DOJ, which has been filed with the District Court, and replaces the Superseding Plea Agreement. At a hearing on March 23, 2017, TMX USVI and TMX LP pled guilty to four misdemeanor charges of violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide, as set forth in a new Information filed on January 20, 2017 with the District Court that is substantially similar to the March 29, 2016 Information. Under the terms of the New Plea Agreement, the parties agreed and jointly recommended to the District Court that (i) TMX USVI and TMX LP each pay a fine of $4 million (total of $8 million); (ii) TMX USVI pay $1 million to the EPA for costs incurred by the EPA for the response and clean-up of the affected units at the resort in St. John; (iii) TMX USVI make a community service payment of $1 million to the National Fish and Wildlife Foundation for the purpose of engaging a third party to provide training to pesticide applicators in the U.S. Virgin Islands; and (iv) both TMX USVI and TMX LP serve a three -year probation period, subject to the special conditions of probation under the New Plea Agreement. The total financial terms of the recommended sentence under the New Plea Agreement are equivalent in total amount to the financial terms under the Superseding Plea Agreement. Unlike the Superseding Plea Agreement, however, the New Plea Agreement is non-binding on the District Court. The sentencing hearing before the District Court previously scheduled for July 27, 2017 , has been rescheduled for September 21, 2017 . It is possible that at that hearing the District Court could use its discretion to impose fines or other terms different than those in the New Plea Agreement. If approved by the District Court, and upon compliance with the terms and conditions of the New Plea Agreement, the New Plea Agreement will resolve the federal criminal consequences associated with the DOJ investigation. The New Plea Agreement does not bind any other federal, state or local authority; however, the EPA has indicated that it does not intend to initiate any administrative enforcement action or refer the matter to the DOJ for any civil enforcement action if the New Plea Agreement is approved by the District Court. The Company has previously recorded within Fumigation related matters in the condensed consolidated statement of operations and comprehensive income total charges of $10 million in connection with the aforementioned criminal matter. 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. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Note 4 . Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate a potential impairment. The Company’s annual assessment date is October 1. There were no goodwill or trade name impairment charges recorded in the thre e and six months ended June 30, 2017 and 2016 . There were no accumulated impairment losses recorded as of June 30, 2017 . The table below summarizes the goodwill balances for continuing operations by reportable segment: American Franchise (In millions) Terminix Home Shield Services Group Total Balance as of December 31, 2016 $ 1,601 $ 471 $ 175 $ 2,247 Acquisitions 1 4 — 5 Impact of foreign exchange rates 1 — — 1 Balance as of June 30, 2017 $ 1,603 $ 476 $ 175 $ 2,254 The table below summarizes the other intangible asset balances for continuing operations: As of June 30, 2017 As of December 31, 2016 Accumulated Accumulated (In millions) Gross Amortization Net Gross Amortization Net Trade names (1) $ 1,608 $ — $ 1,608 $ 1,608 $ — $ 1,608 Customer relationships 588 (547) 42 594 (538) 56 Franchise agreements 88 (68) 20 88 (67) 21 Other 81 (46) 35 65 (42) 23 Total $ 2,365 $ (661) $ 1,704 $ 2,356 $ (647) $ 1,708 ___________________________________ (1) Not subject to amortization. For the existing intangible assets, the Company anticipates amortization expense for the remainder of 2017 and each of the next five years of $ 13 m illion, $ 21 million, $ 16 million, $12 million, $9 million and $ 6 million, respectively . |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | Note 5 . Stock-Based Compensation For the three months ended June 30, 2017 and 2016 , the Company recognized stock-based compensation expense o f $4 million ( $2 million, net of tax) and $ 4 million ( $2 million, net of tax), respectively. For the six months ended June 30, 2017 and 2016 , the Company recognized stock-based compensation expense o f $9 million ( $ 5 million, net of tax) and $7 million ( $4 million, net of tax), respectively. These charges are recorded within Selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income. As of June 30 , 2017 there was $ 33 million of total unrecognized co mpensation costs related to non- vested stock options , restricted stock units (“RSUs”) and performance shares granted under the Amended and Restated ServiceMaster Global Holdings , Inc. Stock Incentive Plan (“MSIP”) and the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Omnibus Incentive Plan”) and discounts associated with the ServiceMaster Global Holdings, Inc. Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). These remaining costs are expected to be recognized over a weighted-average period o f 2. 41 years. |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jun. 30, 2017 | |
Comprehensive Income [Abstract] | |
Comprehensive Income | N ote 6. Comprehensive Income Comprehensive income , which primarily includes net income (loss), unrealized gain (loss) on marketable securities, unrealized gain (loss) on derivative instruments and the effect of foreign currency translation gain (loss), is disclosed in the condensed consolidated statements of operations and comprehensive income. The following tables summarize the activity in accumulated other comprehensive income (loss), net of the related tax effects. Unrealized Gains Unrealized on Available Foreign Gains (Losses) -for-Sale Currency (In millions) on Derivatives Securities Translation Total Balance as of December 31, 2016 $ 12 $ 1 $ (15) $ (3) Other comprehensive (loss) income before reclassifications: Pre-tax amount (9) 2 2 (5) Tax benefit (3) — — (3) After-tax amount (6) 2 2 (2) Amounts reclassified from accumulated other comprehensive income (loss) (1) 3 — — 3 Net current period other comprehensive income (3) 2 2 1 Balance as of June 30, 2017 $ 9 $ 2 $ (13) $ (2) Balance as of December 31, 2015 $ (7) $ 2 $ (15) $ (21) Other comprehensive (loss) income before reclassifications: Pre-tax amount (4) (1) 3 (2) Tax benefit (1) — — (1) After-tax amount (3) (1) 3 (1) Amounts reclassified from accumulated other comprehensive income (loss) (1) 3 (2) — 2 Net current period other comprehensive (loss) income 1 (3) 3 1 Balance as of June 30, 2016 $ (7) $ (1) $ (12) $ (20) ___________________________________ (1) Amounts are net of tax. See reclassifications out of accumulated other comprehensive income (loss) below for further details. Reclassifications out of accumulated other comprehensive income (loss) included the following components for the periods indicated. Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Three Months Ended Six Months Ended Condensed Consolidated Statements of June 30, June 30, Operations and Comprehensive Income (In millions) 2017 2016 2017 2016 Location Losses on derivatives: Fuel swap contracts $ — $ (1) $ 1 $ (2) Cost of services rendered and products sold Interest rate swap contracts (4) (2) (5) (3) Interest expense Net losses on derivatives (3) (2) (4) (5) Impact of income taxes 1 1 1 2 Provision for income taxes Total reclassifications related to derivatives $ (2) $ (1) $ (3) $ (3) Gains on available-for-sale securities $ — $ 3 $ — $ 3 Interest and net investment income Impact of income taxes — (1) — (1) Provision for income taxes Total reclassifications related to securities $ — $ 2 $ — $ 2 Total reclassifications for the period $ (2) $ — $ (3) $ (2) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Cash Flow Information | Note 7 . Supplemental Cash Flow Information Supplemental information relating to the condensed consolidated statements of cash flows is presented in the following table: Six Months Ended June 30, (In millions) 2017 2016 Cash paid for or (received from): Interest expense $ 67 $ 70 Interest and dividend income — (1) Income taxes, net of refunds 41 37 As of June 30, 2017, December 31, 2016 and June 30, 2016, Cash and cash equivalents of $378 million, $291 million, and $342 million, respectively, and Restricted cash of $89 million, $95 million, and $95 million, respectively, as presented on the condensed consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and restricted cash of $467 million, $386 million, and $437 million, respectively, on the condensed consolidated statement of cash flows. There was no restricted cash balance as of December 31, 2015. The Company acquired $23 million and $ 29 million of property and equipment through capital leases and other non-cash financing transactions in the six months ended June 30, 2017 and 2016 , respectively, which have been excluded from the condensed consolidated statements of cash flows as non-cash investing and financing activities. In the six months ended June 30, 2016 , the Company converted certain company-owned Merry Maids branches to franchises for a total purchase price of $8 million. In the six months ended June 30, 2016 , the Company received cash of $6 million and provided financing of $2 million. These financed amounts have been excluded from the condensed consolidated statements of cash flows as non-cash investing activities. |
Cash and Marketable Securities
Cash and Marketable Securities | 6 Months Ended |
Jun. 30, 2017 | |
Cash and Marketable Securities [Abstract] | |
Cash and Marketable Securities | Note 8 . Cash and Marketable Securities Cash, money market funds and certificates of deposits with maturities of three months or less when purchased are included in Cash and cash equivalents on the condensed consolidated statements of financial position. As of June 30, 2017 and December 31, 2016 , the Company’s investments consisted primarily of treasury bills (“ Debt securities”) and common equity securities (“Equity securities”). The amortized cost, fair value and gross unrealized gains and losses of the Company’s short- and long-term investments in Debt and Equity securities are as follows: Gross Gross Amortized Unrealized Unrealized Fair (In millions) Cost Gains Losses Value Available-for-sale securities, June 30, 2017: Debt securities $ 29 $ — $ — $ 29 Equity securities 21 3 — 24 Total securities $ 50 $ 3 $ — $ 53 Available-for-sale securities, December 31, 2016: Debt securities $ 27 $ — $ — $ 27 Equity securities 15 1 — 17 Total securities $ 43 $ 1 $ — $ 44 There were no unrealized losses which had been in a loss position for more than one year as of June 30, 2017 and December 31, 2016. Gains and losses on sales of investments, as determined on a specific identification basis, are included in investment income in the period they are realized. The Company periodically reviews its portfolio of investments to determine whether there has been an other than temporary decline in the value of the investments from factors such as deterioration in the financial condition of the issuer or the market(s) in which the issuer competes . The table below summarizes proceeds, gross realized gains and gross realized losses resulting from sales of available-for-sale securities. There were no impairment charges due to other than temporary declines in the value of certain investments for the three and six months ended June 30, 2017 and 2016. Three Months Ended Six Months Ended June 30, June 30, (In millions) 2017 2016 2017 2016 Proceeds from sale of securities $ — $ 42 $ — $ 42 Gross realized gains, pre-tax — 4 — 4 Gross realized gains, net of tax — 2 — 2 Gross realized (losses), pre-tax — — — — Gross realized (losses), net of tax — — — — |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2017 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | Note 9 . Long-Term Debt Long-term debt is summarized in the following table: As of As of June 30, December 31, (In millions) 2017 2016 Senior secured term loan facility maturing in 2023 (1) $ 1,621 $ 1,628 Revolving credit facility maturing in 2021 — — 5.125% notes maturing in 2024 (2) 738 737 7.10% notes maturing in 2018 (3) 78 77 7.45% notes maturing in 2027 (3) 168 167 7.25% notes maturing in 2038 (3) 52 65 Vehicle capital leases (4) 94 87 Other 67 71 Less current portion (141) (59) Total long-term debt $ 2,678 $ 2,772 ___________________________________ (1) As of June 30, 2017 and December 31, 2016, presented net of $17 million and $ 18 million, respectively, in unamortized debt issuance costs and $4 million and $ 4 million, respectively, in unamortized original issue discount paid. (2) As of June 30, 2017 and December 31, 2016, presented net of $12 and $ 13 million, respectively, in unamortized debt issuance costs. (3) As of June 30, 2017 and December 31, 2016, collectively presented net of $42 million and $ 48 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (4) The Company has entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows the Company to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are capital leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent. Repurchase of Notes On May 11, 2017, the Company purchased $17 million in aggregate principal amount of its 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 this partial repurchase, the Company recorded a loss on extinguishment of debt of $3 million in the three and six months ended June 30, 2017. Interest Rate Swaps Interest rate swap agreements in effect as of June 30, 2017 are as follows: Trade Date Effective Date Expiration Date Notional Amount Fixed Rate (1) Floating Rate November 7, 2016 November 8, 2016 November 30, 2023 $650,000 1.493 % One month LIBOR ___________________________________ (1) Before the application of the applicable borrowing margin. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Acquisitions [Abstract] | |
Acquisitions | Note 10 . Acquisitions Acquisitions have been accounted for using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. The assets and liabilities of these businesses were recorded in the financial statements at their estimated fair values as of the acquisition dates. During the six months ended June 30, 2017, the Company completed two pest control acquisitions and purchased a ServiceMaster Clean master distributor within the Franchise Services Group. The total purchase price for these acquisitions was $14 million. The Company recorded goodwill of $1 million and other intangibles, primarily reacquired rights, of $13 million related to these acquisitions. On November 30, 2016, the Company acquired Landmark Home Warranty, LLC (“Landmark”) for a total purchase price of $39 million. The Company recorded goodwill of $37 million and other intangibles, primarily customer relationships, of $13 million related to this acquisition. During the six months ended June 30, 2017, the Company finalized its assessment of the fair value of the assets acquired and liabilities assumed. The Company updated its preliminary allocation and reclassified $4 million from other intangibles, primarily customer relationships, to goodwill. During the six months ended June 30, 2016, the Company completed several pest control and termite acquisitions. The total purchase price for these acquisitions was $23 million. The Company recorded goodwill of $17 million and other intangibles of $3 million related to these acquisitions. On June 27, 2016, the Company acquired OneGuard Home Warranties (“OneGuard”) for a total purchase price of $65 million. The Company recorded goodwill of $57 million and other intangibles of $15 million related to the OneGuard acquisition. Supplemental cash flow information regarding the Company’s acquisitions is as follows: Six Months Ended June 30, (In millions) 2017 2016 Assets acquired $ 15 $ 88 Liabilities assumed (1) — Net assets acquired $ 14 $ 88 Net cash paid $ 12 $ 73 Seller financed debt 3 15 Purchase price $ 14 $ 88 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | N ote 11 . Income Taxes As of June 30, 2017 and December 31, 2016, the Company had $ 13 million of tax benefits primarily reflected in state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $2 million as the result of settlements of ongoing audits, statute of limitation expirations or final settlements of uncertain tax positions in multiple jurisdictions. As required by Accounting Standard Codification (“ASC”) 740, “Income Taxes,” the Company computes interim period income taxes by applying an anticipated annual effective tax rate to the Company’s year-to-date income or loss from continuing operations before income taxes, except for significant unusual or infrequently occurring items. The Company’s estimated tax rate is adjusted each quarter in accordance with ASC 740. T he effective tax rate on income from continuing operations was 3 8.0 percent and 31. 0 percent for the three months ended June 30, 2017 and 2016, respectively. The effective tax rate on income from continuing operations for the three months ended June 30, 2016 was primarily affected by excess tax benefits for share-based awards and the release of a valuation allowance recorded discretely during the quarter. T he effective tax rate on income from continuing operations was 38 .0 percent and 35. 4 percent for the six months ended June 30, 2017 and 2016, respectively. The effective tax rate on income from continuing operations for the six months ended June 30, 2016 was primarily affected by excess tax benefits for share-based awards and the release of a valuation allowance recorded discretely during the second quarter. |
Business Segment Reporting
Business Segment Reporting | 6 Months Ended |
Jun. 30, 2017 | |
Business Segment Reporting [Abstract] | |
Business Segment Reporting | Note 12 . Business Segment Reporting The business of the Company is conducted through three reportable segments: Terminix, American Home Shield and Franchise Services Group. In accordance with accounting standards for segments, the Company’s reportable segments are strategic business units that offer different services. The Terminix segment provides termite and pest control services to residential and commercial customers and distributes pest control products. The American Home Shield segment provides home warranties for household systems and appliances. The Franchise Services Group segment provides residential and commercial disaster restoration, janitorial and cleaning services through franchises primarily under the ServiceMaster, ServiceMaster Restore and ServiceMaster Clean brand names, home cleaning services through franchises primarily under the Merry Maids brand name, cabinet and wood furniture repair primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate includes SMAC , the Company’s financing subsidiary exclusively dedicated to providing financing to its franchisees and retail customers of its operating units, and the Company’s headquarters operations (substantially all of which costs are allocated to the Company’s reportable segments), wh ich provide various technology, marketing , finance, legal and other support services to the reportabl e segments. The composition of the Company’s reportable segments is consistent with that used by the Company’s chief operating decision maker (the “CODM”) to evaluate performance and allocate resources. Information regarding the accounting policies used by the Company is described in the Company’s 2016 Form 10-K . The Company derives substantially all of its revenue from customers and franchisees in the United States with approximately two percent generated in foreign markets. Operating expenses of the business units consist primarily of direct costs and indirect costs allocated from Co rporate . The Company uses Reportable Segment Adjusted EBITDA as its measure of segment profitability. Accordingly, the CODM evaluates performance and allocates resources based primarily on Reportable Segment Adjusted EBITDA. Reportable Segment Adjusted EBITDA is defined as net income before: unalloca ted corporate expenses; income from discontinued operations, net of income taxes; provision for income taxes; interest expense; depreciation and amortization expense; 401(k) Plan corrective contribution; fumigation related matters; insurance reserve adjustment; non-cash stock-based compensation expense; restructuring charges; gain on sale of Merry Maids branches; non-cash impairment of software and other related costs; and loss on extinguishment of debt . The Company’s definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. The Company believe s 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, restruct uring initiatives and equity-based, long-term incentive plans. Information for continuing operations for each reportable segment and Corporate is presented below: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2017 2016 2017 2016 Revenue: Terminix $ 428 $ 414 $ 794 $ 778 American Home Shield 326 282 553 477 Franchise Services Group 52 50 102 99 Reportable Segment Revenue $ 806 $ 747 $ 1,449 $ 1,354 Corporate 1 1 1 1 Total Revenue $ 807 $ 747 $ 1,450 $ 1,355 Reportable Segment Adjusted EBITDA: (1) Terminix $ 105 $ 112 $ 186 $ 207 American Home Shield 82 72 113 90 Franchise Services Group 22 19 43 37 Reportable Segment Adjusted EBITDA $ 209 $ 203 $ 343 $ 334 ___________________________________ (1) Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: Three Months Ended Six Months Ended June 30, June 30, (In millions) 2017 2016 2017 2016 Net Income $ 85 $ 16 $ 124 $ 54 Unallocated corporate expenses — — (1) 3 Depreciation and amortization expense 25 22 51 43 401(k) Plan corrective contribution — 1 — 1 Fumigation related matters 1 88 2 91 Insurance reserve adjustment — 23 — 23 Non-cash stock-based compensation expense 4 4 9 7 Restructuring charges 1 4 3 5 Gain on sale of Merry Maids branches — — — (2) Non-cash impairment of software and other related costs — 1 2 1 Income from discontinued operations, net of income taxes — — (1) — Provision for income taxes 52 7 76 30 Loss on extinguishment of debt 3 — 3 — Interest expense 38 38 75 76 Reportable Segment Adjusted EBITDA $ 209 $ 203 $ 343 $ 334 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 . Related Party Transactions TruGreen Spin-off In connection with the TruGreen spin-off on January 14, 2014, the Company entered into a transition services agreement with Tru Green Holding Corporation (“ TruGreen”) pursuant to which the Company provide s TruGreen with specified communications, public relations, finance and accounting, tax, treasury, internal audit, human resources operations and benefits, risk management and insurance, supply management, real estate management, marketing, facilities, information technology and other support services. The charges for the transition services are designed to allow the Company 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 terminated at various specified times on or prior to December 31, 2016, except certain information technology services, which the Company has entered into an amendment to the transition services agreement with TruGreen to extend through June 30, 2018. TruGreen may terminate the extended transition services agreement for convenience upon 90 days written notice . Under this transition services agreement, the Company recorded $1 million in the three and six months ended June 30, 2017 and $ 2 million and $4 million in the three and six months ended June 30, 2016, respectively, of fees from TruGreen, which is included as a reduction in Selling and administrative expenses in the condensed consolidated statement of operations and comprehensive income. As of June 30, 2017, all amounts owed by TruGreen under this agreement have been paid. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 14. Fair Value Measurements The period-end carrying amounts of cash and cash equivalents, receivables, restricted cash, accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The period-end carrying amounts of long-term notes receivable approximate fair value as the effective interest rates for these instruments are comparable to period-end market rates. The period-end carrying amounts of short- and long-term marketable securities also approximate fair value, with unrealized gains and losses reported net of tax as a component of accumulated other comprehensive income (loss) on the condensed consolidated statements of financial position, or, for certain unrealized losses, reported in interest and net investment income in the condensed consolidated statements of operations and comprehensive income if the decline in value is other than temporary. The carrying amount of total debt was $2,819 million and $ 2,831 million and the estimated fair value was $2,9 38 million and $2, 930 million as of June 30, 2017 and December 31, 2016 , respectively. The fair value of the Company’s debt is estimated based on available market prices for the same or similar instruments which are considered significant other observable inputs (Level 2) within the fair value hierarchy. The fair values presented reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value estimates presented in this report are based on information available to the Company as of June 30, 2017 and December 31, 2016 . The Company has estimated the fair value of its financial instruments measured at fair value on a recurring basis using the market and income approaches. For investments in marketable securities, deferred compensation trust assets and derivative contracts, which are carried at their fair values, the Company’s fair value estimates incorporate quoted market prices, other observable inputs (for example, forward interest rates) and unobservable inputs (for example, forward commodity prices) at the balance sheet date. Interest rate swap contracts are valued using forward interest rate curves obtained from third-party market data providers. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract interest rate to the expected forward interest rate as of each settlement date and applying the difference between the two rates to the notional amount of debt in the interest rate swap contracts. Fuel swap contracts are valued using forward fuel price curves obtained from third-party market data providers. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract fuel price to the expected forward fuel price as of each settlement date and applying the difference between the contract and expected prices to the notional gallons in the fuel swap contracts. The Company regularly reviews the forward price curves obtained from third-party market data providers and related changes in fair value for reasonableness utilizing information available to the Company from other published sources. The Company has not changed its valuation techniques for measuring the fair value of any financial assets and liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period. There were no significant transfers betwee n levels during each of the six month periods ended June 30, 2017 and 2016 . The carrying amount and estimated fair value of the Company’s financial instruments that are recorded at fair value on a recurring basis for the periods presented are as follows: Estimated Fair Value Measurements Quoted Significant Prices In Other Significant Active Observable Unobservable Statement of Financial Carrying Markets Inputs Inputs (In millions) Position Location Value (Level 1) (Level 2) (Level 3) As of June 30, 2017: Financial Assets: Deferred compensation trust Long-term marketable securities $ 8 $ 8 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 45 40 5 — Fuel swap contracts Prepaid expenses and other assets 1 — — 1 Interest rate swap contract Other assets 21 — 21 — Total financial assets $ 75 $ 48 $ 26 $ 1 Financial Liabilities: Fuel swap contracts Other accrued liabilities $ 1 $ — $ — $ 1 Interest rate swap contract Other accrued liabilities 1 — 1 — Total financial liabilities $ 2 $ — $ 1 $ 1 As of December 31, 2016: Financial Assets: Deferred compensation trust Long-term marketable securities $ 8 $ 8 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 36 33 3 — Fuel swap contracts Prepaid expenses and other assets and Other assets 5 — — 5 Interest rate swap contract Other assets 27 — 27 — Total financial assets $ 75 $ 40 $ 30 $ 5 Financial Liabilities: Interest rate swap contract Other accrued liabilities and Other long-term obligations $ 4 $ — $ 4 $ — Total financial liabilities $ 4 $ — $ 4 $ — A reconciliation of the beginning and ending fair values of financial instruments valued using significant unobservable inputs (Level 3) on a recurring basis is presented as follows: Fuel Swap Contract Assets (In millions) (Liabilities) Location of Gain (Loss) included in Earnings Balance as of December 31, 2016 $ 5 Total (losses) gains (realized and unrealized) Included in earnings 1 Cost of services rendered and products sold Included in other comprehensive income (5) Settlements (1) Balance as of June 30, 2017 $ — Balance as of December 31, 2015 $ (4) Total (losses) gains (realized and unrealized) Included in earnings (2) Cost of services rendered and products sold Included in other comprehensive income 4 Settlements 2 Balance as of June 30, 2016 $ 1 The following tables present information relating to the significant unobservable inputs of the Company’s Level 3 financial instruments: Fair Value Valuation Weighted (in millions) Technique Unobservable Input Range Average As of June 30, 2017: Fuel swap contracts $ — Discounted Cash Flows Forward Unleaded Price per Gallon (1) $1.83 - $2.90 $ 2.36 As of December 31, 2016: Fuel swap contracts $ 5 Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.31 - $2.85 $ 2.55 ___________________________________ (1) Forward prices per gallon were derived from third-party market data providers. A decrease in the forward price would result in a decrease in the fair value of the fuel swap contracts. The Company uses derivative financial instruments to manage risks associated with changes in fuel prices and interest rates. The Company does not hold or issue derivative financial instruments for trading or speculative purposes. In designating its derivative financial instruments as hedging instruments under accounting standards for derivative instruments, the Company formally documents the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for the use of the hedging instrument. This documentation includes linking the derivatives to forecasted transactions. The Company assesses at the time a derivative contract is entered into, and at least quarterly thereafter, whether the derivative item is effective in offsetting the projected changes in cash flows of the associated forecasted transactions. All of the Company’s designated hedging instruments are classified as cash flow hedges. The Company has historically hedged a significant portion of its annual fuel consumption. The Company has also historically hedged the interest payments on a portion of its variable rate debt through the use of interest rate swap agreements. All of the Company’s fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the condensed consolidated statements of financial position as either an asset or liability at fair value, with the effective portion of changes in the fair value attributable to the hedged risks recorded in accumulated other comprehensive income (loss). Any change in the fair value of the hedging instrument resulting from ineffectiveness, as defined by accounting standards, is recognized in current period earnings. Cash flows related to fuel and interest rate derivatives are classified as operating activities in the condensed consolidated statements of cash flows. Ineffective portions of derivative instruments designated in accordance with accounting standards as cash flow hedge relationships we re insignificant during the six months ended June 30, 2017 . As of June 30, 2017 , the Company had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $33 million, maturing through 2018. Under the terms of its fuel swap contracts, the Company is required to post collateral in the event that the fair value of the contracts exceeds a certain agreed upon liability level and in other circumstances required by the counterparty. As of June 30, 2017 , the Company had posted $ 2 million in letters of credit as collateral under its fuel hedging program, which were issued under the Revolving Credit Facility. The effective portion of the gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments is recorded in accumulated other comprehensive income (loss). These amounts are reclassified into earnings in the same period or periods during which the hedged forecasted debt interest settlement or the fuel settlement affects earnings. See Note 6 to the condensed consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in accumulated other comprehensive income (loss) and for the amounts reclassified out of accumulated other comprehensive income (loss) 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 (loss) expected to be recognized in earnings is a loss of $4 million , net of tax, as of June 30, 2017 . The amounts that are ultimately reclassified into earnings will be based on actual fuel prices and interest rates at the time the positions are settled and may differ materially from the amount noted above. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 15 . Earnings Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The d ilutive effect of stock options, RSUs and performance shares are reflected in diluted net 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: Three Months Ended Six Months Ended June 30, June 30, (In millions, except per share data) 2017 2016 2017 2016 Income from continuing operations $ 85 $ 16 $ 123 $ 54 Weighted-average common shares outstanding 133.7 135.5 134.1 135.6 Effect of dilutive securities: RSUs 0.1 0.2 0.1 0.2 Stock options (1) 1.3 1.9 1.3 2.0 Weighted-average common shares outstanding—assuming dilution 135.0 137.7 135.5 137.7 Basic earnings per share from continuing operations $ 0.64 $ 0.11 $ 0.92 $ 0.40 Diluted earnings per share from continuing operations $ 0.63 $ 0.11 $ 0.91 $ 0.40 ___________________________________ (1) Options to purchase 1.3 million and 0.9 million shares for the three months ended June 30, 2017 and 2016, respectively, and 1.3 million and 0.9 million shares for the six months ended June 30, 2017 and 2016, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. |
Significant Accounting Polici21
Significant Accounting Policies (Policy) | 6 Months Ended |
Jun. 30, 2017 | |
Significant Accounting Policies [Abstract] | |
Newly Issued Accounting Standards | Ne wly Issued 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. This model supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” Entities have the option of using either a full retrospective or modified approach to adopt the guidance. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2016. To date, the Company has performed the following: A transition team has been established to implement the required changes; an initial assessment of the Company’s revenue streams has been initiated; the Company has substantially completed its inventory of all outstanding contracts; and the Company has begun the process of applying the five-step model to those contracts and revenue streams to evaluate the quantitative and qualitative impacts the new standard will have on its business and reported revenues. The Company plans to adopt the new revenue standard in the first quarter of 2018 utilizing the full retrospective transition method . The Company does not expect adoption of the new revenue standard to have a material impact on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” to change how entities measure certain equity investments, to require the disclosure of changes in the fair value of financial liabilities measured under the fair value option that are attributable to a company’s own credit, and to change certain other disclosure requirements. The changes in ASU 2016-01 specifically require that the changes in fair value of all investments in equity securities be recognized in net income. The amendments in ASU 2016-01 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and will be adopted prospectively. Upon adoption, changes in fair value of the Company’s available-for-sale securities, which are currently recognized in other comprehensive income, will be recognized in net income. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which is the final standard on accounting for leases. While both lessees and lessors are affected by the new guidance, the effects on lessees are much more significant. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. Entities are required to use a modified retrospective approach to adopt the guidance. The amendments in ASU 2016-02 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the Company’s consolidated financial statements and currently expects that most of the operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption of ASU 2016-02, which will increase the amount of total assets and total liabilities that is reported relative to such amounts prior to adoption. [ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 18 Cash payments (17) Balance as of June 30, 2017 $ 122 Balance as of December 31, 2015 $ 114 Provision for self-insured claims (1) 44 Cash payments (24) Balance as of June 30, 2016 $ 133 ___________________________________ (1) Includes a charge of $23 million recorded in the three and six months ended June 30, 2016 for an adjustment to the Company’s accrued self-insured claims related to automobile, general liability and workers’ compensation risks. The adjustment was based on the Company’s detailed annual assessment of this actuarially determined accrual, which the Company completes in the second quarter of each year. This adjustment related to coverage periods of 2015 and prior. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters | American Franchise (In millions) Terminix Home Shield Services Group Total Balance as of December 31, 2016 $ 1,601 $ 471 $ 175 $ 2,247 Acquisitions 1 4 — 5 Impact of foreign exchange rates 1 — — 1 Balance as of June 30, 2017 $ 1,603 $ 476 $ 175 $ 2,254 |
Schedule Of Other Intangible Asset Balances For Continuing Operations | As of June 30, 2017 As of December 31, 2016 Accumulated Accumulated (In millions) Gross Amortization Net Gross Amortization Net Trade names (1) $ 1,608 $ — $ 1,608 $ 1,608 $ — $ 1,608 Customer relationships 588 (547) 42 594 (538) 56 Franchise agreements 88 (68) 20 88 (67) 21 Other 81 (46) 35 65 (42) 23 Total $ 2,365 $ (661) $ 1,704 $ 2,356 $ (647) $ 1,708 ___________________________________ (1) Not subject to amortization. |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Comprehensive Income [Abstract] | |
Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects | Unrealized Gains Unrealized on Available Foreign Gains (Losses) -for-Sale Currency (In millions) on Derivatives Securities Translation Total Balance as of December 31, 2016 $ 12 $ 1 $ (15) $ (3) Other comprehensive (loss) income before reclassifications: Pre-tax amount (9) 2 2 (5) Tax benefit (3) — — (3) After-tax amount (6) 2 2 (2) Amounts reclassified from accumulated other comprehensive income (loss) (1) 3 — — 3 Net current period other comprehensive income (3) 2 2 1 Balance as of June 30, 2017 $ 9 $ 2 $ (13) $ (2) Balance as of December 31, 2015 $ (7) $ 2 $ (15) $ (21) Other comprehensive (loss) income before reclassifications: Pre-tax amount (4) (1) 3 (2) Tax benefit (1) — — (1) After-tax amount (3) (1) 3 (1) Amounts reclassified from accumulated other comprehensive income (loss) (1) 3 (2) — 2 Net current period other comprehensive (loss) income 1 (3) 3 1 Balance as of June 30, 2016 $ (7) $ (1) $ (12) $ (20) ___________________________________ (1) Amounts are net of tax. See reclassifications out of accumulated other comprehensive income (loss) below for further details. |
Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss) | Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Three Months Ended Six Months Ended Condensed Consolidated Statements of June 30, June 30, Operations and Comprehensive Income (In millions) 2017 2016 2017 2016 Location Losses on derivatives: Fuel swap contracts $ — $ (1) $ 1 $ (2) Cost of services rendered and products sold Interest rate swap contracts (4) (2) (5) (3) Interest expense Net losses on derivatives (3) (2) (4) (5) Impact of income taxes 1 1 1 2 Provision for income taxes Total reclassifications related to derivatives $ (2) $ (1) $ (3) $ (3) Gains on available-for-sale securities $ — $ 3 $ — $ 3 Interest and net investment income Impact of income taxes — (1) — (1) Provision for income taxes Total reclassifications related to securities $ — $ 2 $ — $ 2 Total reclassifications for the period $ (2) $ — $ (3) $ (2) |
Supplemental Cash Flow Inform25
Supplemental Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows | Six Months Ended June 30, (In millions) 2017 2016 Cash paid for or (received from): Interest expense $ 67 $ 70 Interest and dividend income — (1) Income taxes, net of refunds 41 37 |
Cash and Marketable Securities
Cash and Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 Gross Amortized Unrealized Unrealized Fair (In millions) Cost Gains Losses Value Available-for-sale securities, June 30, 2017: Debt securities $ 29 $ — $ — $ 29 Equity securities 21 3 — 24 Total securities $ 50 $ 3 $ — $ 53 Available-for-sale securities, December 31, 2016: Debt securities $ 27 $ — $ — $ 27 Equity securities 15 1 — 17 Total securities $ 43 $ 1 $ — $ 44 |
Schedule Of Proceeds And Gross Realized Gains Resulting From Sales Of Available-For-Sale Securities And Gross Realized Losses Or Impairment Charges Due To Other Than Temporary Declines In The Value Of Certain Investments | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2017 2016 2017 2016 Proceeds from sale of securities $ — $ 42 $ — $ 42 Gross realized gains, pre-tax — 4 — 4 Gross realized gains, net of tax — 2 — 2 Gross realized (losses), pre-tax — — — — Gross realized (losses), net of tax — — — — |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Long-Term Debt [Abstract] | |
Schedule Of Long-Term Debt | As of As of June 30, December 31, (In millions) 2017 2016 Senior secured term loan facility maturing in 2023 (1) $ 1,621 $ 1,628 Revolving credit facility maturing in 2021 — — 5.125% notes maturing in 2024 (2) 738 737 7.10% notes maturing in 2018 (3) 78 77 7.45% notes maturing in 2027 (3) 168 167 7.25% notes maturing in 2038 (3) 52 65 Vehicle capital leases (4) 94 87 Other 67 71 Less current portion (141) (59) Total long-term debt $ 2,678 $ 2,772 ___________________________________ (1) As of June 30, 2017 and December 31, 2016, presented net of $17 million and $ 18 million, respectively, in unamortized debt issuance costs and $4 million and $ 4 million, respectively, in unamortized original issue discount paid. (2) As of June 30, 2017 and December 31, 2016, presented net of $12 and $ 13 million, respectively, in unamortized debt issuance costs. (3) As of June 30, 2017 and December 31, 2016, collectively presented net of $42 million and $ 48 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. (4) The Company has entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows the Company to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are capital leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent. |
Schedule of Interest Rate Swap Agreements | Trade Date Effective Date Expiration Date Notional Amount Fixed Rate (1) Floating Rate November 7, 2016 November 8, 2016 November 30, 2023 $650,000 1.493 % One month LIBOR ___________________________________ (1) Before the application of the applicable borrowing margin. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Acquisitions [Abstract] | |
Schedule Of Supplemental Cash Flow Information Regarding Acquisitions | Six Months Ended June 30, (In millions) 2017 2016 Assets acquired $ 15 $ 88 Liabilities assumed (1) — Net assets acquired $ 14 $ 88 Net cash paid $ 12 $ 73 Seller financed debt 3 15 Purchase price $ 14 $ 88 |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Segment Reporting [Abstract] | |
Schedule Of Information For Continuing Operations For Each Reportable Segment And Other Operations And Headquarters | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2017 2016 2017 2016 Revenue: Terminix $ 428 $ 414 $ 794 $ 778 American Home Shield 326 282 553 477 Franchise Services Group 52 50 102 99 Reportable Segment Revenue $ 806 $ 747 $ 1,449 $ 1,354 Corporate 1 1 1 1 Total Revenue $ 807 $ 747 $ 1,450 $ 1,355 Reportable Segment Adjusted EBITDA: (1) Terminix $ 105 $ 112 $ 186 $ 207 American Home Shield 82 72 113 90 Franchise Services Group 22 19 43 37 Reportable Segment Adjusted EBITDA $ 209 $ 203 $ 343 $ 334 ___________________________________ Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: |
Schedule Of Reconciliation Of Reportable Segment Adjusted EBITDA To Net Income (Loss) | Three Months Ended Six Months Ended June 30, June 30, (In millions) 2017 2016 2017 2016 Net Income $ 85 $ 16 $ 124 $ 54 Unallocated corporate expenses — — (1) 3 Depreciation and amortization expense 25 22 51 43 401(k) Plan corrective contribution — 1 — 1 Fumigation related matters 1 88 2 91 Insurance reserve adjustment — 23 — 23 Non-cash stock-based compensation expense 4 4 9 7 Restructuring charges 1 4 3 5 Gain on sale of Merry Maids branches — — — (2) Non-cash impairment of software and other related costs — 1 2 1 Income from discontinued operations, net of income taxes — — (1) — Provision for income taxes 52 7 76 30 Loss on extinguishment of debt 3 — 3 — Interest expense 38 38 75 76 Reportable Segment Adjusted EBITDA $ 209 $ 203 $ 343 $ 334 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Schedule Of The Carrying Amount And Estimated Fair Value Of The Company's Financial Instruments That Are Recorded At Fair Value On A Recurring Basis | Estimated Fair Value Measurements Quoted Significant Prices In Other Significant Active Observable Unobservable Statement of Financial Carrying Markets Inputs Inputs (In millions) Position Location Value (Level 1) (Level 2) (Level 3) As of June 30, 2017: Financial Assets: Deferred compensation trust Long-term marketable securities $ 8 $ 8 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 45 40 5 — Fuel swap contracts Prepaid expenses and other assets 1 — — 1 Interest rate swap contract Other assets 21 — 21 — Total financial assets $ 75 $ 48 $ 26 $ 1 Financial Liabilities: Fuel swap contracts Other accrued liabilities $ 1 $ — $ — $ 1 Interest rate swap contract Other accrued liabilities 1 — 1 — Total financial liabilities $ 2 $ — $ 1 $ 1 As of December 31, 2016: Financial Assets: Deferred compensation trust Long-term marketable securities $ 8 $ 8 $ — $ — Investments in marketable securities Marketable securities and Long-term marketable securities 36 33 3 — Fuel swap contracts Prepaid expenses and other assets and Other assets 5 — — 5 Interest rate swap contract Other assets 27 — 27 — Total financial assets $ 75 $ 40 $ 30 $ 5 Financial Liabilities: Interest rate swap contract Other accrued liabilities and Other long-term obligations $ 4 $ — $ 4 $ — Total financial liabilities $ 4 $ — $ 4 $ — |
Schedule Of Reconciliation Of The Beginning And Ending Fair Values Of Financial Instruments Valued Using Significant Unobservable Inputs (Level 3) On A Recurring Basis | Fuel Swap Contract Assets (In millions) (Liabilities) Location of Gain (Loss) included in Earnings Balance as of December 31, 2016 $ 5 Total (losses) gains (realized and unrealized) Included in earnings 1 Cost of services rendered and products sold Included in other comprehensive income (5) Settlements (1) Balance as of June 30, 2017 $ — Balance as of December 31, 2015 $ (4) Total (losses) gains (realized and unrealized) Included in earnings (2) Cost of services rendered and products sold Included in other comprehensive income 4 Settlements 2 Balance as of June 30, 2016 $ 1 |
Schedule Of Level 3 Financial Instruments | Fair Value Valuation Weighted (in millions) Technique Unobservable Input Range Average As of June 30, 2017: Fuel swap contracts $ — Discounted Cash Flows Forward Unleaded Price per Gallon (1) $1.83 - $2.90 $ 2.36 As of December 31, 2016: Fuel swap contracts $ 5 Discounted Cash Flows Forward Unleaded Price per Gallon (1) $2.31 - $2.85 $ 2.55 ___________________________________ (1) Forward prices per gallon were derived from third-party market data providers. A decrease in the forward price would result in a decrease in the fair value of the fuel swap contracts. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule Of Reconciliation Of The Amounts Included In The Computation Of Basic Earnings Per Share From Continuing Operations And Diluted Earnings Per Share From Continuing Operations | Three Months Ended Six Months Ended June 30, June 30, (In millions, except per share data) 2017 2016 2017 2016 Income from continuing operations $ 85 $ 16 $ 123 $ 54 Weighted-average common shares outstanding 133.7 135.5 134.1 135.6 Effect of dilutive securities: RSUs 0.1 0.2 0.1 0.2 Stock options (1) 1.3 1.9 1.3 2.0 Weighted-average common shares outstanding—assuming dilution 135.0 137.7 135.5 137.7 Basic earnings per share from continuing operations $ 0.64 $ 0.11 $ 0.92 $ 0.40 Diluted earnings per share from continuing operations $ 0.63 $ 0.11 $ 0.91 $ 0.40 ___________________________________ (1) Options to purchase 1.3 million and 0.9 million shares for the three months ended June 30, 2017 and 2016, respectively, and 1.3 million and 0.9 million shares for the six months ended June 30, 2017 and 2016, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. |
Commitments and Contingencies32
Commitments and Contingencies (Narrative) (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)item | Jun. 30, 2016USD ($) | |
Loss Contingencies [Line Items] | ||||
401(k) Plan corrective contribution | $ 1 | $ 1 | ||
Number of misdemeanor charges | item | 4 | |||
Gain (Loss) Related to Litigation Settlement | $ (1) | $ (88) | $ (2) | $ (91) |
Maximum [Member] | ||||
Loss Contingencies [Line Items] | ||||
401(k) Plan corrective contribution | 93 | |||
Minimum [Member] | ||||
Loss Contingencies [Line Items] | ||||
401(k) Plan corrective contribution | 25 | |||
Terminix International USVI, LLC (“TMX USVI”) [Member] | New Plea Agreement [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | 4 | 4 | ||
Terminix International USVI, LLC (“TMX USVI”) [Member] | New Plea Agreement [Member] | National Fish and Wildlife Foundation [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | 1 | 1 | ||
Terminix International USVI, LLC (“TMX USVI”) [Member] | New Plea Agreement [Member] | Environmental Protection Agency (the “EPA”) [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | 1 | 1 | ||
The Terminix International Company Limited Partnership (“TMX LP”) [Member] | New Plea Agreement [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | 4 | 4 | ||
TMX USVI and TMX LP [Member] | New Plea Agreement [Member] | ||||
Loss Contingencies [Line Items] | ||||
Fines and penalties | $ 8 | $ 8 | ||
Probation period | 3 years | |||
Gain (Loss) Related to Litigation Settlement | $ 10 |
Commitments and Contingencies33
Commitments and Contingencies (Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Commitments and Contingencies [Line Items] | ||||
Increase (Decrease) in Self Insurance Reserve | $ 23 | $ 23 | ||
Accrued Self-Insured Claims, Net [Member] | ||||
Commitments and Contingencies [Line Items] | ||||
Balance at the beginning of the period | $ 120 | 114 | ||
Provision for self-insured claims | 18 | 44 | [1] | |
Cash payments | (17) | (24) | ||
Balance at the end of the period | $ 133 | $ 122 | $ 133 | |
[1] | Includes a charge of $23 million recorded in the three and six months ended June 30, 2016 for an adjustment to the Company's accrued self-insured claims related to automobile, general liability and workers' compensation risks. The adjustment was based on the Company's detailed annual assessment of this actuarially determined accrual, which the Company completes in the second quarter of each year. This adjustment related to coverage periods of 2015 and prior. |
Goodwill and Intangible Asset34
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Indefinite-lived Intangible Assets [Line Items] | ||||
Accumulated impairment losses recorded in continuing operations | $ 0 | $ 0 | ||
Amortization expense | 7 | $ 8 | 14 | $ 16 |
Amortization expense, for the remainder of 2017 | 13 | 13 | ||
Amortization expense, 2018 | 21 | 21 | ||
Amortization expense, 2019 | 16 | 16 | ||
Amortization expense, 2020 | 12 | 12 | ||
Amortization expense, 2021 | 9 | 9 | ||
Amortization expense, Thereafter | 6 | 6 | ||
Trade Names [Member] | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Goodwill and trade name impairment | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset35
Goodwill and Intangible Assets (Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | $ 2,247 |
Acquisitions | 5 |
Impact of foreign exchange rates | 1 |
Other | 1 |
Balance at the end of the period | 2,254 |
Terminix [Member] | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | 1,601 |
Acquisitions | 1 |
Impact of foreign exchange rates | 1 |
Other | 1 |
Balance at the end of the period | 1,603 |
American Home Shield [Member] | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | 471 |
Acquisitions | 4 |
Balance at the end of the period | 476 |
Franchise Services Group [Member] | |
Goodwill balances by segment for continuing operations | |
Balance at the beginning of the period | 175 |
Balance at the end of the period | $ 175 |
Goodwill and Intangible Asset36
Goodwill and Intangible Assets (Schedule Of Other Intangible Asset Balances For Continuing Operations) (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 | |
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible Assets Gross, Excluding Goodwill | $ 2,365 | $ 2,356 | |
Accumulated Amortization | (661) | (647) | |
Intangible Assets Net, Excluding Goodwill | 1,704 | 1,708 | |
Customer Relationships [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible Assets Gross, Excluding Goodwill | 588 | 594 | |
Accumulated Amortization | (547) | (538) | |
Intangible Assets Net, Excluding Goodwill | 42 | 56 | |
Franchise Agreements [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible Assets Gross, Excluding Goodwill | 88 | 88 | |
Accumulated Amortization | (68) | (67) | |
Intangible Assets Net, Excluding Goodwill | 20 | 21 | |
Other [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible Assets Gross, Excluding Goodwill | 81 | 65 | |
Accumulated Amortization | (46) | (42) | |
Intangible Assets Net, Excluding Goodwill | 35 | 23 | |
Trade Names [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible Assets Gross, Excluding Goodwill | [1] | 1,608 | 1,608 |
Intangible Assets Net, Excluding Goodwill | [1] | $ 1,608 | $ 1,608 |
[1] | Not subject to amortization. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Stock-Based Compensation [Abstract] | ||||
Stock-based compensation expense | $ 4 | $ 4 | $ 9 | $ 7 |
Stock-based compensation expense, net of tax | 2 | $ 2 | 5 | $ 4 |
Total unrecognized compensation costs related to non-vested stock options and restricted share units | $ 33 | $ 33 | ||
Weighted-average period of recognition of stock-based compensation cost | 2 years 4 months 28 days |
Comprehensive Income (Summary O
Comprehensive Income (Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects) (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at the beginning of period | $ (3) | $ (21) | |
Other comprehensive (loss) income before reclassifications: | |||
Pre-tax amount | (5) | (2) | |
Tax benefit | (3) | (1) | |
After-tax amount | (2) | (1) | |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 3 | 2 |
Net current period other comprehensive (loss) income | 1 | 1 | |
Balance at the end of period | (2) | (20) | |
Unrealized Gains (Losses) on Derivatives [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at the beginning of period | 12 | (7) | |
Other comprehensive (loss) income before reclassifications: | |||
Pre-tax amount | (9) | (4) | |
Tax benefit | (3) | (1) | |
After-tax amount | (6) | (3) | |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | 3 | 3 |
Net current period other comprehensive (loss) income | (3) | 1 | |
Balance at the end of period | 9 | (7) | |
Unrealized Gains on Available-for-Sale Securities [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at the beginning of period | 1 | 2 | |
Other comprehensive (loss) income before reclassifications: | |||
Pre-tax amount | 2 | (1) | |
After-tax amount | 2 | (1) | |
Amounts reclassified from accumulated other comprehensive income (loss) | [1] | (2) | |
Net current period other comprehensive (loss) income | 2 | (3) | |
Balance at the end of period | 2 | (1) | |
Foreign Currency Translation [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at the beginning of period | (15) | (15) | |
Other comprehensive (loss) income before reclassifications: | |||
Pre-tax amount | 2 | 3 | |
After-tax amount | 2 | 3 | |
Net current period other comprehensive (loss) income | 2 | 3 | |
Balance at the end of period | $ (13) | $ (12) | |
[1] | Amounts are net of tax. See reclassifications out of accumulated other comprehensive income (loss) below for further details. |
Comprehensive Income (Schedule
Comprehensive Income (Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Cost of services rendered and products sold | $ (415) | $ (379) | $ (761) | $ (704) |
Interest expense | (38) | (38) | (75) | (76) |
Interest and net investment loss (income) | 1 | 4 | 1 | 4 |
Provision for income taxes | (52) | (7) | (76) | (30) |
Net Income | 85 | 16 | 124 | 54 |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net Income | (2) | (3) | (2) | |
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 | (3) | (2) | (4) | (5) |
Provision for income taxes | 1 | 1 | 1 | 2 |
Net Income | (2) | (1) | (3) | (3) |
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 | (1) | 1 | (2) | |
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 | $ (4) | (2) | $ (5) | (3) |
Unrealized Gains 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 loss (income) | 3 | 3 | ||
Provision for income taxes | (1) | (1) | ||
Net Income | $ (2) | $ (2) |
Supplemental Cash Flow Inform40
Supplemental Cash Flow Information (Narrative) (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash paid for or (received from): | ||||
Cash and cash equivalents | $ 378,000,000 | $ 342,000,000 | $ 291,000,000 | |
Restricted cash | 89,000,000 | 95,000,000 | 95,000,000 | $ 0 |
Cash and Cash Equivalents Including Restricted Cash, at Carrying Value | 467,000,000 | 437,000,000 | $ 386,000,000 | $ 296,000,000 |
Capital lease and other non-cash financing transactions | 23,000,000 | 29,000,000 | ||
Cash received for franchise | $ 1,000,000 | 7,000,000 | ||
Merry Maids [Member] | ||||
Cash paid for or (received from): | ||||
Total purchase price for conversion of certain company-owned Merry Maids branches to franchises | 8,000,000 | |||
Cash received for franchise | 6,000,000 | |||
Financing provided for franchise | $ 2,000,000 |
Supplemental Cash Flow Inform41
Supplemental Cash Flow Information (Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash paid for or (received from): | ||
Interest expense | $ 67 | $ 70 |
Interest and dividend income | (1) | |
Income taxes, net of refunds | $ 41 | $ 37 |
Cash and Marketable Securitie42
Cash and Marketable Securities (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Cash and Marketable Securities [Abstract] | |||||
Portion of unrealized losses in loss position for more than one year | $ 0 | $ 0 | $ 0 | ||
Impairment charges due to other than temporary declines in the value of certain investments | $ 0 | $ 0 | $ 0 | $ 0 |
Cash and Marketable Securitie43
Cash and Marketable Securities (Schedule Of Amortized Cost, Fair Value And Gross Unrealized Gains And Losses Of The Company's Short- And Long-Term Investments In Debt And Equity Securities) (Details) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost of securities | $ 50 | $ 43 |
Gross unrealized gains of securities | 3 | 1 |
Fair value of securities | 53 | 44 |
Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost of debt securities | 29 | 27 |
Fair value of debt securities | 29 | 27 |
Equity Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost of equity securities | 21 | 15 |
Gross unrealized gains of equity securities | 3 | 1 |
Fair value of equity securities | $ 24 | $ 17 |
Cash and Marketable Securitie44
Cash and Marketable Securities (Schedule Of Proceeds And Gross Realized Gains Resulting From Sales Of Available-For-Sale Securities And Gross Realized Losses)(Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2016 | Jun. 30, 2016 | |
Cash and Marketable Securities [Abstract] | ||
Proceeds from sale of securities | $ 42 | $ 42 |
Gross realized gains, pre-tax | 4 | 4 |
Gross realized gains, net of tax | $ 2 | $ 2 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($) | |
Debt Instrument [Line Items] | ||
Loss on extinguishment of debt | $ 3 | $ 3 |
7.25% Notes Maturing In 2038 [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 7.25% | 7.25% |
Repayment of principal amount | $ 17 | $ 17 |
Loss on extinguishment of debt | $ 3 | |
Redemption percentage | 97.00% |
Long-Term Debt (Schedule Of Lon
Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2017 | Dec. 31, 2016 | ||
Long-term debt [Line Items] | |||
Less current portion | $ (141) | $ (59) | |
Total long-term debt | 2,678 | 2,772 | |
Vehicle Capital Leases [Member] | |||
Long-term debt [Line Items] | |||
Vehicle capital leases | [1] | $ 94 | 87 |
Borrowing margin (as a percent) | 2.45% | ||
Variable rate basis | one-month LIBOR | ||
Senior Secured Term Loan Facility Maturing In 2023 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [2] | $ 1,621 | 1,628 |
Unamortized debt issuance costs | 17 | 18 | |
Unamortized original issue discount | 4 | 4 | |
Revolving Credit Facility Maturing In 2021 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [2],[3] | ||
5.125% Notes Maturing In 2024 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [3] | $ 738 | 737 |
Interest rate (as a percent) | 5.125% | ||
Unamortized debt issuance costs | $ 12 | 13 | |
7.10% Notes Maturing In 2018 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [4] | $ 78 | 77 |
Interest rate (as a percent) | 7.10% | ||
7.45% Notes Maturing In 2027 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [4] | $ 168 | 167 |
Interest rate (as a percent) | 7.45% | ||
7.25% Notes Maturing In 2038 [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [4] | $ 52 | 65 |
Interest rate (as a percent) | 7.25% | ||
7.10% Notes, 7.45% Notes, 7.25% Notes Collectively [Member] | |||
Long-term debt [Line Items] | |||
Unamortized fair value adjustments related to purchase accounting | $ 42 | 48 | |
Other [Member] | |||
Long-term debt [Line Items] | |||
Long-term debt | [1] | $ 67 | $ 71 |
[1] | The Company has entered into a fleet management services agreement (the "Fleet Agreement") which, among other things, allows the Company to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are capital leases for accounting purposes. The lease rental payments include an interest component calculated using a variable rate based on one-month LIBOR plus other contractual adjustments and a borrowing margin totaling 2.45 percent.Repurchase of Notes | ||
[2] | As of June 30, 2017 and December 31, 2016, presented net of $17 million and $18 million, respectively, in unamortized debt issuance costs and $4 million and $4 million, respectively, in unamortized original issue discount paid. | ||
[3] | As of June 30, 2017 and December 31, 2016, presented net of $12 and $13 million, respectively, in unamortized debt issuance costs. | ||
[4] | As of June 30, 2017 and December 31, 2016, collectively presented net of $42 million and $48 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above. |
Long-Term Debt (Schedule of Int
Long-Term Debt (Schedule of Interest Rate Swap Agreements) (Details) - Interest Rate Swap Contracts [Member] $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($) | ||
Derivative, Trade Date | Nov. 7, 2016 | |
Derivative, Effective Date | Nov. 8, 2016 | |
Derivative, Expiration Date | Nov. 30, 2023 | |
Notional amount | $ 650,000 | |
Fixed Rate (as a percent) | 1.493% | [1] |
Floating Rate | One month LIBOR | |
[1] | Before the application of the applicable borrowing margin. |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) $ in Millions | 6 Months Ended | ||
Jun. 30, 2017USD ($)entity | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Acquisitions [Line Items] | |||
Net purchase price | $ 14 | $ 88 | |
Goodwill | 2,254 | $ 2,247 | |
Landmark [Member] | |||
Acquisitions [Line Items] | |||
Net purchase price | 39 | ||
Goodwill | 37 | ||
Other intangibles related to acquisitions | 13 | ||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Intangibles | $ 4 | ||
OneGuard Home Warranties [Member] | |||
Acquisitions [Line Items] | |||
Net purchase price | 65 | ||
Goodwill | 57 | ||
Other intangibles related to acquisitions | 15 | ||
Pest control, termite and franchise acquisitions [Member] | |||
Acquisitions [Line Items] | |||
Number of Businesses Acquired | entity | 2 | ||
Net purchase price | $ 14 | 23 | |
Goodwill | 1 | 17 | |
Other intangibles related to acquisitions | $ 13 | $ 3 |
Acquisitions (Schedule Of Suppl
Acquisitions (Schedule Of Supplemental Cash Flow Information Regarding Acquisitions) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Supplemental cash flow information regarding acquisitions | ||
Assets acquired | $ 15 | $ 88 |
Liabilities assumed | (1) | |
Net assets acquired | 14 | 88 |
Net cash paid | 12 | 73 |
Seller financed debt | 3 | 15 |
Purchase price | $ 14 | $ 88 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Income Taxes [Abstract] | |||||
Unrecognized tax benefits that would impact effective tax rate if recognized | $ 13 | $ 13 | $ 13 | ||
Estimated reduction in unrecognized tax benefits during the next 12 months | $ 2 | $ 2 | |||
Effective tax rate on income from continuing operations (as a percent) | 38.00% | 31.00% | 38.00% | 35.40% |
Business Segment Reporting (Nar
Business Segment Reporting (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2017segment | |
Business Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Maximum percentage of revenue from customers and franchisees generated in foreign market | 2.00% |
Business Segment Reporting (Sch
Business Segment Reporting (Schedule Of Information For Continuing Operations For Each Reportable Segment And Other Operations And Headquarters) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 807 | $ 747 | $ 1,450 | $ 1,355 | |
Adjusted EBITDA | 209 | 203 | 343 | 334 | |
Depreciation & Amortization Expense | 25 | 22 | 51 | 43 | |
Capital Expenditures | 34 | 31 | |||
Operating Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 806 | 747 | 1,449 | 1,354 | |
Adjusted EBITDA | [1] | 209 | 203 | 343 | 334 |
Terminix [Member] | Operating Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 428 | 414 | 794 | 778 | |
Adjusted EBITDA | [1] | 105 | 112 | 186 | 207 |
American Home Shield [Member] | Operating Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 326 | 282 | 553 | 477 | |
Adjusted EBITDA | [1] | 82 | 72 | 113 | 90 |
Franchise Services Group [Member] | Operating Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 52 | 50 | 102 | 99 | |
Adjusted EBITDA | [1] | 22 | 19 | 43 | 37 |
Corporate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | $ 1 | $ 1 | 1 | 1 | |
Adjusted EBITDA | $ (1) | $ 3 | |||
[1] | Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: Three Months EndedSix Months EndedJune 30,June 30,(In millions)2017201620172016Net Income$ 85$ 16$ 124$ 54Unallocated corporate expenses - - (1) 3Depreciation and amortization expense 25 22 51 43401(k) Plan corrective contribution - 1 - 1Fumigation related matters 1 88 2 91Insurance reserve adjustment - 23 - 23Non-cash stock-based compensation expense 4 4 9 7Restructuring charges 1 4 3 5Gain on sale of Merry Maids branches - - - (2)Non-cash impairment of software and other related costs - 1 2 1Income from discontinued operations, net of income taxes - - (1) -Provision for income taxes 52 7 76 30Loss on extinguishment of debt 3 - 3 -Interest expense 38 38 75 76Reportable Segment Adjusted EBITDA $ 209$ 203$ 343$ 334 |
Business Segment Reporting (S53
Business Segment Reporting (Schedule Of Reconciliation Of Reportable Segment Adjusted EBITDA To Net Income (Loss)) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Net Income | $ 85 | $ 16 | $ 124 | $ 54 | |
Depreciation and amortization expense | 25 | 22 | 51 | 43 | |
401(k) Plan corrective contribution | 1 | 1 | |||
Fumigation related matters (Note 3) | 1 | 88 | 2 | 91 | |
Insurance reserve adjustment | 23 | 23 | |||
Non-cash stock-based compensation expense | 4 | 4 | 9 | 7 | |
Restructuring charges | 1 | 4 | 3 | 5 | |
Gain on sale of Merry Maids branches | (2) | ||||
Non-cash impairment of software and other related costs | 1 | 2 | 1 | ||
Income from discontinued operations, net of income taxes | (1) | ||||
Provision for income taxes | 52 | 7 | 76 | 30 | |
Loss on extinguishment of debt | 3 | 3 | |||
Interest expense | 38 | 38 | 75 | 76 | |
Reportable Segment Adjusted EBITDA | 209 | 203 | 343 | 334 | |
Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 209 | 203 | 343 | 334 |
Terminix [Member] | Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 105 | 112 | 186 | 207 |
American Home Shield [Member] | Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | 82 | 72 | 113 | 90 |
Franchise Services Group [Member] | Operating Segment [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | [1] | $ 22 | $ 19 | 43 | 37 |
Corporate [Member] | |||||
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss) | |||||
Reportable Segment Adjusted EBITDA | $ (1) | $ 3 | |||
[1] | Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA: Three Months EndedSix Months EndedJune 30,June 30,(In millions)2017201620172016Net Income$ 85$ 16$ 124$ 54Unallocated corporate expenses - - (1) 3Depreciation and amortization expense 25 22 51 43401(k) Plan corrective contribution - 1 - 1Fumigation related matters 1 88 2 91Insurance reserve adjustment - 23 - 23Non-cash stock-based compensation expense 4 4 9 7Restructuring charges 1 4 3 5Gain on sale of Merry Maids branches - - - (2)Non-cash impairment of software and other related costs - 1 2 1Income from discontinued operations, net of income taxes - - (1) -Provision for income taxes 52 7 76 30Loss on extinguishment of debt 3 - 3 -Interest expense 38 38 75 76Reportable Segment Adjusted EBITDA $ 209$ 203$ 343$ 334 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Related party transactions | ||||
Written notice period for termination of service agreement | 90 days | |||
New TruGreen's [Member] | ||||
Related party transactions | ||||
Fees due from New TruGreen | $ 1 | $ 2 | $ 1 | $ 4 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Letters of credit posted as collateral under fuel hedging program | $ 2,000,000 | |
Hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings, net of tax | 4,000,000 | |
Carrying Value [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Long Term Debt And Capital Lease Obligation | 2,819,000,000 | $ 2,831,000,000 |
Estimated Fair Value [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Fair value of total debt | 2,938,000,000 | $ 2,930,000,000 |
Fuel Swap Contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Aggregate notional amount | 33,000,000 | |
Interest Rate Swap Contracts [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Aggregate notional amount | $ 650,000,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule Of The Carrying Amount And Estimated Fair Value Of The Company's Financial Instruments That Are Recorded At Fair Value On A Recurring Basis) (Details) - Recurring [Member] - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Quoted Price In Active Markets (Level 1) [Member] | ||
Financial Assets: | ||
Deferred compensation trust | $ 8 | $ 8 |
Investments in marketable securities | 40 | 33 |
Total financial assets | 48 | 40 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Financial Assets: | ||
Investments in marketable securities | 5 | 3 |
Total financial assets | 26 | 30 |
Total financial liabilities | 1 | 4 |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 21 | 27 |
Derivative liability, Current | 1 | |
Total financial liabilities | 4 | |
Significant Unobservable Inputs (Level 3) [Member] | ||
Financial Assets: | ||
Total financial assets | 1 | 5 |
Total financial liabilities | 1 | |
Significant Unobservable Inputs (Level 3) [Member] | Fuel Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 1 | |
Total financial assets | 5 | |
Derivative liability, Current | 1 | |
Carrying Value [Member] | ||
Financial Assets: | ||
Deferred compensation trust | 8 | 8 |
Investments in marketable securities | 45 | 36 |
Total financial assets | 75 | 75 |
Total financial liabilities | 2 | 4 |
Carrying Value [Member] | Fuel Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 1 | |
Total financial assets | 5 | |
Derivative liability, Current | 1 | |
Carrying Value [Member] | Interest Rate Swap Contracts [Member] | ||
Financial Assets: | ||
Derivative asset, Current | 21 | 27 |
Derivative liability, Current | $ 1 | |
Total financial liabilities | $ 4 |
Fair Value Measurements (Sche57
Fair Value Measurements (Schedule Of Reconciliation Of The Beginning And Ending Fair Values Of Financial Instruments Valued Using Significant Unobservable Inputs (Level 3) On A Recurring Basis) (Details) - Fuel Swap Contracts [Member] - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
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 | $ 5 | $ (4) |
Total (losses) gains (realized and unrealized) | ||
Included in earnings | 1 | (2) |
Included in other comprehensive income | (5) | 4 |
Settlements | $ (1) | 2 |
Balance at the end of the period | $ 1 |
Fair Value Measurements (Sche58
Fair Value Measurements (Schedule Of Level 3 Financial Instruments) (Details) - Fuel Swap Contracts [Member] $ in Millions | Jun. 30, 2017$ / gal | Dec. 31, 2016USD ($)$ / gal | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) | ||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||||
Fair value at the end of the period | $ | $ 5 | $ 1 | $ (4) | |||
Discounted Cash Flows [Member] | Minimum [Member] | ||||||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||||
Forward Unleaded Price per Gallon (in dollars per gallon) | 1.83 | 2.31 | [1] | |||
Discounted Cash Flows [Member] | Maximum [Member] | ||||||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||||
Forward Unleaded Price per Gallon (in dollars per gallon) | [1] | 2.90 | 2.85 | |||
Discounted Cash Flows [Member] | Weighted Average [Member] | ||||||
Information relating to the significant unobservable inputs of Level 3 financial instruments | ||||||
Forward Unleaded Price per Gallon (in dollars per gallon) | [1] | 2.36 | 2.55 | |||
[1] | Forward prices per gallon were derived from third-party market data providers. A decrease in the forward price would result in a decrease in the fair value of the fuel swap contracts. |
Earnings Per Share (Schedule Of
Earnings Per Share (Schedule Of Reconciliation Of The Amounts Included In The Computation Of Basic Earnings Per Share From Continuing Operations And Diluted Earnings Per Share From Continuing Operations) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | ||
Income from continuing operations | $ 85 | $ 16 | $ 123 | $ 54 | |
Weighted average common shares outstanding | 133.7 | 135.5 | 134.1 | 135.6 | |
Effect of dilutive securities: | |||||
Weighted average common shares outstanding-assuming dilution | 135 | 137.7 | 135.5 | 137.7 | |
Basic earnings per share from continuing operations (in dollars per share) | $ 0.64 | $ 0.11 | $ 0.92 | $ 0.40 | |
Diluted earnings per share from continuing operations (in dollars per share) | $ 0.63 | $ 0.11 | $ 0.91 | $ 0.40 | |
RSUs [Member] | |||||
Effect of dilutive securities: | |||||
Dilutive securities | 0.1 | 0.2 | 0.1 | 0.2 | |
Stock Options [Member] | |||||
Effect of dilutive securities: | |||||
Dilutive securities | [1] | 1.3 | 1.9 | 1.3 | 2 |
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 1.3 | 0.9 | 1.3 | 0.9 | |
[1] | Options to purchase 1.3 million and 0.9 million shares for the three months ended June 30, 2017 and 2016, respectively, and 1.3 million and 0.9 million shares for the six months ended June 30, 2017 and 2016, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) | Jul. 26, 2017entity |
American Home Shield And Terminix and Franchise Services Group, Separation [Member] | Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Number Of Independent, Publicly Traded Companies | 2 |