10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 001-36507

________________________________________________

ServiceMaster Global Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-8738320
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

860 Ridge Lake Boulevard, Memphis, Tennessee 38120

(Address of principal executive offices) (Zip Code)

901-597-1400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,”“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐  No  ☒

The number of shares of the registrant’s common stock outstanding as of April 29, 2016:135,740,188shares of common stock, par value $0.01 per share

TABLE OF CONTENTS

	Page No.
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations and Comprehensive Income	3
Condensed Consolidated Statements of Financial Position	4
Condensed Consolidated Statements of Cash Flows	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	32
Part II. Other Information	32
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6. Exhibits	34
Signature	35

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(In millions, except per share data)

	Three Months Ended
	March 31,
	2016		2015
Revenue	$	608	$	571
Cost of services rendered and products sold		324		303
Selling and administrative expenses		173		152
Amortization expense		8		12
Restructuring charges		1		2
Gain on sale of Merry Maids branches		(1)		(1)
Interest expense		38		46
Interest and net investment income		(1)		(1)
Loss on extinguishment of debt		—		13
Other expense		3		—
Income from Continuing Operations before Income Taxes		62		45
Provision for income taxes		23		17
Income from Continuing Operations		39		28
Loss from discontinued operations, net of income taxes		—		—
Net Income	$	39	$	28
Total Comprehensive Income	$	40	$	22
Weighted-average common shares outstanding - Basic		135.6		134.4
Weighted-average common shares outstanding - Diluted		137.8		136.1
Basic Earnings Per Share:
Income from Continuing Operations	$	0.29	$	0.21
Loss from discontinued operations, net of income taxes		—		—
Net Income		0.28		0.21
Diluted Earnings Per Share:
Income from Continuing Operations	$	0.28	$	0.21
Loss from discontinued operations, net of income taxes		—		—
Net Income		0.28		0.20

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

3

Condensed Consolidated Statements of Financial Position (Unaudited)

(In millions, except per share data)

	As of		As of
	March 31,		December 31,
	2016		2015
Assets:
Current Assets:
Cash and cash equivalents	$	371	$	296
Marketable securities		25		24
Receivables, less allowances of $21 and $23, respectively		458		487
Inventories		39		40
Prepaid expenses and other assets		133		54
Deferred customer acquisition costs		30		32
Total Current Assets		1,056		933
Other Assets:
Property and equipment, net		164		160
Goodwill		2,131		2,129
Intangible assets, primarily trade names, service marks and trademarks, net		1,695		1,704
Notes receivable		33		32
Long-term marketable securities		56		57
Other assets		45		83
Total Assets	$	5,180	$	5,098
Liabilities and Shareholders' Equity:
Current Liabilities:
Accounts payable	$	105	$	110
Accrued liabilities:
Payroll and related expenses		56		64
Self-insured claims and related expenses		179		106
Accrued interest payable		3		10
Other		63		59
Deferred revenue		567		552
Liabilities of discontinued operations		1		—
Current portion of long-term debt		55		54
Total Current Liabilities		1,028		955
Long-Term Debt		2,693		2,698
Other Long-Term Liabilities:
Deferred taxes		687		687
Other long-term obligations, primarily self-insured claims		182		213
Total Other Long-Term Liabilities		868		901
Commitments and Contingencies
Shareholders' Equity:
Common stock $0.01 par value (authorized 2,000,000,000 shares with 143,389,172 shares issued and 135,729,451 outstanding at March 31, 2016 and 143,170,897 shares issued and 135,511,176 outstanding at December 31, 2015)		2		2
Additional paid-in capital		2,250		2,245
Accumulated deficit		(1,521)		(1,560)
Accumulated other comprehensive loss		(19)		(21)
Less common stock held in treasury, at cost (7,659,721 shares at March 31, 2016 and December 31, 2015)		(122)		(122)
Total Shareholders' Equity		590		545
Total Liabilities and Shareholders' Equity	$	5,180	$	5,098

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

4

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

	Three Months Ended
	March 31,
	2016		2015
Cash and Cash Equivalents at Beginning of Period	$	296	$	389
Cash Flows from Operating Activities from Continuing Operations:
Net Income		39		28
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation expense		13		12
Amortization expense		8		12
Amortization of debt issuance costs		1		1
Gain on sale of Merry Maids branches		(1)		(1)
Loss on extinguishment of debt		—		13
Call premium paid on retirement of debt		—		(11)
Deferred income tax provision		1		5
Stock-based compensation expense		3		2
Other		4		1
Change in working capital, net of acquisitions:
Receivables		28		21
Inventories and other current assets		(7)		6
Accounts payable		5		6
Deferred revenue		16		17
Accrued liabilities		(16)		(29)
Accrued interest payable		(7)		(25)
Accrued restructuring charges		—		(1)
Current income taxes		19		10
Net Cash Provided from Operating Activities from Continuing Operations		106		68
Cash Flows from Investing Activities from Continuing Operations:
Property additions		(17)		(8)
Sale of equipment and other assets		3		1
Other business acquisitions, net of cash acquired		(2)		(12)
Purchases of available-for-sale securities		(2)		(5)
Sales and maturities of available-for-sale securities		2		9
Origination of notes receivable		(23)		(21)
Collections on notes receivable		24		22
Net Cash Used for Investing Activities from Continuing Operations		(15)		(14)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt		—		3
Payments of debt		(19)		(200)
Issuance of common stock		2		8
Net Cash Used for Financing Activities from Continuing Operations		(17)		(190)
Cash Flows from Discontinued Operations:
Cash used for operating activities		—		(5)
Net Cash Used for Discontinued Operations		—		(5)
Effect of Exchange Rate Changes on Cash		1		—
Cash Increase (Decrease) During the Period		74		(141)
Cash and Cash Equivalents at End of Period	$	371	$	248

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

5

SERVICEMASTER GLOBAL HOLDINGS,INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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, furniture and cabinet 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, 2015, as filed with the SEC (the “2015 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.

Note 2. Newly 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 adoptthe 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 period within those years, beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

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 Company is impacted as unrealized gains or losses on the Company’s available-for-sale securities are currently recognized in other comprehensive 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.

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 adopting ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” to require the recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled and the presentation of excess tax benefits as an operating activity on the statement of cash flows as part of the FASB’s simplification initiative. Under previous guidance, an entity generally recorded excess tax benefits and certain tax deficiencies in additional paid-in capital instead of through income tax expense or benefit in the income statement and presented excess tax benefits as a financing activity rather than an operating activity in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. As allowed, the Company has elected to early adoptthe amendments of ASU 2016-09. The adoption of ASU 2016-09 has been accounted for as a change in accounting principle prospectively for the income statement effect, as required, and retrospectively for the cash flow statement effect, as allowed. As a result of the implementation of ASU 2016-09,  $8 million of excess tax benefits for the three months ended March 31, 2015 were retrospectively presented as an operating activity within the condensed consolidated statements of cash flows.

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Note 3. Commitments and Contingencies

The Company carries insurance policies on insurable risks at levels that it believes to be appropriate, including workers’ compensation, auto 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. 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, 2015	$	114
Provision for self-insured claims		13
Cash payments		(13)
Balance as of March 31, 2016	$	114
Balance as of December 31, 2014	$	104
Provision for self-insured claims		12
Cash payments		(6)
Balance as of March 31, 2015	$	109

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.

On March 29, 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 Plea Agreement (the “Plea Agreement”) in connection with the previously disclosed 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. Together with the Plea Agreement, the DOJ charged TMX USVI and TMX LP with four misdemeanor violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide. Under the Plea Agreement, TMX USVI agreed to pay a total of $5 million in fines to the United States. TMX LP agreed to pay $3 million in fines and penalties to the United States and a $1 million community service payment 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. TMX USVI also agreed to pay $1 million to the United States Environmental Protection Agency (the “EPA”) for costs incurred by the EPA for the response and clean-up of the affected units at the resort in St. John. Both TMX USVI and TMX LP agreed to a three-year probation period subject to conditions of probation. Furthermore, TMX USVI and TMX LP agreed to make good faith efforts to resolve past and future medical expenses for the affected family through separate civil proceedings. The Plea Agreement would not bind any other federal, state or local authority, but the EPA has stated that it does not intend to initiate any administrative enforcement action or refer the matter to the DOJ for any civil enforcement action once a plea agreement is approved by the court. The Company has recorded in the condensed consolidated statement of operations and comprehensive income charges of $10 million in connection with the Plea Agreement, of which $2 million was recorded in the three months ended March 31, 2016.

Atan initial appearance on April 20, 2016, the United States District Court of the U.S. Virgin Islands rejected the Plea Agreement, indicating that it was not satisfied with the assessment and distribution of the monetary sanctions set forth in the Plea Agreement. The parties continue to discuss the matter, including potential modifications to the Plea Agreement.  The court scheduled a sentencing hearing on August 25, 2016, and indicated that a modified plea agreement or a withdrawal of the plea could be filed up to that date.

Aplea agreement and the payments thereunder would not resolve any related civil or administrative claims for damages or other relief related to the U.S. Virgin Islands matter. 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 civil, criminal or other claims or judicial, administrative or regulatory

7

proceedings resulting from or related to the U.S. Virgin Islands incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under the Company’s general liability insurance program.  In the three months ended March 31, 2015, the Company recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the U.S. Virgin Islands matter, an amount equal to the Company’s insurance deductible under its general liability insurance program, although no assurance can be given regarding the Company’s insurance coverage or recoveries in connection with such civil claims.

On September 15, 2015, a lawsuit was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, styled Carl Robert McCaughey, et al. v. Terminix International Company Limited Partnership, Sunland Pest Control Services, Inc., et al. (Case No. 32080796). The lawsuit alleges that fumigation of a Florida family’s residence by Sunland, a subcontractor of Terminix, resulted in serious injuries to one of the family’s children, alleges claims for negligence and strict liability, and seeks an unspecified amount of monetary and punitive damages. The court has set a trial date in September 2016. The DOJ and other federal and state agencies are investigating the matter, and the DOJ has filed criminal charges against Sunland and two persons associated with Sunland. The Company continues to cooperate fully with all relevant governmental authorities. In the three months ended March 31, 2016, the Company recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the Palm Beach County, Florida matter, an amount equal to the Company’s insurance deductible under its general liability insurance program, although no assurance can be given regarding the Company’s insurance coverage or recoveries in connection with such civil claims. The amount and extent of any potential penalties, fines, sanctions, costs and damages that the federal or other governmental authorities may impose, investigation or other costs and reputational harm, as well as the impact of any civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to this incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under the Company’s general liability insurance program.

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 it is preparing to submit to 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 $23 million to approximately $85 million. The Company recorded a charge of $23 million in the condensed consolidated statement of operations and comprehensive income in the fourth quarter of 2015. However, there can be no assurances as to the ultimate cost of the correction.

In addition to the matters discussed above, in the ordinary course of conducting business activities, the Company and its subsidiaries become involved in judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured matters that are brought on an individual, collective, representative and class action basis, or other proceedings involving regulatory, employment, general and commercial liability, automobile liability, wage and hour, environmental and other matters. The Company has entered into settlement agreements in certain cases, including with respect to putative collective and class actions, which are subject to court or other approvals. If one or more of the Company’s settlements are not finally approved, the Company could have additional or different exposure, which could be material. Subject to the paragraphs above, the Company does not expect any of these proceedings to have a material effect on its reputation, business, financial position, results of operations or cash flows; however, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial position, results of operations and cash flows. 

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 three months ended March 31, 2016 and 2015. There were no accumulated impairment losses recorded as of March 31, 2016.

8

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, 2015	$	1,567	$	381	$	182	$	2,129
Acquisitions		2		—		—		2
Disposals		—		—		(2)		(2)
Other (1)		1		—		—		2
Balance as of March 31, 2016	$	1,570	$	381	$	180	$	2,131

___________________________________

(1) Reflects the impact of foreign exchange rates.

The table below summarizes the other intangible asset balances for continuing operations:

	As of March 31, 2016						As of December 31, 2015
			Accumulated						Accumulated
(In millions)	Gross		Amortization		Net		Gross		Amortization		Net
Trade names(1)	$	1,608	$	—	$	1,608	$	1,608	$	—	$	1,608
Customer relationships		570		(523)		47		571		(517)		53
Franchise agreements		88		(64)		24		88		(63)		25
Other		54		(37)		16		53		(36)		18
Total	$	2,320	$	(624)	$	1,695	$	2,320	$	(616)	$	1,704

___________________________________

(1) Not subject to amortization.

For the existing intangible assets, the Company anticipates amortization expense for the remainder of 2016 and each of the next five years of $22 million, $19 million, $13 million, $8 million, $5 million and $2 respectively.

Note 5. Stock-Based Compensation

For the three months ended March 31, 2016 and 2015, the Company recognized stock-based compensation expense of $3 million ($2million, net of tax) and $2 million ($1 million, net of tax), respectively.As of March 31, 2016, there was $33 million of total unrecognized compensation costs related to non-vested stock options, restricted stock units (“RSUs”) and performance sharesgranted 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 of 2.68 years.

9

Note 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 on
	Unrealized		Available		Foreign
	Losses on		-for-Sale		Currency
(In millions)	Derivatives		Securities		Translation		Total
Balance as of December 31, 2015	$	(7)	$	2	$	(15)	$	(21)
Other comprehensive (loss) income before reclassifications:
Pre-tax amount		(5)		—		3		(2)
Tax benefit		(2)		—		—		(1)
After-tax amount		(3)		—		3		(1)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		2		—		—		2
Net current period other comprehensive (loss) income		(1)		—		3		1
Balance as of March 31, 2016	$	(9)	$	2	$	(12)	$	(19)
Balance as of December 31, 2014	$	(6)	$	6	$	(8)	$	(8)
Other comprehensive loss before reclassifications:
Pre-tax amount		(6)		—		(4)		(9)
Tax benefit		(2)		—		—		(2)
After-tax amount		(4)		—		(4)		(7)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		2		—		—		1
Net current period other comprehensive loss		(2)		—		(4)		(6)
Balance as of March 31, 2015	$	(8)	$	6	$	(11)	$	(13)

___________________________________

(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				Condensed Consolidated Statements of
	March 31,				Operations and Comprehensive Income
(In millions)	2016		2015		Location
Losses on derivatives:
Fuel swap contracts	$	(1)	$	(2)	Cost of services rendered and products sold
Interest rate swap contracts		(2)		(1)	Interest expense
Net losses on derivatives		(3)		(2)
Impact of income taxes		1		1	Provision for income taxes
Total reclassifications related to derivatives	$	(2)	$	(2)
Total reclassifications for the period	$	(2)	$	(1)

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Note 7. Supplemental Cash Flow Information

Supplemental information relating to the condensed consolidated statements of cash flows is presented in the following table:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Cash paid for or (received from):
Interest expense	$	42	$	67
Interest and dividend income		(1)		(1)
Income taxes, net of refunds		3		1

The Company acquired $6 million and $2 million of property and equipment through capital leases and other non-cash  financing transactions in the three months ended March 31, 2016 and 2015, respectively, which have been excluded from the condensed consolidated statements of cash flows as non-cash investing and financing activities. 

In the three months ended March 31, 2016 and 2015, the Company converted certain company-owned Merry Maids branches to franchises for a total purchase price of $4 million and $2 million, respectively. In the three months ended March 31, 2016 and 2015, the Company received cash of $3 million and $1 million, respectively, and provided financing of $1 million and $1 million, respectively. These financed amounts have been excluded from the condensed consolidated statements of cash flows as non-cash investing activities.

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 March 31, 2016 and December 31, 2015, the Company’s investments consisted primarily of domestic publicly traded debt and certificates of deposit (“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 and trading securities, March 31, 2016:
Debt securities	$	59	$	1	$	—	$	60
Equity securities		19		3		—		22
Total securities	$	78	$	4	$	—	$	81
Available-for-sale and trading securities, December 31, 2015:
Debt securities	$	60	$	1	$	—	$	60
Equity securities		18		3		—		21
Total securities	$	78	$	4	$	(1)	$	81

There were no unrealized losses which had been in a loss position for more than one year as of March 31, 2016 andDecember 31, 2015. The aggregate fair value of the investments with unrealized losses was $28million and $23 million as of March 31, 2016 and December 31, 2015, respectively.

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. There were no proceeds, gross realized gains or gross realized losses resulting from sales of available-for-sale securities  or  impairment charges due to other than temporary declines in the value of certain investments for the three months ended March 31, 2016 and 2015.  

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Note 9. Long-Term Debt

Long-term debt is summarized in the following table:

	As of		As of
	March 31,		December 31,
(In millions)	2016		2015
Senior secured term loan facility maturing in 2021(1)	$	2,332	$	2,336
Revolving credit facility maturing in 2019		—		—
7.10% notes maturing in 2018(2)		76		75
7.45% notes maturing in 2027(2)		165		164
7.25% notes maturing in 2038(2)		65		65
Vehicle capital leases(3)		49		47
Other		62		65
Less current portion		(55)		(54)
Total long-term debt	$	2,693	$	2,698

___________________________________

(1) As of March 31, 2016 and December 31, 2015, presented net of $20 million and $21 million, respectively, in unamortized debt issuance costs and $16 million and $17million, respectively, in unamortized original issue discount paid.

(2) As of March 31, 2016 and December 31, 2015, collectively presented net of $52 million and $53 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

(3) 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.

Refinancing of Indebtedness

On February 17, 2015, the Companyredeemed $190 million in aggregate principal amount of its outstanding 8%  senior notes due 2020 (the “8% 2020 Notes”) at a redemption price of 106.0% of the principal amount using available cash. In connection with the partial redemption, the Company recorded a loss on extinguishment of debt of $13 million in the three months ended March 31, 2015, which included  a pre-payment premium of $11 million and the write-off of $2 million of debt issuance costs. 

On April 1, 2015, the Companyentered into a first amendment (the “First Term Loan Amendment”) which amends the agreement governingthe $1,825 million term loan facility maturing July 1, 2021 (the “Term Loan Facility”) and the $300 million revolving credit facility maturing July 1, 2019 (the “Revolving Credit Facility”) (together with the Term Loan Facility, the “Credit Facilities”). The First Term Loan Amendment provides for incremental term loans (the “April Incremental Term Loans”) in an aggregate principal amount of $175 million. On April 1, 2015, the Companyused the net proceeds from the April Incremental Term Loans, together with cash on hand, to redeem the remaining outstanding $200 million in aggregate principal amount of the 8% 2020 Notes at a redemption price of 106.0% of the principal amount. In connection with the redemption, the Company recorded a loss on extinguishment of debt of $14 million in the second quarter of 2015, which included a pre-payment premium of $12 million and the write-off of $2 million of debt issuance costs.

On August  17, 2015, the Companyentered into a second amendment (the “Second Term Loan Amendment”) which amends the agreement governing the Credit Facilities. The Second Term Loan Amendment provides for incremental term loans (the “August Incremental Term Loans”) in an aggregate principal amount of $400 million. On August  17, 2015, the Companyused the net proceeds from the August Incremental Term Loans, together with cash on hand, to redeem the remaining outstanding $488 million in aggregate principal amount of the7% senior notes due 2020 (the “7% 2020 Notes”) (together with the 8% 2020 Notes, the “2020 Notes”) at a redemption price of 105.25% of the principal amount. In connection with the redemption, the Company recorded a loss on extinguishment of debt of $31 million in the third quarter of 2015, which included a pre‑payment premium of $25 million and the write-off of $6 million of debt issuance costs.

Interest Rate Swaps

Interest rate swap agreements in effect as of March 31, 2016 are as follows:

Trade Date	Effective Date	Expiration Date	Notional Amount	Fixed Rate(1)		Floating Rate
July 23, 2014	August 1, 2014	July 31, 2018	$300,000	1.786	%	One month LIBOR
July 23, 2014	March 1, 2015	July 31, 2018	$400,000	1.927	%	One month LIBOR

(1)Before the application of the applicable borrowing margin.

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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 three months ended March 31, 2016, the Company completed several pest control and termite acquisitions. The total purchase price for these acquisitions was $3  million. The Company recorded goodwill of $2 million and accounts receivable of $1 million related to these acquisitions.

During the three months ended March 31, 2015, the Company completed several pest control and termite acquisitions. The total purchase price for these acquisitions was $14 million. The Company recorded goodwill of $10 million and other intangibles, primarily customer relationships, of $4 million related to these acquisitions.

Supplemental cash flow information regarding the Company’s acquisitions is as follows:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Assets acquired	$	3	$	14
Liabilities assumed		—		—
Net assets acquired	$	3	$	14
Net cash paid	$	2	$	12
Seller financed debt		—		2
Purchase price	$	3	$	14

Note 11. Income Taxes

As of March 31, 2016 and December 31, 2015, the Company had $17 million and $16 million, respectively, of tax benefits primarily reflected in state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $7 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.

The effective tax rate on income from continuing operations was 37.1 percent and 37.0 percent for the three months ended March 31, 2016 and 2015, respectively. The effective tax rate on income from continuing operations for the three months ended March 31, 2016 was primarily affected by excess tax benefits for share-based awards recorded discretely during the quarter. The effective tax rate on income from continuing operations for the three months ended March 31, 2015 was primarily affected by a reduction of the state valuation allowance on net operating losses during the quarter.

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 and Company-owned locations primarily under the Merry Maids brand name, on-site wood furniture and cabinet repair and restoration services primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate includes SMAC, the Company’s financing subsidiary exclusively dedicated to providing financing to its franchisees and retail customers of its operating units, and the Company’s headquarters operations (substantially all of which costs are allocated to the Company’s reportable segments), which provide various technology, marketing, finance, legal and other support services to the reportable segments. The composition of the Company’s reportable segments is consistent with that used by the Company’s chief operating decision maker (the “CODM”) to evaluate performance and allocate resources.

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Information regarding the accounting policies used by the Company is described in the Company’s 2015 Form 10-K. The Company derives substantially all of its revenue from customers and franchisees in the United States with approximatelytwo percent generated in foreign markets. Operating expenses of the business units consist primarily of direct costs and indirect costs allocated from Corporate.

The Company uses Reportable Segment Adjusted EBITDA as its measure of segment profitability. Accordingly, the CODM evaluates performance and allocates resources based primarily on Reportable Segment Adjusted EBITDA. Reportable Segment Adjusted EBITDA is defined as net income before: unallocated corporate expenses; loss from discontinued operations, net of income taxes; provision for income taxes; loss on extinguishment of debt; interest expense; depreciation and amortization expense; 401(k) Plan corrective contribution; non-cash stock-based compensation expense; restructuring charges; gain on sale of Merry Maids branches; and other non-operating expenses. The Company’s definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. The Company believes Reportable Segment Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives, consulting agreements and equity-based, long-term incentive plans.

Information for continuing operations for each reportable segment and Corporate is presented below:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Revenue:
Terminix	$	364	$	336
American Home Shield		194		175
Franchise Services Group		49		59
Reportable Segment Revenue	$	607	$	571
Corporate		1		1
Total Revenue	$	608	$	571
Reportable Segment Adjusted EBITDA:(1)
Terminix	$	94	$	89
American Home Shield		19		29
Franchise Services Group		18		19
Reportable Segment Adjusted EBITDA	$	131	$	137

___________________________________

(1) Presented below is a reconciliation of Reportable Segment Adjusted EBITDA to Net Income:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Reportable Segment Adjusted EBITDA:
Terminix	$	94	$	89
American Home Shield		19		29
Franchise Services Group		18		19
Reportable Segment Adjusted EBITDA	$	131	$	137
Unallocated corporate expenses	$	(4)	$	(4)
Depreciation and amortization expense		(21)		(24)
Non-cash stock-based compensation expense		(3)		(2)
Restructuring charges		(1)		(2)
Gain on sale of Merry Maids branches		1		1
Provision for income taxes		(23)		(17)
Loss on extinguishment of debt		—		(13)
Interest expense		(38)		(46)
Other non-operating expenses		(3)		(1)
Net Income	$	39	$	28

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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 TruGreen Holding Corporation (“New TruGreen”) pursuant to which the Company provided New 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 were 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 January 14, 2016 (except certain information technology, human resources and accounts payable services, which the Company has continued to provide to New TruGreen beyond January 14, 2016). New TruGreen may terminate the transition services agreement (or certain services under the transition services agreement) for convenience upon 90 days written notice, in which case New TruGreen will be required to reimburse the Company for early termination costs.

Under this transition services agreement, the Company recorded $3million and $8 million in the three months ended March 31, 2016 and 2015, respectively, of fees due from New TruGreen, which is included as a reduction in Selling and administrative expenses in the condensed consolidated statement of operations and comprehensive income. As of March 31, 2016, all amounts owed by New TruGreen under this agreement have been paid.

In addition, the Company, New TruGreen and TruGreen Limited Partnership, an indirectly wholly-owned subsidiary of New TruGreen, entered into (1) a separation and distribution agreement containing key provisions relating to the separation of the TruGreen business and the distribution of New TruGreen common stock to the Company’s stockholders (including relating to specified TruGreen legal matters with respect to which the Company has agreed to retain liability, as well as insurance coverage, non-competition, indemnification and other matters), (2) an employee matters agreement allocating liabilities and responsibilities relating to employee benefit plans and programs and other related matters and (3) a tax matters agreement governing the respective rights, responsibilities and obligations of the parties thereto with respect to taxes, including allocating liabilities for income taxes attributable to New TruGreen and its subsidiaries generally to the Company for tax periods (or portions thereof) ending on or before January 14, 2014 and generally to New TruGreen for tax periods (or portions thereof) beginning after that date.

Note 14. Fair Value Measurements

The period-end carrying amounts of receivables, 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 $2,748 million and $2,752 million and the estimated fair value was $2,821 million and $2,813 million as of March 31, 2016 and December 31, 2015, 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 March 31, 2016 and December 31, 2015.

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.

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The Company has not changed its valuation techniques for measuring the fair value of any financial assets and liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period. There were no significant transfers between levels during each of the three month periods ended March 31, 2016 and 2015.

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 March 31, 2016:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	8	$	8	$	—	$	—
Investments in marketable securities	Marketable securities and Long-term marketable securities		74		41		33		—
Total financial assets		$	81	$	48	$	33	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	3	$	—	$	—	$	3
Interest rate swap contracts	Other long-term liabilities		11		—		11		—
Total financial liabilities		$	14	$	—	$	11	$	3
As of December 31, 2015:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	8	$	8	$	—	$	—
Investments in marketable securities	Marketable securities and Long-term marketable securities		73		38		35		—
Total financial assets		$	81	$	46	$	35	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	4	$	—	$	—	$	4
Interest rate swap contracts	Other long-term liabilities		8		—		8		—
Total financial liabilities		$	12	$	—	$	8	$	4

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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, 2015	$	(4)
Total (losses) gains (realized and unrealized)
Included in earnings		(1)	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		1
Balance as of March 31, 2016	$	(3)
Balance as of December 31, 2014	$	(6)
Total (losses) gains (realized and unrealized)
Included in earnings		(2)	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		2
Balance as of March 31, 2015	$	(4)

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 March 31, 2016:
Fuel swap contracts	$	(3)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$1.91 - $2.45	$	2.16
As of December 31, 2015:
Fuel swap contracts	$	(4)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$1.91 - $2.55	$	2.22

___________________________________

(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 were insignificant during the three months ended March 31, 2016. As of March 31, 2016, the Company had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $35 million, maturing through 2017. 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 March 31, 2016, the Company had posted $5 million in letters of credit as collateral under its fuel hedging program, which were issued under the Revolving Credit Facility.

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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 $6 million, net of tax, as of March 31, 2016. 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.

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 dilutive effect of stock options, RSUs and performance sharesare 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
	March 31,
(In millions, except per share data)	2016		2015
Income from continuing operations	$	39	$	28
Weighted-average common shares outstanding		135.6		134.4
Effect of dilutive securities:
RSUs(1)		0.2		0.2
Stock options(2)		1.9		1.4
Weighted-average common shares outstanding—assuming dilution		137.8		136.1
Basic earnings per share from continuing operations	$	0.29	$	0.21
Diluted earnings per share from continuing operations	$	0.28	$	0.21

___________________________________

(1) Unvested RSUs and performance shares of 0.3 million shares for each of the three month periods ended March 31, 2016 and 2015 were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

(2) Options to purchase 0.9 million and 0.4 million shares for the three months ended March 31, 2016 and 2015, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this report, particularly in “—Information Regarding Forward-Looking Statements.”  

Overview

Our core services include termite and pest control, home warranties, disaster restoration, janitorial, residential cleaning, furniture and cabinet repair and home inspection under the following leading brands: Terminix, American Home Shield, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec. Our operations for the periods presented in this report are organized into three reportable segments: Terminix, American Home Shield and Franchise Services Group.

Management Change

As of February 23, 2016, our board of directors appointed Mary Kay Wegner as Senior Vice President, Service and Operations, Terminix. In this role, Ms. Wegner will lead innovative service solutions and initiatives designed to enhance the Terminix customer experience across many contact points. She will report directly to William J. Derwin, President, Terminix. Ms. Wegner will also continue to have oversight of Corporate Supply Management and report to our Chief Executive Officer, Robert J. Gillette, in this capacity and will remain a member of the ServiceMaster Executive Leadership Team.

On March 3, 2016, Mark J. Barry, Chief Marketing & Strategy Officer of the Company, submitted his retirement notice. Mr. Barry's retirement was effective as of March 31, 2016. Mr. Barry has agreed to remain with the Company for two years in a consulting role following his retirement.

Key Business Metrics

We focus on a variety of indicators and key operating and financial metrics to monitor the financial condition and performance of the continuing operations of our businesses. These metrics include:

· revenue,

· operating expenses,

· Adjusted EBITDA,

· net income (loss),

· earnings (loss) per share,

· organic revenue growth,

· customer retention rates, and

· customer counts growth.

To the extent applicable, these measures are evaluated with and without impairment, restructuring and other charges that management believes are not indicative of the earnings capabilities of our businesses. We also focus on measures designed to monitor cash flow, including net cash provided from operating activities from continuing operations and free cash flow.

Revenue.Our revenue results are primarily a function of the volume and pricing of the services and products provided to our customers by our businesses as well as the mix of services and products provided across our businesses. The volume of our revenue in Terminix and American Home Shield, and in our company-owned branches in the Franchise Services Group, is impacted by new unit sales, the retention of our existing customers and acquisitions. We expect to continue our tuck-in acquisition program at Terminixand to periodically evaluate other strategic acquisitions. Revenue results in the remainder of our Franchise Services Group are driven principally by royalty fees earned from our franchisees. We serve both residential and commercial customers, principally in the United States. In 2015, approximately 98 percent of our revenue was generated by sales in the United States.

Operating Expenses.In addition to the impact of changes in our revenue results, our operating results are affected by, among other things, the level of our operating expenses. A number of our operating expenses are subject to inflationary pressures, such as fuel, chemicals, raw materials, wages and salaries, employee benefits and health care, vehicles, contractor costs, self-insurance costs and other insurance premiums, as well as various regulatory compliance costs.

Adjusted EBITDA. We evaluate performance and allocate resources based primarily on Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) before: income (loss) from discontinued operations, net of income taxes; provision (benefit) for income taxes; loss on extinguishment of debt; interest expense; depreciation and amortization expense; 401(k) Plan corrective contribution; non-cash impairment of software and other related costs; non-cash impairment of property and equipment; non-cash

19

stock-based compensation expense; restructuring charges; gain on sale of Merry Maids branches; management and consulting fees; consulting agreement termination fees; and other non-operating expenses. We believe Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives, consulting agreements and equity-based, long-term incentive plans.

Net Income and Earnings Per Share.Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, increased to include the number of shares of common stock that would have been outstanding had potential dilutive shares of common stock been issued. The dilutive effect of stock options and RSUs are reflected in diluted net income per share by applying the treasury stock method. The presentation of net income and earnings per share provides GAAP measures of performance which are useful for investors, analysts and other interested parties in company-to-company operating performance comparisons.

Organic Revenue Growth.We evaluate organic revenue growth to track performance of the business, including the impacts of sales, pricing, new service offerings and other growth initiatives. Organic revenue growth excludes revenue from acquired customers for 12 months following the acquisition date.

Customer Retention Rates and Customer Counts Growth. Where applicable, we report our customer retention rates and growth in customer counts in order to track the performance of the business. Customer counts represent our recurring customer base, which includes customers with active contracts for recurring services. Retention rates are calculated as the ratio of ending customer counts to the sum of beginning customer counts, new sales and acquired accounts for the applicable period. These measures are presented on a rolling, 12-month basis in order to avoid seasonal anomalies. See “—Segment Review.”

Seasonality

We have seasonality in our business, which drives fluctuations in revenue and Adjusted EBITDA for interim periods. In 2015, approximately 22 percent, 28 percent, 27 percent and 23 percent of our revenue and approximately 21 percent, 31 percent, 28 percent and 20 percent of our Adjusted EBITDA was recognized in the first, second, third and fourth quarters, respectively.

Effect of Weather Conditions

The demand for our services and our results of operations are also affected by weather conditions, including the seasonal nature of our termite and pest control services, home inspection services and disaster restoration services. Weather conditions which have a potentially unfavorable impact to our business include cooler temperatures or droughts which can impede the development of termite swarms and lead to lower demand for our termite control services; severe winter storms which can impact our residential cleaning business if we cannot travel to service locations due to hazardous road conditions; and extreme temperatures which can lead to an increase in service requests related to household systems. Weather conditions which have a potentially favorable impact to our business include mild winters which can lead to higher demand for termite and pest control services; mild winters or summers which can lead to lower household systems claim frequency; and severe storms which can lead to an increase in demand for disaster restoration services.

Franchises

Franchises are important to the Terminix, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec businesses. Total profits from our franchised operations were $18 million for each of the three month periods ended March 31, 2016 and 2015. Nearly all of the franchise fees received by our Franchise Services Group segment are derived from the ServiceMaster Restore, ServiceMaster Clean and Merry Maids businesses. Franchise fees from our Terminix franchisees represented less than one percent of Terminix revenue for the three months ended March 31, 2016. We evaluate the performance of our franchise businesses based primarily on operating profit before corporate general and administrative expenses, interest expense and amortization of intangible assets. Franchise agreements entered into in the course of these businesses are generally for a term of five to 10 years. The majority of these franchise agreements are renewed prior to expiration. Internationally, we have license agreements, whereby licensees provide services under our brand names that would ordinarily be provided by franchisees in the United States. The majority of international licenses are for 10‑year terms.

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Results of Operations

	Three Months Ended				Increase
	March 31,				(Decrease)		% of Revenue
(In millions)	2016		2015		2016 vs. 2015		2016		2015
Revenue	$	608	$	571	6	%	100	%	100	%
Cost of services rendered and products sold		324		303	7		53		53
Selling and administrative expenses		173		152	14		28		27
Amortization expense		8		12	(33)		1		2
Restructuring charges		1		2	(50)		—		—
Gain on sale of Merry Maids branches		(1)		(1)	—		—		—
Interest expense		38		46	(17)		6		8
Interest and net investment income		(1)		(1)	—		—		—
Loss on extinguishment of debt		—		13	*		—		2
Other expense		3		—	*		—		—
Income from Continuing Operations before Income Taxes		62		45	38		10		8
Provision for income taxes		23		17	35		4		3
Income from Continuing Operations		39		28	39		6		5
Loss from discontinued operations, net of income taxes		—		—	—		—		—
Net Income	$	39	$	28	39	%	6	%	5	%

_________________________________

*     not meaningful

Revenue

We reported revenue of $608 million and $571 million for the three months ended March 31, 2016 and 2015, respectively. A summary of changes in revenue for each of our reportable segments and Corporate is included in the table below. See “—Segment Review” for a discussion of the drivers of the year-over-year changes.

			American		Franchise
			Home		Services
(In millions)	Terminix		Shield		Group		Corporate		Total
Three Months Ended March 31, 2015	$	336	$	175	$	59	$	1	$	571
Pest Control(1)		22		—		—		—		22
Termite and Other Services(1)(2)		2		—		—		—		2
Home Warranties		—		19		—		—		19
Franchise-Related Revenue		—		—		(3)		—		(3)
Sale of Merry Maids branches(3)		—		—		(7)		—		(7)
Other		4		—		—		—		4
Three Months Ended March 31, 2016	$	364	$	194	$	49	$	1	$	608

_________________________________

(1) Includes growth from acquisitions of approximately $17 million and $1 million in pest control and termite and other services, respectively.

(2) Includes wildlife exclusion, crawl space encapsulation and attic insulation products which are managed as a component of our termite line of business.

(3) Includes an $8 million reduction in revenue from company-owned branches, offset, in part, by a $1 million increase in royalty fees as a result of the conversion of certain company-owned Merry Maids branches to franchises (the “branch conversions”).

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Cost of Services Rendered and Products Sold

We reported cost of services rendered and products sold of $324 million and $303 million for the three months ended March 31, 2016 and 2015, respectively. The following table provides a summary of changes in cost of services rendered and products sold for each of our reportable segments and Corporate:

			American		Franchise
			Home		Services
(In millions)	Terminix		Shield		Group		Corporate		Total
Three Months Ended March 31, 2015	$	181	$	91	$	28	$	4	$	303
Impact of change in revenue		12		6		(1)		—		17
Contract claims		—		10		—		—		10
Sale of Merry Maids branches		—		—		(6)		—		(6)
Cost reduction initiatives		—		—		(1)		—		(1)
Other		2		(2)		—		—		—
Three Months Ended March 31, 2016	$	195	$	105	$	20	$	4	$	324

The increase in contract claims cost at American Home Shield was driven by an increase in the average cost per service request associated with appliance repairs andnormal inflationary pressure on the underlying costs of repairs. As of the end of the first quarter of 2016, our utilization of in-network contractors has returned to historical levels.

We realized a reduction in cost of sales of $6 million in the Franchise Services Group as a result of the branch conversions.

Selling and Administrative Expenses

We reported selling and administrative expenses of $173 million and $152 million for the three months ended March 31, 2016 and 2015, respectively, which comprised general and administrative expenses of $75 and $66 million, respectively, and selling and marketing expenses of $98 million and $86 million, respectively.  The following table provides a summary of changes in selling and administrative expenses for each of our reportable segments and Corporate:

			American		Franchise
			Home		Services
(In millions)	Terminix		Shield		Group		Corporate		Total
Three Months Ended March 31, 2015	$	75	$	57	$	13	$	7	$	152
Sales and marketing costs		1		10		—		—		11
Customer service costs		—		2		—		—		2
Sale of Merry Maids branches		—		—		(1)		—		(1)
Technology costs		4		2		—		—		6
Cost reduction initiatives		—		—		(1)		—		(1)
Stock-based compensation expense		—		—		—		1		1
Secondary offering expenses		—		—		—		(1)		(1)
Other		2		1		1		—		4
Three Months Ended March 31, 2016	$	82	$	72	$	12	$	7	$	173

The increase in sales and marketing costs at American Home Shield was primarily driven by the shift in the timing of a holiday mail campaign from the fourth quarter of 2015 to the first quarter of 2016 and, to a lesser extent, an increase in sales commissions and a change in the timing of marketing spend within the year. We expect the shift in the holiday mail campaign to result in an increase to our full year marketing costs. The increase in customer service costs at American Home Shield was due to higher labor costs resulting from an acceleration of pre-season hiring and training in preparation for the high-volume summer season.  

We realized a reduction in selling and administrative expenses of $1 million in the Franchise Services Group as a result of the branch conversions.

The increase in technology costs was primarily due to investments in initiatives to improve ourcustomers’ experiences.

Amortization Expense

Amortization expense was $8 million and $12 million in the three months ended March 31, 2016 and 2015, respectively. The decrease is a result of certain finite-lived intangible assets recorded in connection with the merger transaction by which the Company was taken private in 2007 being fully amortized.

Restructuring Charges

We incurred restructuring charges of $1 million and $2 million in the three months ended March 31, 2016 and 2015, respectively. The initiative to enhance capabilities and reduce costs in our headquarters functions that provide Company-wide

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administrative services for our operations resulted in $1 million of severance and other costs for each of the three month periods ended March 31, 2016 and 2015. Severance costs of $1 million related to the Terminix branch optimization were recorded in the three months ended March 31, 2015.

Gain on Sale of Merry Maids Branches

We recorded a gain of  $1 million in each of the three month periods ended March 31, 2016 and 2015, associated with the branch conversions.

Interest Expense

Interest expense was $38 million and $46 million for the three months ended March 31, 2016 and 2015, respectively. The decrease in interest expense was driven by the redemption of the 2020 Notes in 2015,offset, in part, by additional borrowings under the April and August Incremental Term Loans. See Note 9 to the condensed consolidated financial statements for more details.

Interest and Net Investment Income

Interest and net investment income was $1 million for each of the three month periods ended March 31, 2016 and 2015, and comprised net investment gains and interest and dividend income realized on the American Home Shield investment portfolio and interest income on other cash balances.

Loss on Extinguishment of Debt

A loss on extinguishment of debt of $13 million was recorded in the three months ended March 31, 2015 related to the partial redemption of the 8% 2020 Notes on February 17, 2015. See Note 9 to the condensed consolidated financial statements for more details. There were no debt extinguishments in the three months ended March 31, 2016.

Other Expense

Other expense was $3 million for the three months ended March 31, 2016, of which $2 million related to the Plea Agreement and $1 million related to legal expenses associated with the U.S. Virgin Islands matter. There was no such expense for the three months ended March 31, 2015.

Income from Continuing Operations before Income Taxes

Income from continuing operations before income taxes was $62 million and $45 million for the three months ended March 31, 2016and 2015, respectively. The change in income from continuing operations before income taxes primarily reflects the net effect of year-over-year changes in the following items:

	Three Months Ended
	March 31,
(In millions)	2016 vs. 2015
Reportable segments and Corporate(1)	$	(6)
Interest expense(2)		8
Loss on extinguishment of debt(3)		13
Other(4)		2
Increase in income from continuing operations before income taxes	$	17

___________________________________

(1) Represents the net change in Adjusted EBITDA as described in “—Segment Review.”

(2) Represents the net change in interest expense as described in “—Interest Expense.”

(3) Represents the $13 million loss on extinguishment of debt recorded in the three months ended March 31, 2015 as described in “—Loss on Extinguishment of Debt.”

(4) Primarily represents the net change in restructuring charges, stock-based compensation, secondary offering fees, legal and environmental expenses, depreciation and amortization.

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Provision for Income Taxes

The effective tax rate on incomefrom continuing operations was 37.1 percent and 37.0 percent for the three months ended March 31, 2016and 2015, respectively. The effective tax rate on income from continuing operations for the three months ended March 31, 2016 was primarily affected by excess tax benefits for share-based awards recorded discretely during the quarter. The effective tax rate on income from continuing operations for the three months ended March 31, 2015 was primarily affected by a reduction of the state valuation allowance on net operating losses during the quarter.

Net Income

Net income was $39 million and $28 million for the three months ended March 31, 2016 and 2015, respectively. The $11 million improvement was driven by a $17 million increase in income from continuing operations before income taxes, offset, in part, by a $6  million increase in the provision for income taxes.

Segment Review

The following business segment reviews should be read in conjunction with the required footnote disclosures presented in the notes to the condensed consolidated financial statements included in this report.

Revenue and Adjusted EBITDA by reportable segment and for Corporate are as follows:

	Three Months Ended
	March 31,				Increase
(In millions)	2016		2015		(Decrease)
Revenue:
Terminix	$	364	$	336	8	%
American Home Shield		194		175	11
Franchise Services Group		49		59	(17)
Corporate		1		1	—
Total Revenue:	$	608	$	571	6	%
Adjusted EBITDA:(1)
Terminix	$	94	$	89	6	%
American Home Shield		19		29	(34)
Franchise Services Group		18		19	(5)
Reportable Segment Adjusted EBITDA		131		137	(4)
Corporate(2)		(4)		(4)	—
Total Adjusted EBITDA	$	127	$	133	(5)	%

___________________________________

(1) See Note 12 for our definition of Adjusted EBITDA and a reconciliation of Reportable Segment Adjusted EBITDA to net income.

(2) Represents unallocated corporate expenses.

Terminix Segment

The Terminix segment, which provides termite and pest control services to residential and commercial customers and distributes pest control products, reported an eight percent increase in revenue and a six percent increase in Adjusted EBITDA for the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Revenue

Revenue by service line is as follows:

	Three Months Ended
	March 31,
(In millions)	2016		2015		Growth				Acquired				Organic
Pest Control	$	206	$	184	$	22	12	%	$	17	9	%	$	5	3	%
Termite and Other Services		143		141		2	1	%		1	1	%		1	1	%
Other		15		11		4	36	%		—	—	%		4	36	%
Total revenue	$	364	$	336	$	28	8	%	$	18	5	%	$	10	3	%

Pest control revenue increased 12 percent,  reflecting  improved price realization, the impact of the Alterra acquisition and growth in bed bug services.

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Termite revenue, including the wildlife exclusion, crawl space encapsulation and attic insulation products, which are managed as a component of our termite line of business, increased one percent. Termite renewal revenue comprised 57 percent of total termite revenue, while the remainder consisted of termite new unit revenue. The increase in termite revenue reflects an increase in traditional termite sales, offset, in part, by a decrease in sales of attic insulation.Termite activity is unpredictable in its nature. Factors that can impact termite activity include conducive weather conditions and consumer awareness of termite swarms.

Adjusted EBITDA

The following table provides a summary of changes in the segment’s Adjusted EBITDA:

(In millions)
Three Months Ended March 31, 2015	$	89
Impact of change in revenue		15
Sales and marketing costs		(1)
Technology costs		(4)
Other		(5)
Three Months Ended March 31, 2016	$	94

The increase in technology costs was primarily due to investments in initiatives to improve ourcustomers’ experiences.

American Home Shield Segment

The American Home Shield segment, which provides home warranties for household systems and appliances, reported an 11 percent increase in revenue and a 34 percent decrease in Adjusted EBITDA for the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

The growth in renewable customer counts and customer retention are presented below.

	As of March 31,
	2016		2015
Growth in Home Warranties	7	%	6	%
Customer Retention Rate	75	%	75	%

Revenue

The revenue results reflect an increase in new unit sales, improved price realization and a favorable product mix.

Adjusted EBITDA

The following table provides a summary of changes in the segment’s Adjusted EBITDA:

(In millions)
Three Months Ended March 31, 2015	$	29
Impact of change in revenue		13
Contract claims		(10)
Marketing costs		(10)
Customer service costs		(2)
Technology costs		(2)
Other		1
Three Months Ended March 31, 2016	$	19

The increase in contract claims cost was driven by an increase in the average cost per service request associated with appliance repairs andnormal inflationary pressure on the underlying costs of repairs. As of the end of the first quarter of 2016, our utilization of in-network contractors has returned to historical levels.

The increase in sales and marketing costs was primarily driven by the shift in the timing of a holiday mail campaign from the fourth quarter of 2015 to the first quarter of 2016 and, to a lesser extent, an increase in sales commissions and a change in the timing of marketing spend within the year. We expect the shift in the holiday mail campaign to result in an increase to our full year marketing costs. The increase in customer service costs was due to higher labor costs resulting from an acceleration of pre-season hiring and training in preparation for the high-volume summer season.

The increase in technology costs was primarily due to investments in initiatives to improve ourcustomers’ experiences.

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Franchise Services Group Segment

The Franchise Services Group segment, which consists of the ServiceMaster Restore (disaster restoration), ServiceMaster Clean (janitorial), Merry Maids (residential cleaning), Furniture Medic (furniture and cabinet repair) and AmeriSpec (home inspection) businesses, reported a seventeen percent decrease in revenue and a five percent decrease in Adjusted EBITDA for the three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Revenue

Revenue by service line is as follows:

	Three Months Ended				% of
	March 31,				Revenue
(In millions)	2016		2015		2016
Royalty Fees	$	28	$	28	57	%
Company-Owned Merry Maids Branches		4		13	9
Janitorial National Accounts		10		10	20
Sales of Products		3		5	7
Other		3		4	7
Total revenue	$	49	$	59	100	%

Approximately $7  million of the decline in revenue from company-owned Merry Maids branches was attributable to the branch conversions with the remainder of the decline attributable to a decrease in new unit sales. The decrease in sales of products was driven by lower franchisee demand.

In 2014, we began converting company-owned Merry Maids branches to franchises. We expect the branch conversions completed through March 31, 2016, as well as further branch conversions expected during the remainder of 2016, to result in further decreases in revenues from company-owned Merry Maids branches, which we expect will be offset, in part, by modest increases in royalty fees. During the three months ended March 31, 2016, we converted 9company-owned Merry Maids branches to franchises. As of March 31, 2016, there were 20 company-owned Merry Maids branches remaining.

Adjusted EBITDA

The following table provides a summary of changes in the segment’s Adjusted EBITDA:

(In millions)
Three Months Ended March 31, 2015	$	19
Impact of change in revenue		(2)
Sale of Merry Maids branches		(1)
Cost reduction initiatives		2
Three Months Ended March 31, 2016	$	18

We realized a reduction in Adjusted EBITDA of $1 million as a result of the branch conversions.

Corporate

Adjusted EBITDA for Corporate for the three months ended March 31, 2016 was comparable to the three months ended March 31, 2015. Each of the three month periods ended March 31, 2016 and 2015 include increased reserves in our automobile, general liability and workers’ compensation insurance program of $4 million driven by unfavorable claims trends. The unfavorable claims trends for the three months ended March 31, 2016 were impacted by a charge of $3 million in connection with civil claims related to an incident at a family’s residence in Palm Beach County, Florida. The unfavorable claims trends for the three months ended March 31, 2015 were impacted by a charge of $3 million in connection with civil claims related to an incident at a resort in St. John in the U.S. Virgin Islands. Each of the $3 million charges are amounts equal to our insurance deductibles under our general liability insurance program.

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Liquidity and Capital Resources

Liquidity

We are highly leveraged, and a substantial portion of our liquidity needs are due to service requirements on our significant indebtedness. The agreements governing the Credit Facilities contain covenants that limit or restrict our ability, including the ability of certain of our subsidiaries, to incur additional indebtedness, repurchase debt, incur liens, sell assets, make certain payments (including dividends) and enter into transactions with affiliates. As of March 31, 2016,  we were in compliance with the covenants under the agreements that were in effect on such date.

Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under our credit facilities. We expect that cash provided from operations and available capacity under the Revolving Credit Facility will provide sufficient funds to operate our business, make expected capital expenditures and meet our liquidity requirements for the following 12 months, including payment of interest and principal on our debt. Cash and short- and long-term marketable securities totaled $452 million as of March 31, 2016, compared with $377 million as of December 31, 2015. As of March 31, 2016, there were $131 million of letters of credit outstanding and $169 million of available borrowing capacity under the Revolving Credit Facility. The letters of credit are posted to satisfy collateral requirements under our automobile, general liability and workers’ compensation insurance program and fuel swap contracts.

On February 23, 2016, our board of directors authorized a three-year share repurchase program, under which we may repurchase up to $300 million of outstanding shares of our common stock. We expect to fund the share repurchases from operating cash flow.

Cash and short- and long-term marketable securities include balances associated with regulatory requirements at American Home Shield. See “—Limitations on Distributions and Dividends by Subsidiaries.” American Home Shield’s investment portfolio has been invested in a combination of high-quality debt securities and equity securities. We closely monitor the performance of the investments. From time to time, we review the statutory reserve requirements to which our regulated entities are subject and any changes to such requirements. These reviews may result in identifying current reserve levels above or below minimum statutory reserve requirements, in which case we may adjust our reserves. The reviews may also identify opportunities to satisfy certain regulatory reserve requirements through alternate financial vehicles.

As of March 31, 2016, we had posted $126 million in letters of credit as collateral under our automobile, general liability and workers’ compensation insurance program, which were issued under the Revolving Credit Facility. We may from time to time elect to use cash or marketable securities, rather than letters of credit, to satisfy collateral requirements under our automobile, general liability and workers’ compensation insurance program.  The amount of cash or marketable securities utilized to satisfy these collateral requirements will depend on the relative cost of the issuance of letters of credit under the Revolving Credit Facility and our cash position.  Any use of cash or marketable securities as collateral would result is a corresponding increase in our available borrowing capacity under the Revolving Credit Facility.

Additionally, under the terms of our fuel swap contracts, we are required to post collateral in the event the fair value of the contracts exceeds a certain agreed upon liability level and in other circumstances required by the agreement with the counterparty. As of March 31, 2016, the estimated fair value of our fuel swap contracts was a net liability of $3 million, and we had posted $5 million in letters of credit as collateral under our fuel hedging program, which were also issued under the Revolving Credit Facility. The continued use of letters of credit for this purpose in the future could limit our ability to post letters of credit for other purposes and could limit our borrowing availability under theRevolving Credit Facility. However, we do not expect the fair value of the outstanding fuel swap contracts to materially impact our financial position or liquidity.

We may from time to time repurchase or otherwise retire or extend our debt and/or take other steps to reduce our debt or otherwise improve our financial position, results of operations or cash flows. These actions may include open market debt repurchases, negotiated repurchases, other retirements of outstanding debt and/or opportunistic refinancing of debt. The amount of debt that may be repurchased or otherwise retired or refinanced, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with debt covenants and other considerations.

The Company is preparing to submit to the IRS a voluntary correction proposal to remedy an administrative error related to its Profit Sharing and Retirement Plan. The Company’s current estimate of the cost of the correction ranges from $23 million to approximately $85 million. We expect to fund the corrective contribution from operating cash flow.

Fleet and Equipment Financing Arrangements

Wehave entered into the Fleet Agreement which, among other things, allows us to obtain fleet vehicles through a leasing program. We expect to fulfill substantially all of our vehicle fleet needs through the leasing program under the Fleet Agreement. For the three months ended March 31, 2016, we acquired $6 million of vehicles through the leasing program under the Fleet Agreement. 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. We have no minimum commitment for the number of vehicles to be obtained under the Fleet Agreement.

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Additionally, a portion of our property and equipment is leased through programs outside the scope of the Fleet Agreement. For the three months ended March 31, 2016, there were no acquisitions of property and equipment through these incremental leasing programs, which are treated as capital leases for accounting purposes. We anticipate new lease financings, including the Fleet Agreement and incremental leasing programs, for the full year 2016 will range from approximately $40 to $50 million.

Limitations on Distributions and Dividends by Subsidiaries

We are a holding company, and as such have no independent operations or material assets other than ownership of equity interests in our subsidiaries. We depend on our subsidiaries to distribute funds to us so that we may pay obligations and expenses, including satisfying obligations with respect to indebtedness. The ability of our subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial condition and general business conditions, as well as restrictions under the laws of our subsidiaries’ jurisdictions.

The terms of the agreements governing the Credit Facilities restrict the ability of our subsidiaries to pay dividends, make loans or otherwise transfer assets to us. Further, our subsidiaries are permitted under the terms of the Credit Facilities and other indebtedness to incur additional indebtedness that may restrict or prohibit the making of distributions, the payment of dividends or the making of loans by such subsidiaries to us.

Furthermore, there are third-party restrictions on the ability of certain of our subsidiaries to transfer funds to us. These restrictions are related to regulatory requirements at American Home Shield and to a subsidiary borrowing arrangement at SMAC. The payments of ordinary and extraordinary dividends by our home warranty and similar subsidiaries (through which we conduct our American Home Shield business) are subject to significant regulatory restrictions under the laws and regulations of the states in which they operate. Among other things, such laws and regulations require certain such subsidiaries to maintain minimum capital and net worth requirements and may limit the amount of ordinary and extraordinary dividends and other payments that these subsidiaries can pay to us. As of March 31, 2016, the total net assets subject to these third-party restrictions was $175 million. We expect that such limitations will be in effect for the remainder of 2016. None of our subsidiaries are obligated to make funds available to us through the payment of dividends.

We consider undistributed earnings of our foreign subsidiaries as of March 31, 2016 to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. The amount of cash associated with indefinitely reinvested foreign earnings was approximately $17 million as of March 31, 2016 and December 31, 2015. We have not repatriated, nor do we anticipate the need to repatriate, funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.

Cash Flows

Cash flows from operating, investing and financing activities, as reflected in the accompanying condensed consolidated statements of cash flows, are summarized in the following table.

	Three Months Ended
	March 31,
(In millions)	2016		2015
Net cash provided from (used for):
Operating activities	$	106	$	68
Investing activities		(15)		(14)
Financing activities		(17)		(190)
Discontinued operations		—		(5)
Effect of exchange rate changes on cash		1		—
Cash increase (decrease) during the period	$	74	$	(141)

Operating Activities

Net cash provided from operating activities from continuing operations increased$38 million to $106 million for the three months ended March 31, 2016 compared to $68 million for the three months ended March 31, 2015.

Net cash provided from operating activities for the three months ended March 31, 2016 comprised $68 million in earnings adjusted for non-cash charges and a $38 million decrease in cash required for working capital(a $26 million decrease excluding the working capital impact of accrued interest, restructuring and taxes). For the three months ended March 31, 2016, working capital requirements were favorably impacted by seasonal activity and timing of income tax payments, offset, in part, by incentive compensation payments related to 2015 performance.

Net cash provided from operating activities for the three months ended March 31, 2015 comprised $74 million in earnings adjusted for non-cash charges and a $5 million decrease in cash required for working capital(a $21 million decrease excluding the working capital impact of accrued interest, restructuring and taxes), offset, in part, by $11 million in payments for the call premium paid on the retirement of debt. For the three months ended March 31, 2015, working capital requirements were favorably impacted by seasonal activity, offset, in part, by the timing of interest payments on the 2020 Notes and incentive compensation payments related to 2014 performance.

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Investing Activities

Net cash used for investing activities from continuing operations was $15 million for the three months ended March 31, 2016 compared to $14 million forthe three months ended March 31, 2015.

Capital expenditures increased to $17 million for the three months ended March 31, 2016 from $8 million in the three months ended March 31, 2015 and included recurring capital needs and information technology projects. We anticipate capital expenditures for the full year 2016 will range from approximately $55 million to $65 million, reflecting recurring capital needs and the continuation of investments in information systems and productivity enhancing technology. We expect to fulfill our ongoing vehicle fleet needs through vehicle capital leases. We have no additional material capital commitments at this time.

Proceeds from the sale of equipment and other assets was $3 million for the three months ended March 31, 2016, primarily driven by the branch conversions. The branches were sold for a total purchase price of $4 million for which we received cash of $3 million and provided financing of $1 million. We expect to continue the branch conversions throughout the remainder of 2016.

Cash payments for acquisitions for the three months ended March 31, 2016 totaled $2 million, compared with $12 million for the three months ended March 31, 2015. Consideration paid for tuck-in acquisitions consisted of cash payments and debt payable to sellers. We expect to continue our tuck-in acquisition program at Terminix and to periodically evaluate other strategic acquisitions.

Cash flows from purchases, sales and maturities of securities, net, for the three months ended March 31, 2016 totaled $0 million. Cash flows provided from purchases, sales and maturities of securities, net, for the three months ended March 31, 2015 totaled $4 million and were driven by the maturity and sale of marketable securities at American Home Shield.

Cash flows provided by notes receivable, net, for each of the three month periods ended March 31, 2016 and 2015 totaled $1 million and were a result of a net reduction in financing provided by SMAC to our franchisees and retail customers of our operating units.

Financing Activities

Net cash used for financing activities from continuing operations was $17 million for the three months ended March 31, 2016 compared to $190 million for the three months ended March 31, 2015.

During the three months ended March 31, 2016,  we made scheduled principal payments on long-term debt of $19 million. Additionally, we received $2 million from the issuance of common stock.

During the three months ended March 31, 2015, we borrowed an incremental $3 million, made scheduled principal payments on long-term debt of $10 million and redeemed $190 million in aggregate principal amount of the 8% 2020 Notes at a redemption price of 106.0% of the principal amount using available cash. Additionally, we received $8 million from the issuance of common stock during the three months ended March 31, 2015.

Contractual Obligations

Our 2015 Form 10-K includes disclosures of our contractual obligations and commitments as of December 31, 2015. We continue to make the contractually required payments, and, therefore, the 2016 obligations and commitments as listed in our 2015 Form 10-K have been reduced by the required payments.

Off-Balance Sheet Arrangements

As of March 31, 2016, we did not have any significant off-balance sheet arrangements.

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off- balance sheet arrangements or other contractually narrow or limited purposes. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Regulatory Matters

On March 29, 2016, TMX USVI and TMX LP, each an indirect, wholly-owned subsidiary of the Company, entered into the Plea Agreement in connection with the previously disclosed investigation initiated by the DOJ into allegations that a local Terminix branch used methyl bromide as a fumigant at a resort in St. John, U.S. Virgin Islands. Together with the Plea Agreement, the DOJ charged TMX USVI and TMX LP with four misdemeanor violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide. Under the Plea Agreement, TMX USVI agreed to pay a total of $5 million in fines to the United States. TMX LP agreed to pay $3 million in fines and penalties to the United States and a $1 million community service payment 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. TMX USVI also agreed to 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. Both TMX USVI and TMX LP agreed to a three-year probation period subject to conditions of probation. Furthermore, TMX USVI and TMX LP agreed to make good faith efforts to resolve past and future medical expenses for the affected family through separate civil proceedings. The Plea Agreement would not bind any other federal, state or local authority, but the EPA has stated that it does

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not intend to initiate any administrative enforcement action or refer the matter to the DOJ for any civil enforcement action once a plea agreement is approved by the court. We have recorded in the condensed consolidated statement of operations and comprehensive income charges of $10 million in connection with the Plea Agreement, of which $2 million was recorded in the three months ended March 31, 2016.

Atan initial appearance on April 20, 2016, the United States District Court of the U.S. Virgin Islands rejected the Plea Agreement, indicating that it was not satisfied with the assessment and distribution of the monetary sanctions set forth in the Plea Agreement. The parties continue to discuss the matter, including potential modifications to the Plea Agreement. The court scheduled a sentencing hearing on August 25, 2016, and indicated that a modified plea agreement or a withdrawal of the plea could be filed up to that date.

Aplea agreement and the payments thereunder would not resolve any related civil or administrative claims for damages or other relief related to the U.S. Virgin Islands matter. 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 civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under our general liability insurance program.In the three months ended March 31, 2015, we recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the U.S. Virgin Islands matter, an amount equal to our insurance deductible under our general liability insurance program, although no assurance can be given regarding our insurance coverage or recoveries in connection with such civil claims.

On September 15, 2015, a lawsuit was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, styled Carl Robert McCaughey, et al. v. Terminix International Company Limited Partnership, Sunland Pest Control Services, Inc., et al. (Case No. 32080796). The lawsuit alleges that fumigation of a Florida family’s residence by Sunland, a subcontractor of Terminix, resulted in serious injuries to one of the family’s children, alleges claims for negligence and strict liability, and seeks an unspecified amount of monetary and punitive damages. The court has set a trial date in September 2016. The DOJ and other federal and state agencies are investigating the matter, and the DOJ has filed criminal charges against Sunland and two persons associated with Sunland. We continue to cooperate fully with all relevant governmental authorities. In the three months ended March 31, 2016, we recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the Palm Beach County, Florida matter, an amount equal to our insurance deductible under our general liability insurance program, although no assurance can be given regarding our insurance coverage or recoveries in connection with such civil claims. The amount and extent of any potential penalties, fines, sanctions, costs and damages that the federal or other governmental authorities may impose, investigation or other costs and reputational harm, as well as the impact of any civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to this incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under our general liability insurance program.

Information Regarding Forward-Looking Statements

This report contains forward-looking statements and cautionary statements. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,”“expects,”“may,”“will,”“shall,”“should,”“would,”“could,”“seeks,”“aims,”“projects,”“is optimistic,”“intends,”“plans,”“estimates,”“anticipates” or other comparable terms. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this report and include, without limitation, statements regarding our intentions, beliefs, assumptions or current expectations concerning, among other things, financial position; results of operations; cash flows; prospects; growth strategies or expectations; customer retention; the continuation of acquisitions, including the integration of any acquired company and risks relating to any such acquired company; fuel prices; attraction and retention of key personnel; the impact of fuel swaps; the valuation of marketable securities; estimates of accruals for self-insured claims related to workers’ compensation, auto and general liability risks; estimates of accruals for home warranty claims; estimates of future payments under operating and capital leases; estimates on current and deferred tax provisions; the outcome (by judgment or settlement) and costs of legal or administrative proceedings, including, without limitation, collective, representative or class action litigation; and the impact of prevailing economic conditions.

Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market segments in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market segments in which we operate, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors, including, without limitation, the risks and uncertainties discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above, could cause actual results and outcomes to differ from those reflected in the forward-looking statements. Additional factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation:

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· lawsuits, enforcement actions and other claims by third parties or governmental authorities;

· the 401(k) Plan corrective contribution and other employee benefit plan compliance issues;

· compliance with, or violation of, environmental, health and safety laws and regulations;

· weakening general economic conditions, especially as they may affect home sales, unemployment and consumer confidence or spending levels;

· our ability to successfully implement our business strategies;

· adverse credit and financial markets impeding access, increasing financing costs or causing our customers to incur liquidity issues leading to some of our services not being purchased or cancelled;

· cyber security breaches, disruptions or failures in our information technology systems and our failure to protect the security of personal information about our customers;

· our ability to attract and retain key personnel, including our ability to attract, retain and maintain positive relations with trained workers and third-party contractors;

· increase in prices for fuel and raw materials, and in minimum wage levels;

· changes in the source and intensity of competition in our market segments;

· adverse weather conditions;

· our franchisees, subcontractors, third-party distributors and vendors taking actions that harm our business;

· changes in our services or products;

· our ability to protect our intellectual property and other material proprietary rights;

· negative reputational and financial impacts resulting from future acquisitions or strategic transactions;

· laws and governmental regulations increasing our legal and regulatory expenses;

· increases in interest rates increasing the cost of servicing our substantial indebtedness;

· increased borrowing costs due to lowering or withdrawal of the ratings, outlook or watch assigned to our debt securities;

· restrictions contained in our debt agreements;

· our ability to refinance all or a portion of our indebtedness or obtain additional financing; and

· other factors described in this report and from time to time in documents that we file with the SEC.

You should read this report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this report are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this report, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The economy and its impact on discretionary consumer spending, labor wages, fuel prices and other material costs, home resales, unemployment rates, insurance costs and medical costs could have a material adverse impact on future results of operations.

We do not hold or issue derivative financial instruments for trading or speculative purposes. We have entered into specific financial arrangements, primarily fuel swap agreements and interest rate swap agreements, in the ordinary course of business to manage certain market risks, with a policy of matching positions and limiting the terms of contracts to relatively short durations. The effect of derivative financial instrument transactions could have a material impact on our financial statements.

Interest Rate Risk

We are exposed to the impact of interest rate changes and manage this exposure through the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps. In our opinion, the market risk associated with debt obligations and other significant instruments as of March 31, 2016 has not materially changed from December 31, 2015 (see Item 7A of the 2015 Form 10-K).

Fuel Price Risk

We are exposed to market risk for changes in fuel prices through the consumption of fuel by our vehicle fleet in the delivery of services to our customers. We expect to use approximately 13 million gallons of fuel in 2016. As of March 31, 2016, a ten percent

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change in fuel prices would result in a change of approximately $3 million in our annual fuel cost before considering the impact of fuel swap contracts.

We use fuel swap contracts to mitigate the financial impact of fluctuations in fuel prices. As of March 31, 2016, we had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $35 million, maturing through 2017. The estimated fair value of these contracts as of March 31, 2016 was a net liability of $3 million. These fuel swap contracts provide a fixed price for approximately 59 percent and 70 percent of our estimated fuel usage for the remainder of 2016 and 2017, respectively.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our Chief Executive Officer, Robert J. Gillette, and Senior Vice President and Chief Financial Officer, Alan J. M. Haughie, have evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e)and Rule 15d-15(e)under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q as required by Rule 13a-15(b)and Rule 15d-15(b)under the Exchange Act. Messrs. Gillette and Haughie have concluded that both the design and operation of our disclosure controls and procedures were effective as of March 31, 2016.

Changes in internal control over financial reporting

No changes in our internal control over financial reporting, as defined in Rule 13a-15(f)or Rule 15d-15(f)under the Exchange Act, occurred during the three months ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On March 29, 2016, TMX USVI and TMX LP, each an indirect, wholly-owned subsidiary of the Company, entered into the Plea Agreement in connection with the previously disclosed investigation initiated by the DOJ into allegations that a local Terminix branch used methyl bromide as a fumigant at a resort in St. John, U.S. Virgin Islands. Together with the Plea Agreement, the DOJ charged TMX USVI and TMX LP with four misdemeanor violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide. Under the Plea Agreement, TMX USVI agreed to pay a total of $5 million in fines to the United States. TMX LP agreed to pay $3 million in fines and penalties to the United States and a $1 million community service payment 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. TMX USVI also agreed to 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. Both TMX USVI and TMX LP agreed to a three-year probation period subject to conditions of probation. Furthermore, TMX USVI and TMX LP agreed to make good faith efforts to resolve past and future medical expenses for the affected family through separate civil proceedings. The Plea Agreement would not bind any other federal, state or local authority, but the EPA has stated that it does not intend to initiate any administrative enforcement action or refer the matter to the DOJ for any civil enforcement action once a plea agreement is approved by the court. We have recorded in the condensed consolidated statement of operations and comprehensive income charges of $10 million in connection with the Plea Agreement, of which $2 million was recorded in the three months ended March 31, 2016.

At an initial appearance on April 20, 2016, the United States District Court of the U.S. Virgin Islands rejected the Plea Agreement, indicating that it was not satisfied with the assessment and distribution of the monetary sanctions set forth in the Plea Agreement. The parties continue to discuss the matter, including potential modifications to the Plea Agreement.  The court scheduled a sentencing hearing on August 25, 2016, and indicated that a modified plea agreement or a withdrawal of the plea could be filed up to that date.

Aplea agreement and the payments thereunder would not resolve any related civil or administrative claims for damages or other relief related to the U.S. Virgin Islands matter. 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 civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under our general liability insurance program. In the three months ended March 31, 2015, we recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the U.S. Virgin Islands matter, an amount equal to our insurance deductible under our general liability insurance program, although no assurance can be given regarding our insurance coverage or recoveries in connection with such civil claims.

On September 15, 2015, a lawsuit was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, styled Carl Robert McCaughey, et al. v. Terminix International Company Limited Partnership, Sunland Pest Control Services, Inc., et al. (Case No. 32080796). The lawsuit alleges that fumigation of a Florida family’s residence by Sunland, a subcontractor of

32

Terminix, resulted in serious injuries to one of the family’s children, alleges claims for negligence and strict liability, and seeks an unspecified amount of monetary and punitive damages. The court has set a trial date in September 2016. The DOJ and other federal and state agencies are investigating the matter, and the DOJ has filed criminal charges against Sunland and two persons associated with Sunland. We continue to cooperate fully with all relevant governmental authorities. In the three months ended March 31, 2016, we recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the Palm Beach County, Florida matter, an amount equal to our insurance deductible under our general liability insurance program, although no assurance can be given regarding our insurance coverage or recoveries in connection with such civil claims. The amount and extent of any potential penalties, fines, sanctions, costs and damages that the federal or other governmental authorities may impose, investigation or other costs and reputational harm, as well as the impact of any civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to this incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under our general liability insurance program.

In addition to the matters discussed above, in the ordinary course of conducting business activities, we and our subsidiaries become involved in judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured matters that are brought on an individual, collective, representative and class action basis, or other proceedings involving regulatory, employment, general and commercial liability, automobile liability, wage and hour, environmental and other matters. We have entered into settlement agreements in certain cases, including with respect to putative collective and class actions, which are subject to court or other approvals. If one or more of our settlements are not finally approved, we could have additional or different exposure, which could be material. Subject to the paragraphs above, we do not expect any of these proceedings to have a material effect on our reputation, business, financial position, results of operations or cash flows; however, we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position, results of operations and cash flows. See Note 3 to the condensed consolidated financial statement for more details.

ITEM 1A. RISK FACTORS

We discuss in our 2015 Form 10-K and our other filings with the SEC various risks that may materially affect our business. There have been no material changes to the risk factors disclosed in the 2015 Form 10-K. The materialization of any risks and identified in Forward-Looking Statements contained in this report, together with those previously disclosed in the 2015 Form 10-K and our other filings with the SEC or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See “Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations – Information Regarding Forward-Looking Statements” above.

ITEM 2.  UNREGISTERED SALES OF REGISTERED SECURITIES AND USE OF PROCEEDS

Share Repurchase Program

On February 23, 2016, our board of directors authorized a three-year share repurchase program, under which we may repurchase up to $300 million of outstanding shares of our common stock. We expect to fund the share repurchases from operating cash flow. The share repurchase program is part of our capital allocation strategy that focuses on sustainable growth and maximizing shareholder value.

Issuer Purchases of Equity Securities

During the three months ended March 31, 2016, we did not purchase any shares of our common stock or other equity securities.

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ITEM 6. EXHIBITS

Exhibit Number	Description
10.1	Plea Agreement entered into on March 29, 2016 by The Terminix International Company Limited Partnership and Terminix International USVI, LLC is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 29, 2016.
10.2	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 is incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 29, 2016.
10.3	Letter from Cynthia Giles to Timothy K. Webster and Thomas L. Campbell, dated March 28, 2016, reflecting that the United States Environmental Protection Agency does not intend to initiate any administrative enforcement action or refer the fumigation matter for any civil enforcement action is incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 29, 2016.
10.4#	Form of Employee Stock Option Agreement under the ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Omnibus Plan”) for awards granted on or after February 22, 2016.
10.5#	Form of Employee Restricted Stock Unit Agreement under the Omnibus Plan for awards granted on or after February 22, 2016.
10.6#	Form of Performance Share Agreement under the Omnibus Plan for awards granted on or after February 22, 2016.
10.7#	Form of Director Restricted Stock Agreement for awards granted under the Omnibus Plan.
10.8#	Separation and Consulting Agreement with Mark J. Barry, dated March 24, 2016.
31.1#	Certification of Chief Executive Officer pursuant to Rule 13a — 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2#	Certification of Chief Financial Officer pursuant to Rule 13a — 14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1#	Certification of Chief Executive Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2#	Certification of Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS#	XBRL Instance Document
101.SCH#	XBRL Taxonomy Extension Schema
101.CAL#	XBRL Taxonomy Extension Calculation Linkbase
101.DEF#	XBRL Taxonomy Extension Definition Linkbase
101.LAB#	XBRL Taxonomy Extension Label Linkbase
101.PRE#	XBRL Extension Presentation Linkbase

___________________________________

# Filed herewith. 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 5, 2016

SERVICEMASTER GLOBAL HOLDINGS, INC.
(Registrant)
By:	/s/ Alan J. M. Haughie
	Alan J. M. Haughie
	Senior Vice President and Chief Financial Officer

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EX-10.4

Exhibit 10.4

Employee Stock Option Agreement

This Employee Stock Option Agreement, dated as of ________, 20__, between ServiceMaster Global Holdings, Inc., a Delaware corporation (the “Company”), and the associate whose name appears on the signature page hereof and who is employed by the Company or one of its Subsidiaries, is being entered into pursuant to the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Plan”).  The meaning of capitalized terms used, but not otherwise defined, in this Agreement may be found in the Plan.

The Company and the Associate hereby agree as follows:

Section 1.        Grant of Options.

(a)           Confirmation of Grant.  The Company hereby evidences and confirms, effective as of the date hereof, its grant to the Associate of Options to purchase the number of shares of Company Common Stock specified on the signature page hereof.  The Options are not intended to be Incentive Stock Options.  This Agreement is entered into pursuant to, and the terms of the Options are subject to, the terms of the Plan.  If there is any inconsistency between this Agreement and the terms of the Plan, the terms of the Plan shall govern.

(b)           Option Price.  Each share covered by an Option shall have the Option Price specified on the signature page hereof.

Section 2.        Vesting and Exercisability.

(a)           Except as otherwise provided in the Plan or Section 2(b) of this Agreement, the Options shall become vested in four equal annual installments on each of the first through fourth anniversaries of the Grant Date, subject to the continuous employment of the Associate with the Company until the applicable vesting date; provided that if the Associate’s employment with the Company is terminated by reason of the Associate’s death or Disability, any Options held by the Associate shall immediately vest as of the effective date of such termination.

(b)           Discretionary Acceleration.  The Administrator, in its sole discretion, may accelerate the vesting or exercisability of all or a portion of the Options, at any time and from time to time.

(c)           Exercise.  Once vested in accordance with the provisions of this Agreement, the Options may be exercised at any time and from time to time prior to the date such Options terminate pursuant to Section 3.  Options may only be exercised with respect to whole shares and must be exercised in accordance with Section 4. 

Section 3.        Termination of Options.

(a)           Normal Termination Date.  Unless earlier terminated pursuant to Section 3(b) or the Plan, the Options shall terminate on the tenth anniversary of the Grant Date (the “Normal Termination Date”), if not exercised prior to such date.

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(b)           Early Termination.  If the Associate’s employment with the Company terminates for any reason, any Options held by the Associate that have not vested before the effective date of such termination of employment (determined without regard to any statutory or deemed or express contractual notice period) or that do not become vested on such date in accordance with Section 2 shall terminate immediately upon such termination of employment (determined without regard to any statutory or deemed or express contractual notice period) and, if the Associate’s employment is terminated for Cause, all Options (whether or not then vested or exercisable) shall automatically terminate immediately upon such termination.  All vested Options held by the Associate following the effective date of a termination of employment (the “Covered Options”) shall remain exercisable until the first to occur of (i) the one-year anniversary in the case of a termination by reason of the Associate’s death or Disability or a retirement from active service on or after the Associate reaches normal retirement age, or in the event of any other termination of employment, the three-month anniversary of the effective date of the Associate’s termination of employment (determined without regard to any deemed or express statutory or contractual notice period) (ii) the Normal Termination Date or (iii) the cancellation of the Options pursuant to Section 5(a), and if not exercised within such period the Options shall automatically terminate upon the expiration of such period.

Section 4.        Manner of Exercise.  Subject to such reasonable administrative regulations as the Administrator may adopt from time to time, the exercise of vested Options by the Associate shall be pursuant to procedures set forth in the Plan or established by the Administrator from time to time and shall include the Associate specifying the proposed date on which the Associate desires to exercise a vested Option (the “Exercise Date”), the number of whole shares with respect to which the Options are being exercised (the “ExerciseShares”) and the aggregate Option Price for such Exercise Shares (the “Exercise Price”) or such other or different requirements as may be imposed by the Company.  Unless otherwise determined by the Administrator, (i) on or before the Exercise Date the Associate shall deliver to the Company full payment for the Exercise Shares in United States dollars in cash, or cash equivalents satisfactory to the Company, in an amount equal to the Exercise Price plus any required withholding taxes or other similar taxes, charges or fees (including, if available, pursuant to a broker-assisted cashless exercise program established by the Company whereby the Associate may exercise vested Options by an exercise-and-sell procedure in which the Exercise Price (together with any required withholding taxes or other similar taxes, charges or fees) is obtained from the sale of shares in the public market) and (ii) the Company shall register the issuance of the Exercise Shares on its records (or direct such issuance to be registered by the Company’s transfer agent).  The Company may require the Associate to furnish or execute such other documents as the Company shall reasonably deem necessary (i) to evidence such exercise or (ii) to comply with or satisfy the requirements of the Securities Act, applicable state or non‑U.S. securities laws or any other law.

Section 5.        Change in Control.

(a)           Vesting and Cancellation.  Except as otherwise provided in Section 5(b), in the event of a Change in Control, all then-outstanding Options (whether vested or unvested) shall be canceled in exchange for a payment having a value equal to the excess, if any, of (i) the product of the Change in Control Price multiplied by the aggregate number of shares covered by all such Options immediately prior to the Change in Control over (ii) the aggregate Option Price for all such shares, to be paid as soon as reasonably practicable, but in no event later than 30 days following the Change in Control.

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(b)           Alternative Award.  Notwithstanding Section 5(a), no cancellation, termination, or settlement or other payment shall occur with respect to any Option if the Administrator reasonably determines prior to the Change in Control that the Associate shall receive an Alternative Award meeting the requirements of the Plan.

Section 6.        Miscellaneous.

(a)           Withholding.  The Company or one of its Subsidiaries may require the Associate to remit to the Company an amount in cash sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding or other similar charges or fees that may arise in connection with the grant, vesting, exercise, settlement or purchase of the Options.

(b)           Incorporation of Forfeiture Provisions.  The Associate acknowledges and agrees that, pursuant to the Plan, he or she shall be subject to the Company’s Clawback Policy and any generally applicable disgorgement or forfeiture provisions set forth in Article XIII of the Plan as of the date of this Agreement or as required by applicable law after the date of this Agreement.

(c)           Restrictive Covenants.  In consideration of the grant of the Options, during the Associate’s employment with the Company and its Subsidiaries (the “Company Group”) and for a period of twelve (12) months following the termination of the Associate’s employment (whether such termination is initiated by the Associate or the Associate’s employer), the Associate shall not (i) become employed by, operate or provide services to any business or other entity that competes with the Company Group; (ii) solicit or sell any product or service in competition with the Company Group to any person, business or other entity that is a customer of the Company Group; (iii) interfere with the Company Group’s relations with any of its customers, franchisees, subcontractors, consultants, vendors or business partners; or (iv) induce or encourage anyCompany Group employee to leave his/her position or to seek employment or association with any person or entity other than the Company Group.  This Agreement is in addition to and does not supersede any other agreements between the Associate and the Company Group prohibiting competition with the Company Group.  Nothing in this paragraph shall be construed to restrict the right of an attorney to practice law to the extent protected by statute, common law or applicable rules of professional conduct.

(d)           Dispute Resolution.  Any dispute or controversy between Associate and the Company, whether arising out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be resolved in accordance with the ServiceMaster We Listen Dispute Resolution Plan then in effect.  Notwithstanding the foregoing, the Associate agrees that the Company may seek a temporary restraining order and/or preliminary injunction in any court of competent jurisdiction, without the posting of a bond, in order to preserve the status quo or to enforce the restrictive covenants in this Agreement.

(e)           Authorization to Share Personal Data.  The Associate authorizes any Affiliate of the Company that employs the Associate or that otherwise has or lawfully obtains personal data relating to the Associate to divulge or transfer such personal data to the Company or to a third party, in each case in any jurisdiction, if and to the extent appropriate in connection with this Agreement or the administration of the Plan. 

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(f)           No Rights as Stockholder; No Voting Rights.  The Associate shall have no rights as a stockholder of the Company with respect to any shares covered by the Options until the exercise of the Options and delivery of the shares.

(g)           No Right to Continued Employment. Nothing in this Agreement shall be deemed to confer on the Associate any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

(h)           Non-Transferability of Options.  The Options may be exercised only by the Associate.  The Options are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, but not limited to, by gift, operation of law or otherwise) other than by will or by the laws of descent and distribution to the estate of the Associate upon the Associate’s death or with the Company’s consent. 

(i)           Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(j)           Waiver; Amendment.

(i)           Waiver.  Any party hereto or beneficiary hereof may by written notice to the other parties (A) extend the time for the performance of any of the obligations or other actions of the other parties under this Agreement, (B) waive compliance with any of the conditions or covenants of the other parties contained in this Agreement and (C) waive or modify performance of any of the obligations of the other parties under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party or beneficiary, shall be deemed to constitute a waiver by the party or beneficiary taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto or beneficiary hereof of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party or beneficiary to exercise any right or privilege hereunder shall be deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise the same at any subsequent time or times hereunder.

(ii)           Amendment.  This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Associate and the Company. 

(k)           Assignability.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Associate without the prior written consent of the other party.

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(l)           Applicable Law and Forum.  This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.  Subject to the dispute resolution provision contained herein, any judicial action to enforce, interpret or challenge this Agreement shall be brought in the federal or state courts located in the State of Delaware, which shall be the exclusive forum for resolving such disputes.  Both parties irrevocably consent to the personal jurisdiction of such courts for purposes of any such action.

(m)          Waiver of Jury Trial.  Each party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated hereby.  Each party (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this section.

(n)           Section and Other Headings, etc.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(o)           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the Company and the Associate have executed this Agreement as of the date first above written.

SERVICEMASTER GLOBAL HOLDINGS, INC.
By:
	Name:
	Title:
THE ASSOCIATE:
Name

Total Number of Shares for the Purchase of Which Options have been Granted	Option Price
_______ Shares	$_____

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EX-10.5

Exhibit 10.5

Employee Restricted Stock Unit Agreement

This Employee Restricted Stock Unit Agreement, dated as of __________, 20__ (the “Grant Date”), between ServiceMaster Global Holdings, Inc., a Delaware corporation (the “Company”), and the associate whose name appears on the signature page hereof and who is employed by the Company or one of its Subsidiaries, is being entered into pursuant to the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Plan”).  The meaning of capitalized terms may be found in the Plan.

The Company and the Associate hereby agree as follows:

Section 1. Grant of Restricted Stock Units.  Subject to the terms of this Agreement, the Company hereby evidences and confirms, effective as of the date hereof, its grant to the Associate of Restricted Stock Units representing the right to receive the number of shares of Company Common Stock specified on the signature page hereof.  This Agreement is entered into pursuant to, and the terms of the Restricted Stock Units are subject to, the terms of the Plan.  If there is any conflict between this Agreement and the terms of the Plan, the terms of the Plan shall govern.

Section 2. Vesting and Forfeiture

(a) Based on Continued Employment.  The Associate’s Restricted Stock Units shall vest in three equal installments on the first, second and third anniversaries of the Grant Date, subject to the Associate’s continued employment with the Company or any Subsidiary through the applicable vesting date.

(b) Discretionary Acceleration.  The Administrator, in its sole discretion, may accelerate the vesting of all or a portion of the Restricted Stock Units at any time and from time to time.

(c) Effect of Termination of Employment.  Upon termination of the Associate’s employment with the Company and its Subsidiaries for any reason (whether initiated by the Company or by the Associate), any unvested Restricted Stock Units shall be forfeited, provided that if the Associate’s employment is terminated by reason of the Associate’s death or Disability (such termination, a “Special Termination”), the Associate’s Restricted Stock Units shall vest as to the number of Restricted Stock Units that would have vested on the next anniversary of the Grant Date (assuming the Associate’s employment had continued through such anniversary) multiplied by a fraction, the numerator of which is the number of days elapsed since (x) the Grant Date, if the Special Termination occurs on or prior to the first anniversary of the Grant Date, or (y) the most recent prior anniversary of the Grant Date, if the Special Termination occurs after the first anniversary of the Grant Date, and the denominator of which is 365.

(d) Effect of a Change in Control.  In the event of a Change in Control occurring prior to the third anniversary of the Grant Date, subject to the Associate’s continued employment with the Company or any Subsidiary from the Grant Date to the date of the Change in Control, any Restricted Stock Units which are unvested shall automatically become vested.

Section 3. Dividend Equivalents.  If the Company pays any cash dividend or similar cash distribution on the Company Common Stock, the Company shall credit to the Associate’s account an amount equal to the product of (x) the number of the Associate’s Restricted Stock Units as of the

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record date for such distribution times (y) the per share amount of such dividend or similar cash distribution on Company Common Stock.  Any cash amounts credited to the Associate’s account shall be subject to the same restrictions as apply to the Restricted Stock Units and shall be paid to the Associate if and when the related Settlement Date (as defined below) occurs.  If the Company makes any dividend or other distribution on the Company Common Stock in the form of Company Common Stock or other securities, the Company will credit the Associate’s account with that number of additional shares of Company Common Stock or other securities that would have been distributed with respect to that number of shares of Company Common Stock underlying the Associate’s Restricted Stock Units as of the record date thereof.  Any such additional shares of Company Common Stock or other securities shall be subject to the same restrictions as apply to the Restricted Stock Units and shall be paid to the Associate if and when the related Settlement Date occurs.

Section 4. Settlement.  Subject to Section 6(a), promptly following the date on which a Restricted Stock Unit becomes vested, and in any event no later than March 15th of the calendar year following the calendar year in which such vesting occurs (the “Settlement Date”), the Associate shall receive, without payment, one Settlement Share in respect of each such Restricted Stock Unit. 

Section 5. Restriction on Transfer; Non-Transferability of Restricted Stock Units.  The Restricted Stock Units are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, but not limited to, by gift, operation of law or otherwise).  Any purported transfer in violation of this Section 6 shall be void abinitio.

Section 6. Miscellaneous

(a) Withholding.  The Company or one of its Subsidiaries shall require the Associate to remit to the Company an amount in cash sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding obligations that may arise in connection with the vesting of the Restricted Stock Units and the related issuance of the Shares.  Notwithstanding the preceding sentence, if the Associate elects not to remit cash in respect of such obligations and a facility is not available to the Associate by which the Associate may sell a number of Shares in the public market to satisfy such obligations, the Company shall retain a number of Shares subject to the Restricted Stock Units then vesting that have an aggregate Fair Market Value as of the Settlement Date equal to the amount of such taxes required to be withheld (and the Associate shall thereupon be deemed to have satisfied his or her obligations under this Section 6(a)); provided that the number of Shares retained shall not be in excess of the minimum amount required to satisfy the statutory withholding tax obligations (it being understood that the value of any fractional share of Company Common Stock shall be paid in cash).  The number of Shares to be issued shall thereupon be reduced by the number of Shares so retained.  The method of withholding set forth in the immediately preceding sentence shall not be available if withholding in this manner would violate any financing instrument of the Company or any of its Subsidiaries or to the extent that a facility is available to the Associate by which the Associate may sell Shares in the public market to satisfy such obligations. 

(b) Incorporation of Forfeiture Provisions.  The Associate acknowledges and aggress that, pursuant to the Plan, he or she shall be subject to the Company’s Clawback Policy and any generally applicable disgorgement or forfeiture provisions set forth in Article XIII of the Plan as of the date of this Agreement or as required by applicable law after the date of this Agreement.

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(c) Restrictive Covenants.  In consideration of the grant of the Restricted Stock Units, during the Associate’s employment with the Company and its Subsidiaries (the “Company Group”) and for a period of twelve (12) months following the termination of the Associate’s employment (whether such termination is initiated by the Associate or the Associate’s employer), the Associate shall not (i) become employed by, operate or provide services to any business or other entity that competes with the Company Group; (ii) solicit or sell any product or service in competition with the Company Group to any person, business or other entity that is a customer of the Company Group; (iii) interfere with the Company Group’s relations with any of its customers, franchisees, subcontractors, consultants, vendors or business partners; or (iv) induce or encourage anyCompany Group employee to leave his/her position or to seek employment or association with any person or entity other than the Company Group.  This Agreement is in addition to and does not supersede any other agreements between the Associate and the Company Group prohibiting competition with the Company Group.  Nothing in this paragraph shall be construed to restrict the right of an attorney to practice law to the extent protected by statute, common law or applicable rules of professional conduct.

(d) Dispute Resolution.  Any dispute or controversy between Associate and the Company, whether arising out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be resolved in accordance with the ServiceMaster We Listen Dispute Resolution Plan then in effect.  Notwithstanding the foregoing, the Associate agrees that the Company may seek a temporary restraining order and/or preliminary injunction in any court of competent jurisdiction, without the posting of a bond, in order to preserve the status quo or to enforce the restrictive covenants in Section 8(c) of this Agreement.

(e) Authorization to Share Personal Data.  The Associate authorizes any Affiliate of the Company that employs the Associate or that otherwise has or lawfully obtains personal data relating to the Associate to divulge such personal data to the Company if and to the extent appropriate in connection with this Agreement or the administration of the Plan.  

(f) No Rights as Stockholder; No Voting Rights.  The Associate shall have no rights as a stockholder of the Company with respect to any Restricted Stock Units or Shares covered by the Restricted Stock Units until the delivery of the Shares.

(g) No Right to Continued Employment. Nothing in this Agreement shall be deemed to confer on the Associate any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

(h) Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(i) Waiver; Amendment.

(i) Waiver.  Any party hereto or beneficiary hereof may by written notice to the other parties (A) extend the time for the performance of any of the obligations or other actions of the other parties under this Agreement, (B) waive compliance with any of the conditions or covenants of the other parties contained in this Agreement and (C) waive or

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modify performance of any of the obligations of the other parties under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party or beneficiary, shall be deemed to constitute a waiver by the party or beneficiary taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto or beneficiary hereof of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party or beneficiary to exercise any right or privilege hereunder shall be deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise the same at any subsequent time or times hereunder.

(ii) Amendment.  This Agreement may not be amended, modified or supplemented orally, but only by a written instrument executed by the Associate and the Company.

(j) Assignability.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Associate without the prior written consent of the other.

(k) Applicable Law and Forum.  This Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.  Subject to the dispute resolution provision contained herein, any judicial action to enforce, interpret or challenge this Agreement shall be brought in the federal or state courts located in the State of Delaware, which shall be the exclusive forum for resolving such disputes.  Both parties irrevocably consent to the personal jurisdiction of such courts for purposes of any such action.

(l) Section and Other Headings, etc.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(m) Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

[signature page follows]

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IN WITNESS WHEREOF, the Company and the Associate have executed this Agreement as of the date first above written.

SERVICEMASTER GLOBAL HOLDINGS, INC.
By:
	Name:
	Title:
THE ASSOCIATE:
Name

Total Number of Shares
of Company Common Stock as to which Restricted Stock Units have been Granted Pursuant Hereto: 

__________

5

EX-10.6

Exhibit10.6

Performance Share Agreement

This Performance Share Agreement (this “Award Agreement”), dated as of ___________, 20__ (the “Grant Date”), between ServiceMaster Global Holdings, Inc., a Delaware corporation (the “Company”), and _____________ (the “Participant”), is being entered into pursuant to Article IX of the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Plan”).  The meaning of capitalized terms that are not defined in this Award Agreement may be found in the Plan.

The Company and the Participant hereby agree as follows:

Section 1. Confirmation of Grant.  Subject to the terms of this Award Agreement, the Company hereby evidences and confirms, effective as of the Grant Date, its grant to the Participant of Performance Shares representing the right to receive ______ Shares, which represents the number of Shares that would be earned under Section 2 of this Award Agreement if the Performance Goal set forth in Section 2 is achieved “at target” (the “Target Number of Shares”), as adjusted (i.e., increased or decreased) pursuant to Section 2 of this Award Agreement.  This Award Agreement is entered into pursuant to, and the terms of the Performance Shares are subject to, the terms of the Plan.  If there is any conflict between this Award Agreement and the terms of the Plan, the terms of the Plan shall govern.

Section 2. Vesting and Forfeiture.  So long as the Performance Goal, which is Cumulative Adjusted EPS (as defined below), is met or exceeded for the three-year Performance Cycle beginning January 1, 20__ and ending December 31, 20__, the Performance Shares shall vest on the last day of the Performance Cycle (the “Vesting Date”), subject to the Participant’s continued employment with the Company or any Subsidiary through the Vesting Date, based on the following vesting formula:  the number of Performance Shares that vests on the Vesting Date will be determined by (i) multiplying the Target Number of Shares plus the number of additional Target Dividend Shares credited to the Participant pursuant to Section 5 of this Award Agreement by (ii)  the “Payout Multiple” derived from the chart below, with linear interpolation between Cumulative Adjusted EPS achievement points with corresponding Payout Multiple points:

Cumulative Adjusted EPS for the Performance Cycle	Performance Multiple	Performance Level	Payout Multiple
<xxx	0%		0%
$xxx	50%	Threshold	50%
$xxx	100%	Target	100%
≥$xxx	125%	Maximum	200%

For purposes of the forgoing chart, the Cumulative Adjusted EPS means the sum of Adjusted Earnings per Share (positive or negative) for each fiscal year during the Performance Cycle. The determination of the number of Performance Shares that vest will be certified by the Administrator as soon as reasonably practicable following the Vesting Date, but in no event later that 10 business days following the release of earnings by the Company for the Company’s 20__ fiscal year.

Adjusted Earnings per Share is calculated as Adjusted Earnings divided by the Adjusted Share Count.

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Adjusted Earnings is defined as income (loss) from continuing operations before: amortization expense; 401(k) Plan corrective contribution; impairment of software and other related costs; non-cash impairment of property and equipment (including non-cash asset impairment charges of any kind); restructuring charges; gain on sale of Merry Maids branches; loss on extinguishment of debt; other expense (which is the earnings impact of the U.S. Virgin Islands and Florida (Sunland) matters); investment gain (loss); income and expense resulting from unusual or infrequent items as determined under accounting principles generally accepted in the United States of America; the cumulative effects of accounting changes; the earnings impact of cumulative acquisitions in excess of $50 million total purchase price per year; and the tax impact of all of the aforementioned adjustments.

Adjusted Share Count is defined as the diluted weighted-average common shares outstanding as disclosed in the Company’s Annual Report on Form 10-K for each fiscal year as adjusted to exclude all cumulative share repurchases in excess of 2.3 million shares during the Performance Cycle.

Any Performance Shares that do not become vested as of the Vesting Date shall be forfeited.

Section 3. Effect of a Change in Control.  In the event of a Change in Control occurring prior to the Vesting Date, subject to the Participant’s continued employment with the Company or any Subsidiary through the date of the Change in Control, any Performance Shares evidenced by this Award Agreement shall automatically become vested at the “Target” Performance Level indicated in Section 2 and otherwise subject to the provisions of the Plan. 

Section 4. Effect of Termination of Employment.  Upon termination of the Participant’s employment with the Company and its Subsidiaries for any reason prior to the Vesting Date, the Performance Shares evidenced by this Award Agreement shall be forfeited, provided that if the Participant’s employment is terminated in a Special Termination (i.e., by reason of the Participant’s death or Disability) prior to the Vesting Date, then the Participant’s Performance Shares evidenced by this Award Agreement shall become vested as to the number of such Performance Shares that would have vested at the “Target” Performance Level indicated in Section 2, multiplied by a fraction, the numerator of which is the number of days elapsed from the Grant Date through the date of the Special Termination and the denominator of which is the number of days in the Performance Cycle. The Participant, or the Participant’s estate or beneficiary, shall receive one Share in respect of each such vested Performance Share within 90 days following the date of the Special Termination.

Section 5. Dividend Equivalents.  If the Company pays any cash dividend or similar cash distribution on the Company Common Stock, the Company shall credit to the Participant with an additional number of Performance Shares (“Target Dividend Shares”) equal to the (A) product of (x) the Target Number of Shares plus the number of additional Target Dividend Shares held by the Participant as of the record date for such distribution times (y) the per share amount of such dividend or similar cash distribution on Company Common Stock divided by (B) the Fair Market Value of a Share on the dividend payment date, rounded down to the nearest whole number.If the Company makes any dividend or other distribution on the Company Common Stock in the form of Shares or other securities, the Company will credit to the Participant with that number of additional Target Dividend Shares or other securities that would have been distributed with respect to the Target Number of Shares plus the number of additional Target Dividend Shares held by the Participant as of the record date for such distribution.  Any additional Target Dividend Shares or other securities shall be subject to the same terms and conditions as apply to the related Performance Shares that resulted in the crediting of such Target Dividend Shares or other securities.

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Section 6. Settlement.  Except as otherwise provided in Article XIV of the Plan and in Section 4, promptly following the date on which the number of Performance Shares that vest is certified by the Administrator pursuant to Section 2 of this Award Agreement, but in any event during the Company’s 2019 fiscal year, the Participant shall receive one Share in respect of each such vested Performance Share.

Section 7. Miscellaneous

(a) Restrictive Covenants.  In consideration of the grant of the Performance Shares, during the Participant’s employment with the Company and its Subsidiaries (the “Company Group”) and for a period of twelve (12) months following the termination of the Participant’s employment (whether such termination is initiated by the Participant or the Participant’s employer), the Participant shall not (i) become employed by, operate or provide services to any business or other entity that competes with the Company Group; (ii) solicit or sell any product or service in competition with the Company Group to any person, business or other entity that is a customer of the Company Group; (iii) interfere with the Company Group’s relations with any of its customers, franchisees, subcontractors, consultants, vendors or business partners; or (iv) induce or encourage anyCompany Group employee to leave his/her position or to seek employment or association with any person or entity other than the Company Group.  This Award Agreement is in addition to and does not supersede any other agreements between the Participant and the Company Group prohibiting competition with the Company Group.

(b) Dispute Resolution.  Any dispute or controversy between the Participant and any member of the Company Group, whether arising out of or relating to this Award Agreement, the breach of this Award Agreement, or otherwise, shall be resolved in accordance with the ServiceMaster We Listen Dispute Resolution Plan then in effect.  Notwithstanding the foregoing, the Participant agrees that the members of the Company Group may seek a temporary restraining order and/or preliminary injunction in any court of competent jurisdiction, without the posting of a bond, in order to preserve the status quo or to enforce the restrictive covenants in Section 7(a) of this Award Agreement.

(c) Incorporation of Forfeiture Provisions.  The Participant acknowledges and agrees that, pursuant to the Plan, the Participant shall be subject to the Company’s Clawback Policy and any generally applicable disgorgement or forfeiture provisions set forth in Article XIII of the Plan as of the date of this Award Agreement or as required by applicable law after the date of this Award Agreement.

(d) Authorization to Share Personal Data.  The Participant authorizes any Affiliate of the Company that employs the Participant or that otherwise has or lawfully obtains personal data relating to the Participant to divulge such personal data to the Company if and to the extent appropriate in connection with this Award Agreement or the administration of the Plan.  

(e) No Right to Continued Employment. Nothing in this Award Agreement shall be deemed to confer on the Participant any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

(f) Binding Effect; Benefits.  This Award Agreement shall be binding upon and inure to the benefit of the parties to this Award Agreement and their respective successors and assigns.  Nothing in this Award Agreement, express or implied, is intended or shall be construed to give

3

any person other than the parties to this Award Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(g) Waiver; Amendment.  The waiver by any party hereto or beneficiary hereof of a breach of any provision of this Award Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party or beneficiary to exercise any right or privilege hereunder shall be deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise the same at any subsequent time or times hereunder.  This Award Agreement may not be amended, modified or supplemented, except (i) by a written instrument executed by the Participant and the Company, (ii)  as authorized under the Plan (including under Section 4.3 of the Plan), or (iii) by the Administrator at any time, and from time to time, provided,  however, that the rights of the Participant under this Award Agreement shall not be adversely under this clause (iii) without the Participant's written consent.

(h) Applicable Law.  This Award Agreement shall be governed in all respects, including, but not limited to, as to validity, interpretation and effect, by the internal laws of the State of Delaware, without reference to principles of conflict of law that would require application of the law of another jurisdiction.  Subject to the dispute resolution provision contained herein, any judicial action to enforce, interpret or challenge this Award Agreement shall be brought in the federal or state courts located in the State of Delaware, which shall be the exclusive forum for resolving such disputes.  Both parties irrevocably consent to the personal jurisdiction of such courts for purposes of any such action.

(i) Section and Other Headings, etc.  The section and other headings contained in this Award Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Award Agreement.

(j) Counterparts.  This Award Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date first above written.

SERVICEMASTER GLOBAL HOLDINGS, INC.
By:
	Name:
	Title:
THE PARTICIPANT:
Name

4

EX-10.7

Exhibit 10.7

Director Restricted Stock Agreement

This Director Restricted Stock Agreement, dated as of ______, 20__ (the “Grant Date”), between ServiceMaster Global Holdings, Inc., a Delaware corporation, and Laurie Ann Goldman (the “Director”), is being entered into pursuant to the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan.  The meaning of each capitalized term not otherwise defined in this Agreement may be found in Section 4.

The Company and the Director hereby agree as follows:

Section 1. Grant of Shares

(a) Confirmation of Grant.  Subject to all of the terms of this Agreement, the Company hereby evidences and confirms, effective as of the Grant Date, its grant to the Director of the aggregate number of shares of Common Stock set forth on the signature page hereof (the “Shares”).  This Agreement is entered into pursuant to, and the terms of the Shares are subject to, the terms of the Plan.  If there is any conflict between this Agreement and the terms of the Plan, the terms of the Plan shall govern.

Section 2. Vesting and Forfeiture

(a) Based on Continued Service on Board.  The Director’s Shares shall vest upon the earlier of (i) the next annual shareholder meeting or (ii) the first anniversary of the Grant Date (the “Vesting Date”), subject to the Director continuing to serve on the Board until the Vesting Date.

(b) Effect of a Change in Control.  In the event of a Change in Control occurring prior to the Vesting Date, subject to the Director’s continued service on the Board from the Grant Date to the date of the Change in Control, any Shares which are unvested shall automatically become vested.

(c) Discretionary Acceleration.  The Board, in its sole discretion, may accelerate the vesting of all or a portion of the Shares at any time and from time to time.

(d) Effect of Termination of Board Service.  Upon termination of the Director’s service on the Board for any reason (whether initiated by the Company or by the Director), any unvested Shares shall be forfeited by the Director, provided that if the Director’s service on the Board is terminated by reason of the Director’s death or disability (as determined by the Board), the Director’s Shares shall become vested as of the date the Director’s service on the Board terminates.

(e) Delivery by the Company.  The Company shall register the Shares in the name of the Director.  If the Shares are certificated, any certificates relating to the Shares shall be held by the Secretary of the Company or his designee on behalf of the Director.

Section 3. Restriction on Transfer of Shares.  Prior to the vesting thereof the Shares are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered

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(including, but not limited to, by gift, operation of law or otherwise).  Any purported transfer in violation of this Section 3 shall be void abinitio. 

Section 4. Certain Definitions.

(a) Capitalized terms not otherwise defined in this Agreement have the meanings given to them in the Plan.

(b) As used in this Agreement, the following terms shall have the meanings set forth below:

“Agreement” means this Director Restricted Stock Agreement, as amended from time to time in accordance with the terms hereof.

“Person” means any natural person, firm, partnership, limited liability company, association, corporation, company, trust, business trust, governmental authority or other entity.

“Plan” means the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan adopted by the Board, as amended from time to time.

“Shares” has the meaning given in Section 1(a).

Section 5. Miscellaneous.

(a) Authorization to Share Personal Data.  The Director authorizes any Affiliate of the Company that has or lawfully obtains personal data relating to the Director to divulge or transfer such personal data to the Company or a to a third party, in each case in any jurisdiction, if and to the extent appropriate in connection with this Agreement or the administration of the Plan.

(b) Notices.  All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, to the Company or the Director, as the case may be, at the following addresses or to such other address as the Company or the Director, as the case may be, shall specify by notice to the other:

(c) If to the Company, to it at:

ServiceMaster Global Holdings, Inc.
860 Ridge Lake Boulevard
Memphis, Tennessee  38120

Attention: General Counsel

Fax: (901) 597-8025

(i) If to the Director, to the Director at his or her most recent address as shown on the books and records of the Company;

Copies of any notice or other communication given under this Agreement shall also be given to:

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All such notices and communications shall be deemed to have been received on the date of delivery if delivered personally or on the third business day after the mailing thereof.  Copies of any notice or other communication given under this Agreement shall also be given to:

Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022

Attention:  Peter Loughran
Fax:  (212) 909-6375

(d) Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(e) Waiver; Amendment.

(i) Waiver.  Any party hereto may by written notice to the other parties (A) extend the time for the performance of any of the obligations or other actions of the other parties under this Agreement, (B) waive compliance with any of the conditions or covenants of the other parties contained in this Agreement, and (C) waive or modify performance of any of the obligations of the other parties under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, but not limited to, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

(ii) Amendment.  This Agreement may be amended, modified or supplemented only by a written instrument executed by the Director and the Company. 

(f) Assignability.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Director without the prior written consent of the other.

(g) Applicable Law.  This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

(h) Waiver of Jury Trial.  Each party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated hereby.  Each party (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver

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and (ii) acknowledges that it and the other parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this Section 5(g).

(i) Section and Other Headings, etc.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(j) Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by electronic transmission (including, without limitation, email or facsimile) shall be as effective as delivery of a manually executed counterpart of this Agreement.

[signature page follows]

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IN WITNESS WHEREOF, the Company and the Director have executed this Agreement as of the date first above written.

SERVICEMASTER GLOBAL HOLDINGS, INC.
By:
	Name:
	Title:
DIRECTOR:
Address of the Director:

Total Number of Shares
of Common Stock Granted Pursuant Hereto:

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EX-10.8

Exhibit 10.8

March 24, 2016

Mark J. Barry

Chief Marketing and Strategy Officer

ServiceMaster Global Holdings, Inc.
860 Ridge Lake Blvd.

Memphis, TN 38120

Re:  Separation and Consulting Agreement

Dear Mark:

This letter will follow-up on our recent discussions, and will confirm the terms of your retirement from ServiceMaster.  We respect and are grateful for your dedicated service and appreciate your willingness to continue to provide services to the Company as a consultant during the next two years. 

This Separation and Consulting Agreement (“Agreement”) is made and entered into by you, Mark J. Barry (collectively referred to as “you”), on behalf of yourself, your heirs, executors, administrators, successors and assigns and ServiceMaster Global Holdings, Inc., on behalf of itself, its divisions, subsidiaries, affiliates, related companies, predecessors, successors, assigns, and their respective officers, directors, employees, insurers, stockholders, and agents (collectively referred to as “Company” or “ServiceMaster”).

In consideration of the mutual covenants in this Agreement, the parties hereby agree as follows:

1. Resignation from Employment. You have resigned from ServiceMaster, effective as of the close of business on Thursday, March 31, 2016 (“Resignation Date”).  Effective as of the Resignation Date, you acknowledge that you will no longer hold the position of Chief Marketing & Strategy Officer of the Company, nor any other officer, director or employee position with any of the entities that comprise the Company.  You acknowledge that, from and after the Resignation Date, you shall no longer be authorized to conduct business on behalf of ServiceMaster, including but not limited to entering into contracts on behalf of ServiceMaster.  You agree that, as requested by ServiceMaster from time to time following the Resignation Date, you will execute such other documents as may be necessary to consummate the transactions contemplated by the Agreement.  Your resignation from ServiceMaster shall be treated as a termination “without cause” for purposes of (a) the equity securities that you currently hold, (b) any other applicable compensatory agreements to which you and ServiceMaster are parties and (c) the employee benefit plans of ServiceMaster in which you participate.  By entering into this Agreement, you confirm that you have no disagreement with the Company on any matter relating to the Company’s operations, policies or practices and know of no violations of law or Company policy that have not been reported through the appropriate channels in accordance with Company policy.

2. Officer Indemnity.  To the extent required or permitted under Delaware law, the Company will indemnify you for any claims or suits that may be brought against you arising from your service as an executive officer of the Company.

3. Consulting Arrangement. From April 1, 2016 through March 31, 2018 (the “Consulting Term”), you will provide ongoing consulting advice to ServiceMaster, at the request and direction of ServiceMaster’s

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Chief Executive Officer.  You agree to provide up to 30 hours of consulting services per month, on an as need basis.  ServiceMaster agrees to pay you a consulting fee of $100,000 per year for your services, payable monthly.  ServiceMaster also will reimburse your reasonable travel expenses, if any, incurred to provide such consulting services. 

4. Equity Grants.Any unvested restricted stock units (“RSUs”), performance shares (“PSUs”) or stock options held by you as of your Resignation Date are forfeited and will be cancelled.   Two business days following the public release of ServiceMaster’s financial results for the first quarter of 2016, you will be released from any applicable insider trading restrictions.  However, ServiceMaster reserves the right to re-impose such trading restrictions as it reasonably deems necessary to comply with applicable securities laws and regulations in the event that you become aware of any material, non-public information. 

5. Accrued Wages and Benefits.  

a. Accrued Wages. You will be paid any accrued unpaid wages (including any accrued, unused vacation time) through the last day of employment, in your final paycheck or in accordance with state law.

b. Deferred Compensation and Incentive Plans.   If you participate in any profit sharing, bonus, deferred compensation or incentive plans, your eligibility to participate will end on your Resignation Date.  Any amounts to be paid, distributed, rolled over, or held under such plans will be paid, distributed, rolled over, or held in accordance with the terms of such plans and applicable rules and regulations.

c. Group Health Insurance. If you participate in the ServiceMaster Health and Welfare Benefit Plan, your eligibility to participate will end on your Resignation Date.  You will become eligible for continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) on the first day following the last day of employment.  You are solely responsible for the payment of any premiums for COBRA coverage.

6. Confidential Information. You acknowledge and agree that your employment with ServiceMaster created a relationship of confidence and trust between you and ServiceMaster with respect to all Confidential Information.  You represent, warrant and agree that (a) you have not used or disclosed any Confidential Information other than as necessary in the ordinary course of performing your duties as a ServiceMaster employee for the benefit of ServiceMaster, and (b) you will keep in confidence and trust all Confidential Information known to you, and will not use or disclose such Confidential Information without the prior written consent of ServiceMaster.  As used in this Agreement, “Confidential Information” means all information belonging to ServiceMaster, which is of value to ServiceMaster and which is not publicly known.   Confidential Information includes information you developed in the course of your employment with ServiceMaster, as well as other information to which you may have had access in connection with your employment.  Confidential Information also includes the confidential information of others with whom ServiceMaster has a business relationship.  Nothing in this Agreement, however, shall be construed to prevent you from providing truthful information or testimony in response to a valid subpoena, court order, the request of any government agency or as otherwise required by law.

7. Return of ServiceMaster Property.   On or before your Resignation Date, you agree to return to ServiceMaster all ServiceMaster property, equipment and materials, including, but not limited to, any laptop computer and peripherals; any cell phone or other portable computing device; any telephone calling cards; keys;

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ServiceMaster identification card; any credit or fuel cards; and all tangible written or graphic materials (and all copies) relating in any way to ServiceMaster or its business, including, without limitations, documents, manuals, customer lists and reports, as well as all data contained on computer files, “thumb” drives, “cloud” services, or other data storage device, or home or personal computers and/or e-mail or internet accounts; provided, that, if the return of any such tangible written or graphic materials is impracticable, then you shall destroy such materials and shall certify such destruction to the Company at its request.   Notwithstanding anything herein to the contrary, you may retain possession of your Company-provided iPad tablet computer; provided that any Confidential Information relating to ServiceMaster that may be stored on the iPad is permanently deleted.

8. Assistance. You agree that, subject to reimbursement by ServiceMaster of reasonable costs and expenses, you will cooperate fully with ServiceMaster and its counsel with respect to any matter (including, but not limited to litigation, investigation or government proceeding) which relates to matters with which you were involved during your employment with ServiceMaster. You further agree to notify ServiceMaster’s General Counsel immediately upon your being asked to assist or supply information to any person or entity regarding any civil claim or possible claim against any member of ServiceMaster, and also to give such notice in the event you do in fact assist or supply information to any such person or entity.

9. Assignment of Inventions and Copyrights.  You hereby assign, transfer and release, without royalty or any other consideration except as expressly set forth herein, all worldwide right, title and interest you may have or acquire (including copyright and “moral rights”) in and to all work product, inventions, discoveries, know-how, processes, data and other items (“Materials”) resulting from your services under this Agreement.  To the extent any Materials are not assignable, you waive, disclaim and agree that you will not enforce against ServiceMaster any rights you may have to such Materials. 

10. Independent Contractor Relationship.  During the Consulting Term, you will be an independent contractor and nothing contained herein shall be deemed to make you an employee of ServiceMaster or to empower you to bind or obligate ServiceMaster in any way.  You are solely responsible for paying all of your own tax obligations, as well as those due for any employee/subcontractor permitted to work for you hereunder.

11. Non-Compete/Non-Solicitation/Non-Interference.  During the Consulting Term, you shall not, directly or indirectly (whether as owner, stockholder, director, officer, employee, principal, agent, consultant, independent contractor, partner or otherwise), in North America or any other geographic area in which ServiceMaster or any subsidiary of ServiceMaster is then conducting business:

a. own, manage, operate, control, participate in, perform services for, or otherwise carry on, a business similar to or competitive with the business conducted by ServiceMaster or any subsidiary of ServiceMaster, provided that the foregoing shall not prohibit  your passive ownership of less than 1% of any class of voting securities of a public or privately-held company which would otherwise be prohibited under this Section;

b. attempt to induce any employee of ServiceMaster or any subsidiary of ServiceMaster to terminate his or her employment with ServiceMaster or any subsidiary of ServiceMaster for any purpose whatsoever, or attempt directly or indirectly, in connection with any business to which this section applies, to solicit the trade or business of any current or prospective customer, supplier or partner of ServiceMaster or any subsidiary of ServiceMaster;

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c. engage in any activity which is contrary, inimical or harmful to the interests of ServiceMaster or any subsidiary of ServiceMaster, including but not limited to (i) violations of ServiceMaster policies, (ii) disclosure or misuse of any confidential information or trade secrets of ServiceMaster or a subsidiary of ServiceMaster, (iii) participation in any activity not approved by the Board which could reasonably be foreseen as contributing to or resulting in a change in control and (iv) conduct related to employment for which either criminal or civil penalties may be sought; or

d. interfere with ServiceMaster’s relations with any of its customers, franchisees, subcontractors, consultants, vendors or business partners. 

This Agreement is in addition to and does not supersede any other agreements prohibiting competition with ServiceMaster.   Failure to abide by this Agreement or other such agreements with the Company will give the Company (in addition to any other remedies which may be available to the Company) the right, exercised in its sole and absolute discretion, to (a) suspend or cancel the consulting fees specified above, and (b) obtain a refund for any such consulting fees already made (collectively, “Company Rights”). You understand and recognize that, as a result of your executive role with ServiceMaster, you had contact with, and developed and furthered relationships with, customers and/or prospective customers, and had access to secret, proprietary and confidential information regarding ServiceMaster and its businesses, including Confidential Information (as defined above), and therefore understand and agree that (i) both the nature of this covenant and the scope of this covenant (as well as the covenants in this Agreement) are reasonable and necessary for the protection of ServiceMaster, including its secret, proprietary and confidential information, goodwill and customer relationships and (ii) that ServiceMaster will be irreparably harmed by the breach of any covenants in this Agreement, entitling it to seek injunctive and other equitable relief.

12. No Conflict of Interest.  During the Consulting Term, you shall not enter into any relationship or affiliation, or engage in any activity which may constitute a conflict of interest with ServiceMaster.  You shall immediately notify ServiceMaster in writing if at any time during the Consulting Term you become aware of a potential conflict of interest arising between you and ServiceMaster.  

13. Non-Disparagement.  You agree that you will refrain from taking actions or making statements, written or oral, which criticize, disparage or defame the business, goodwill or reputation of ServiceMaster (including its products and services), its directors, officers, executives, subsidiaries, parent entities, and/or employees or making statements which could adversely affect the morale of other employees.  Nothing in this Agreement, however, shall be construed to prevent you from providing truthful testimony or information in response to any valid subpoena, court order, the request of any government agency or as otherwise required by law.

14. Release and Covenant Not to Sue.  

a. Release. In exchange for the consideration provided to you in this Agreement, you hereby release and forever discharge ServiceMaster, its past and present parent entities, subsidiaries, divisions, limited partnerships, affiliated corporations, successors and assigns,  as well as their respective past and present directors, managers, officers, partners, agents, employees, insurers, attorneys, servants, and each of them, separately and collectively (“Releasees”), from any and all claims, charges, complaints, liens, demands, causes of action, obligations, damages and liabilities, known or unknown, suspected or unsuspected, whether or not mature or ripe (“Claims”), that you ever had and now have against any of the Releasees, including, but not

4

limited to, Claims arising out of or in any way related to your employment with or separation from the Company.  This includes, but is not limited to, Claims based on statutes, torts, contracts and common law, Claims for discrimination, wrongful discharge, harassment, retaliation, and unpaid wages, Claims arising under Title VII of the Civil Rights Act of 1964, the Fair Labor Standards Act (“FLSA”),Family Medical Leave Act (“FMLA”), the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Worker Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act, and any other federal, state or local law or regulation governing the employment relationship.  You understand that this Agreement includes a release of all known and unknown claims through your Resignation Date. 

b. Limitation of Release.  Nothing in this Agreement will prohibit you from filing a charge of discrimination with the National Labor Relations Board, the Equal Employment Opportunity Commission (“EEOC”) or an equivalent state civil rights agency, but you agree and understand that you are expressly waiving your right to monetary compensation or damages thereby if any such agency elects to pursue a claim on your behalf.  Further, nothing in this Agreement shall be construed to waive any right that is not subject to waiver by private agreement under federal, state or local employment or other laws, such as claims for workers’ compensation or unemployment benefits or any claims that may arise after your Resignation Date.

c. Covenant Not To Sue.  To the extent that any Claims covered by the scope of the release herein is not subject to waiver by applicable law (including, without limitation, any Claims arising under or related to FMLA, FLSA, and any other local, state or federal statute governing employment and/or the payment of wages and benefits), you hereby covenant and agree not to sue or otherwise seek any remedy or other form of relief against any of the Releasees relating to such Claims.

d. Representations.  You represent that you have been provided all benefits due under the Family and Medical Leave Act and that you have received all wages due, including overtime pay, premium pay, vacation pay, bonus pay, commissions, or other compensation, and that you have received all appropriate meals and rest breaks to which you were entitled, in compliance with the Fair Labor Standards Act and applicable state and local law, that you have no known workplace injuries or occupational diseases, and that you have not made any report of or opposed any fraud or other wrong doing at the Company and that you have not been retaliated against for reporting or opposing any alleged fraud or other wrongdoing at the Company.

15. Termination.

a. Cause.  ServiceMaster may terminate this Agreement for Cause.  “Cause” is defined as (i) your repeated failure to substantially perform your duties hereunder (including by reason of a disability); (ii) your material breach of this Agreement; or (iii) your intentional misconduct, illegal conduct, or gross negligence which is materially injurious to the Company.  In the event that ServiceMaster terminates this Agreement for Cause, ServiceMaster shall have no further obligation to you, except for payment of a pro-rated consulting fee through the date of termination.  You shall remain obligated to comply with your Non-Compete, Non-Interference and Non-Solicitation obligations through the remaining two-year Consulting Term of this Agreement.

b. Without Cause.  ServiceMaster may terminate this Agreement at any time without Cause.  In that ServiceMaster terminates this Agreement without Cause, ServiceMaster shall have no further obligation to you, except for payment of a pro-rated consulting fee through the date of termination.  In the event this Agreement is terminated without Cause, you shall have no further obligation to ServiceMaster under the Non-Compete, Non-Interference and Non-Solicitation provisions of this Agreement.

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c. Survival of Provisions.  The provisions set forth in paragraphs 6 (Confidential Information), 8 (Assistance), 9 (Assignment of Inventions and Copyrights), 13 (Non-Disparagement) and 14 (Release) shall survive any expiration or termination of this Agreement.

16. Severability.  You and ServiceMaster agree that to the extent that any portion of this Agreement may be held to be invalid or legally unenforceable, the remaining portions will not be affected and will be given full force and effect.

17. Dispute Resolution.  Any dispute or controversy between you and ServiceMaster, whether arising out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be resolved in accordance with the ServiceMaster We Listen Dispute Resolution Plan in effect on your Resignation Date.  Notwithstanding the foregoing, you agree that ServiceMaster may seek a temporary restraining order and/or preliminary injunction in any court of competent jurisdiction, without the posting of a bond, in order to preserve the status quo or to enforce the covenants in this Agreement. 

18. Notices.  All notices required hereunder will be in writing and will be deemed given upon receipt if delivered personally (receipt of which is confirmed) or by courier service promising overnight delivery (with delivery confirmed the next day) or three (3) business days after deposit in the U.S. Mail, certified with return receipt requested.  All notices will be addressed as follows:

If to you: Mark J. Barry XXX XXXXX XXXXXX, XX XXXXX If to ServiceMaster: ServiceMaster Global Holdings, Inc. 860 Ridge Lake Boulevard Memphis, TN  38120 Attn: SVP, Human Resources

Or to such other address as either party will have furnished to the other in writing.

19. Governing Law and Venue.  The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware without regard to the principle of conflicts of laws.  Subject to the arbitration provisions herein, any judicial proceeding arising from and relating to this Agreement shall be brought in courts having competent jurisdiction located in the State of Tennessee, which shall be the exclusive forum for resolving such disputes.  Both parties consent to the personal jurisdiction of such courts for the purposes of this Agreement. 

20. Income Taxation.   You understand that the Company has not provided any advice regarding the tax liability resulting from this Agreement and you shall not rely upon any representations or policies of the Company related to taxation. You are advised to seek the advice of your own personal tax advisor or counsel as to the taxability of the consulting fees. 

21. Successors and Assigns.  This Agreement shall inure to the benefit of and be enforceable by ServiceMaster and its successors and assigns and by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  This Agreement shall not be terminated by any merger or consolidation of ServiceMaster whereby ServiceMaster is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of ServiceMaster.  In the event

6

of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.

22. Entire Agreement. You and ServiceMaster agree that this Agreement constitutes the complete understanding between you and ServiceMaster regarding the matters herein and that no other promises or agreements, express or implied, will be binding between you and ServiceMaster unless signed in writing by you and ServiceMaster.  This Agreement fully supersedes and replaces any and all prior agreements or understandings, if any, between you and ServiceMaster on any matter that is addressed in this Agreement with the exception of confidentiality/non-solicitation/non-compete issues except as stated herein.

Sincerely,

/s/ Susan Hunsberger

Susan Hunsberger

Senior Vice President, Human Resources

ServiceMaster Global Holdings, Inc.

Accepted and agreed this 29th day of March, 2016.

/s/ Mark J. Barry___________________________
Mark J. Barry

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert J. Gillette, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ServiceMaster Global Holdings,Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2016
	/s/ Robert J. Gillette
	Robert J. Gillette
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Alan J. M. Haughie, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ServiceMaster Global Holdings,Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2016
	/s/ Alan J. M. Haughie
	Alan J. M. Haughie
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to Section 1350 of Chapter 63 of Title 18 of The United States Code

I, Robert J. Gillette, the Chief Executive Officer of ServiceMaster Global Holdings,Inc., certify that (i) the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of ServiceMaster Global Holdings,Inc.

cto
	/s/ Robert J. Gillette
	Robert J. Gillette
	May 5, 2016

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to Section 1350 of Chapter 63 of Title 18 of The United States Code

I, Alan J. M. Haughie, the Senior Vice President and Chief Financial Officer of ServiceMaster Global Holdings,Inc., certify that (i) the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of ServiceMaster Global Holdings,Inc.

z
	/s/ Alan J. M. Haughie
	Alan J. M. Haughie
	May 5, 2016

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 29, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	SERVICEMASTER GLOBAL HOLDINGS INC
Entity Central Index Key	0001428875
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		135,740,188
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

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Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract]
Revenue	$ 608	$ 571
Cost of services rendered and products sold	324	303
Selling and administrative expenses	173	152
Amortization expense	8	12
Restructuring charges	1	2
Gain on sale of Merry Maids branches	(1)	(1)
Interest expense	38	46
Interest and net investment income	(1)	(1)
Loss on extinguishment of debt		13
Other expense	3
Income from Continuing Operations before Income Taxes	62	45
Provision for income taxes	23	17
Income from Continuing Operations	$ 39	$ 28
Loss from discontinued operations, net of income taxes
Net Income	$ 39	$ 28
Total Comprehensive Income	$ 40	$ 22
Weighted average common shares outstanding - Basic	135.6	134.4
Weighted-average common shares outstanding - Diluted	137.8	136.1
Basic Earnings Per Share:
Income from Continuing Operations (in dollars per share)	$ 0.29	$ 0.21
Loss from discontinued operations, net of income taxes (in dollars per share)
Net Income (in dollars per share)	$ 0.28	$ 0.21
Diluted Earnings Per Share:
Income from Continuing Operations (in dollars per share)	$ 0.28	$ 0.21
Loss from discontinued operations, net of income taxes (in dollars per share)
Net Income (in dollars per share)	$ 0.28	$ 0.20

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Condensed Consolidated Statements of Financial Position - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 371	$ 296
Marketable securities	25	24
Receivables, less allowances of $21 and $23, respectively	458	487
Inventories	39	40
Prepaid expenses and other assets	133	54
Deferred customer acquisition costs	30	32
Total Current Assets	1,056	933
Other Assets:
Property and equipment, net	164	160
Goodwill	2,131	2,129
Intangible assets, primarily trade names, service marks and trademarks, net	1,695	1,704
Notes receivable	33	32
Long-term marketable securities	56	57
Other assets	45	83
Total Assets	5,180	5,098
Current Liabilities:
Accounts payable	105	110
Accrued liabilities:
Payroll and related expenses	56	64
Self-insured claims and related expenses	179	106
Accrued interest payable	3	10
Other	63	59
Deferred revenue	567	552
Liabilities of discontinued operations	1
Current portion of long-term debt	55	54
Total Current Liabilities	1,028	955
Long-Term Debt	2,693	2,698
Other Long-Term Liabilities:
Deferred taxes	687	687
Other long-term obligations, primarily self-insured claims	182	213
Total Other Long-Term Liabilities	$ 868	$ 901
Commitments and Contingencies
Shareholders' Equity:
Common stock $0.01 par value (authorized 2,000,000,000 shares with 143,389,172 shares issued and 135,729,451 outstanding at March 31, 2016 and 143,170,897 shares issued and 135,511,176 outstanding at December 31, 2015)	$ 2	$ 2
Additional paid-in capital	2,250	2,245
Accumulated deficit	(1,521)	(1,560)
Accumulated other comprehensive loss	(19)	(21)
Less common stock held in treasury, at cost (7,659,721 shares at March 31, 2016 and December 31, 2015)	(122)	(122)
Total Shareholders' Equity	590	545
Total Liabilities and Shareholders' Equity	$ 5,180	$ 5,098

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Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Condensed Consolidated Statements of Financial Position [Abstract]
Allowance for receivables (in dollars)	$ 21	$ 23
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	2,000,000,000	2,000,000,000
Common stock, shares issued (in shares)	143,389,172	143,170,897
Common stock, shares outstanding (in shares)	135,729,451	135,511,176
Treasury stock (in shares)	7,659,721	7,659,721

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Consolidated Statements of Cash Flows [Abstract]
Cash and Cash Equivalents at Beginning of Period	$ 296	$ 389
Cash Flows from Operating Activities from Continuing Operations:
Net Income	$ 39	$ 28
Adjustments to reconcile net income to net cash provided from operating activities:
Loss from discontinued operations, net of income taxes
Depreciation expense	$ 13	$ 12
Amortization expense	8	12
Amortization of debt issuance costs	1	1
Gain on sale of Merry Maids branches	(1)	(1)
Loss on extinguishment of debt		13
Call premium paid on retirement of debt		(11)
Deferred income tax provision	1	5
Stock-based compensation expense	3	2
Other	4	1
Change in working capital, net of acquisitions:
Receivables	28	21
Inventories and other current assets	(7)	6
Accounts payable	5	6
Deferred revenue	16	17
Accrued liabilities	(16)	(29)
Accrued interest payable	(7)	(25)
Accrued restructuring charges		(1)
Current income taxes	19	10
Net Cash Provided from Operating Activities from Continuing Operations	106	68
Cash Flows from Investing Activities from Continuing Operations:
Property additions	(17)	(8)
Sale of equipment and other assets	3	1
Other business acquisitions, net of cash acquired	(2)	(12)
Purchases of available-for-sale securities	(2)	(5)
Sales and maturities of available-for-sale securities	2	9
Origination of notes receivable	(23)	(21)
Collections on notes receivable	24	22
Net Cash Used for Investing Activities from Continuing Operations	(15)	(14)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt		3
Payments of debt	(19)	(200)
Issuance of common stock	2	8
Net Cash Used for Financing Activities from Continuing Operations	(17)	(190)
Cash Flows from Discontinued Operations:
Cash used for financing activities		(5)
Net Cash Used for Discontinued Operations		(5)
Effect of Exchange Rate Changes on Cash	1
Cash Increase (Decrease) During the Period	74	(141)
Cash and Cash Equivalents at End of Period	$ 371	$ 248

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Basis of Presentation

3 Months Ended

Mar. 31, 2016

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, furniture and cabinet 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, 2015, as filed with the SEC (the “2015 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.

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Newly Issued Accounting Standards

3 Months Ended

Mar. 31, 2016

Newly Issued Accounting Standards [Abstract]

Newly Issued Accounting Standards

Note 2. Newly 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 adoptthe 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 period within those years, beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

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 Company is impacted as unrealized gains or losses on the Company’s available-for-sale securities are currently recognized in other comprehensive 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.

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 adopting ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” to require the recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled and the presentation of excess tax benefits as an operating activity on the statement of cash flows as part of the FASB’s simplification initiative. Under previous guidance, an entity generally recorded excess tax benefits and certain tax deficiencies in additional paid-in capital instead of through income tax expense or benefit in the income statement and presented excess tax benefits as a financing activity rather than an operating activity in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. As allowed, the Company has elected to early adopt the amendments of ASU 2016-09. The adoption of ASU 2016-09 has been accounted for as a change in accounting principle prospectively for the income statement effect, as required, and retrospectively for the cash flow statement effect, as allowed. As a result of the implementation of ASU 2016-09, $8 million of excess tax benefits for the three months ended March 31, 2015 were retrospectively presented as an operating activity within the condensed consolidated statements of cash flows.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

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, auto 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. 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, 2015	$	114
Provision for self-insured claims		13
Cash payments		(13)
Balance as of March 31, 2016	$	114
Balance as of December 31, 2014	$	104
Provision for self-insured claims		12
Cash payments		(6)
Balance as of March 31, 2015	$	109

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.

On March 29, 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 Plea Agreement (the “Plea Agreement”) in connection with the previously disclosed 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. Together with the Plea Agreement, the DOJ charged TMX USVI and TMX LP with four misdemeanor violations of the Federal Insecticide, Fungicide, and Rodenticide Act related to improper applications of methyl bromide. Under the Plea Agreement, TMX USVI agreed to pay a total of $5 million in fines to the United States. TMX LP agreed to pay $3 million in fines and penalties to the United States and a $1 million community service payment 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. TMX USVI also agreed to pay $1 million to the United States Environmental Protection Agency (the “EPA”) for costs incurred by the EPA for the response and clean-up of the affected units at the resort in St. John. Both TMX USVI and TMX LP agreed to a three-year probation period subject to conditions of probation. Furthermore, TMX USVI and TMX LP agreed to make good faith efforts to resolve past and future medical expenses for the affected family through separate civil proceedings. The Plea Agreement would not bind any other federal, state or local authority, but the EPA has stated that it does not intend to initiate any administrative enforcement action or refer the matter to the DOJ for any civil enforcement action once a plea agreement is approved by the court. The Company has recorded in the condensed consolidated statement of operations and comprehensive income charges of $10 million in connection with the Plea Agreement, of which $2 million was recorded in the three months ended March 31, 2016.

Atan initial appearance on April 20, 2016, the United States District Court of the U.S. Virgin Islands rejected the Plea Agreement, indicating that it was not satisfied with the assessment and distribution of the monetary sanctions set forth in the Plea Agreement. The parties continue to discuss the matter, including potential modifications to the Plea Agreement.  The court scheduled a sentencing hearing on August 25, 2016, and indicated that a modified plea agreement or a withdrawal of the plea could be filed up to that date.

Aplea agreement and the payments thereunder would not resolve any related civil or administrative claims for damages or other relief related to the U.S. Virgin Islands matter. 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 civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under the Company’s general liability insurance program. In the three months ended March 31, 2015, the Company recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the U.S. Virgin Islands matter, an amount equal to the Company’s insurance deductible under its general liability insurance program, although no assurance can be given regarding the Company’s insurance coverage or recoveries in connection with such civil claims.

On September 15, 2015, a lawsuit was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida, styled Carl Robert McCaughey, et al. v. Terminix International Company Limited Partnership, Sunland Pest Control Services, Inc., et al. (Case No. 32080796). The lawsuit alleges that fumigation of a Florida family’s residence by Sunland, a subcontractor of Terminix, resulted in serious injuries to one of the family’s children, alleges claims for negligence and strict liability, and seeks an unspecified amount of monetary and punitive damages. The court has set a trial date in September 2016. The DOJ and other federal and state agencies are investigating the matter, and the DOJ has filed criminal charges against Sunland and two persons associated with Sunland. The Company continues to cooperate fully with all relevant governmental authorities. In the three months ended March 31, 2016, the Company recorded in the condensed consolidated statement of operations and comprehensive income a charge of $3 million in connection with civil claims related to the Palm Beach County, Florida matter, an amount equal to the Company’s insurance deductible under its general liability insurance program, although no assurance can be given regarding the Company’s insurance coverage or recoveries in connection with such civil claims. The amount and extent of any potential penalties, fines, sanctions, costs and damages that the federal or other governmental authorities may impose, investigation or other costs and reputational harm, as well as the impact of any civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to this incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or damages may not be covered under the Company’s general liability insurance program.

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 it is preparing to submit to 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 $23 million to approximately $85 million. The Company recorded a charge of $23 million in the condensed consolidated statement of operations and comprehensive income in the fourth quarter of 2015. However, there can be no assurances as to the ultimate cost of the correction.

In addition to the matters discussed above, in the ordinary course of conducting business activities, the Company and its subsidiaries become involved in judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured matters that are brought on an individual, collective, representative and class action basis, or other proceedings involving regulatory, employment, general and commercial liability, automobile liability, wage and hour, environmental and other matters. The Company has entered into settlement agreements in certain cases, including with respect to putative collective and class actions, which are subject to court or other approvals. If one or more of the Company’s settlements are not finally approved, the Company could have additional or different exposure, which could be material. Subject to the paragraphs above, the Company does not expect any of these proceedings to have a material effect on its reputation, business, financial position, results of operations or cash flows; however, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial position, results of operations and cash flows. 

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2016

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 three months ended March 31, 2016 and 2015. There were no accumulated impairment losses recorded as of March 31, 2016.

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, 2015	$	1,567	$	381	$	182	$	2,129
Acquisitions		2		—		—		2
Disposals		—		—		(2)		(2)
Other (1)		1		—		—		2
Balance as of March 31, 2016	$	1,570	$	381	$	180	$	2,131

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(1) Reflects the impact of foreign exchange rates.

The table below summarizes the other intangible asset balances for continuing operations:

	As of March 31, 2016						As of December 31, 2015
			Accumulated						Accumulated
(In millions)	Gross		Amortization		Net		Gross		Amortization		Net
Trade names(1)	$	1,608	$	—	$	1,608	$	1,608	$	—	$	1,608
Customer relationships		570		(523)		47		571		(517)		53
Franchise agreements		88		(64)		24		88		(63)		25
Other		54		(37)		16		53		(36)		18
Total	$	2,320	$	(624)	$	1,695	$	2,320	$	(616)	$	1,704

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(1) Not subject to amortization.

For the existing intangible assets, the Company anticipates amortization expense for the remainder of 2016 and each of the next five years of $22 million, $19 million, $13 million, $8 million, $5 million and $2 respectively.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 5. Stock-Based Compensation

For the three months ended March 31, 2016 and 2015, the Company recognized stock-based compensation expense of $3 million ($2million, net of tax) and $2 million ($1 million, net of tax), respectively.As of March 31, 2016, there was $33 million of total unrecognized compensation costs related to non-vested stock options, restricted stock units (“RSUs”) and performance shares  granted under the Amended and Restated ServiceMaster Global Holdings, Inc. 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 of 2.68 years.

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Comprehensive Income

3 Months Ended

Mar. 31, 2016

Comprehensive Income [Abstract]

Comprehensive Income

Note 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 on
	Unrealized		Available		Foreign
	Losses on		-for-Sale		Currency
(In millions)	Derivatives		Securities		Translation		Total
Balance as of December 31, 2015	$	(7)	$	2	$	(15)	$	(21)
Other comprehensive (loss) income before reclassifications:
Pre-tax amount		(5)		—		3		(2)
Tax benefit		(2)		—		—		(1)
After-tax amount		(3)		—		3		(1)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		2		—		—		2
Net current period other comprehensive (loss) income		(1)		—		3		1
Balance as of March 31, 2016	$	(9)	$	2	$	(12)	$	(19)
Balance as of December 31, 2014	$	(6)	$	6	$	(8)	$	(8)
Other comprehensive loss before reclassifications:
Pre-tax amount		(6)		—		(4)		(9)
Tax benefit		(2)		—		—		(2)
After-tax amount		(4)		—		(4)		(7)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		2		—		—		1
Net current period other comprehensive loss		(2)		—		(4)		(6)
Balance as of March 31, 2015	$	(8)	$	6	$	(11)	$	(13)

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(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				Condensed Consolidated Statements of
	March 31,				Operations and Comprehensive Income
(In millions)	2016		2015		Location
Losses on derivatives:
Fuel swap contracts	$	(1)	$	(2)	Cost of services rendered and products sold
Interest rate swap contracts		(2)		(1)	Interest expense
Net losses on derivatives		(3)		(2)
Impact of income taxes		1		1	Provision for income taxes
Total reclassifications related to derivatives	$	(2)	$	(2)
Total reclassifications for the period	$	(2)	$	(1)

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Supplemental Cash Flow Information

3 Months Ended

Mar. 31, 2016

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:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Cash paid for or (received from):
Interest expense	$	42	$	67
Interest and dividend income		(1)		(1)
Income taxes, net of refunds		3		1

The Company acquired $6 million and $2 million of property and equipment through capital leases and other non-cash  financing transactions in the three months ended March 31, 2016 and 2015, respectively, which have been excluded from the condensed consolidated statements of cash flows as non-cash investing and financing activities. 

In the three months ended March 31, 2016 and 2015, the Company converted certain company-owned Merry Maids branches to franchises for a total purchase price of $4 million and $2 million, respectively. In the three months ended March 31, 2016 and 2015, the Company received cash of $3 million and $1 million, respectively, and provided financing of $1 million and $1 million, respectively. These financed amounts have been excluded from the condensed consolidated statements of cash flows as non-cash investing activities.

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Cash and Marketable Securities

3 Months Ended

Mar. 31, 2016

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 March 31, 2016 and December 31, 2015, the Company’s investments consisted primarily of domestic publicly traded debt and certificates of deposit (“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 and trading securities, March 31, 2016:
Debt securities	$	59	$	1	$	—	$	60
Equity securities		19		3		—		22
Total securities	$	78	$	4	$	—	$	81
Available-for-sale and trading securities, December 31, 2015:
Debt securities	$	60	$	1	$	—	$	60
Equity securities		18		3		—		21
Total securities	$	78	$	4	$	(1)	$	81

There were no unrealized losses which had been in a loss position for more than one year as of March 31, 2016 andDecember 31, 2015. The aggregate fair value of the investments with unrealized losses was $28million and $23 million as of March 31, 2016 and December 31, 2015, respectively.

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. There were no proceeds, gross realized gains or gross realized losses resulting from sales of available-for-sale securities or impairment charges due to other than temporary declines in the value of certain investments for the three months ended March 31, 2016 and 2015.  

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Long-Term Debt

3 Months Ended

Mar. 31, 2016

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
	March 31,		December 31,
(In millions)	2016		2015
Senior secured term loan facility maturing in 2021(1)	$	2,332	$	2,336
Revolving credit facility maturing in 2019		—		—
7.10% notes maturing in 2018(2)		76		75
7.45% notes maturing in 2027(2)		165		164
7.25% notes maturing in 2038(2)		65		65
Vehicle capital leases(3)		49		47
Other		62		65
Less current portion		(55)		(54)
Total long-term debt	$	2,693	$	2,698

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(1) As of March 31, 2016 and December 31, 2015, presented net of $20 million and $21 million, respectively, in unamortized debt issuance costs and $16 million and $17million, respectively, in unamortized original issue discount paid.

(2) As of March 31, 2016 and December 31, 2015, collectively presented net of $52 million and $53 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

(3) 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.

Refinancing of Indebtedness

On February 17, 2015, the Companyredeemed $190 million in aggregate principal amount of its outstanding 8%  senior notes due 2020 (the “8% 2020 Notes”) at a redemption price of 106.0% of the principal amount using available cash. In connection with the partial redemption, the Company recorded a loss on extinguishment of debt of $13 million in the three months ended March 31, 2015, which included  a pre-payment premium of $11 million and the write-off of $2 million of debt issuance costs. 

On April 1, 2015, the Companyentered into a first amendment (the “First Term Loan Amendment”) which amends the agreement governingthe $1,825 million term loan facility maturing July 1, 2021 (the “Term Loan Facility”) and the $300 million revolving credit facility maturing July 1, 2019 (the “Revolving Credit Facility”) (together with the Term Loan Facility, the “Credit Facilities”). The First Term Loan Amendment provides for incremental term loans (the “April Incremental Term Loans”) in an aggregate principal amount of $175 million. On April 1, 2015, the Companyused the net proceeds from the April Incremental Term Loans, together with cash on hand, to redeem the remaining outstanding $200 million in aggregate principal amount of the 8% 2020 Notes at a redemption price of 106.0% of the principal amount. In connection with the redemption, the Company recorded a loss on extinguishment of debt of $14 million in the second quarter of 2015, which included a pre-payment premium of $12 million and the write-off of $2 million of debt issuance costs.

On August  17, 2015, the Companyentered into a second amendment (the “Second Term Loan Amendment”) which amends the agreement governing the Credit Facilities. The Second Term Loan Amendment provides for incremental term loans (the “August Incremental Term Loans”) in an aggregate principal amount of $400 million. On August  17, 2015, the Companyused the net proceeds from the August Incremental Term Loans, together with cash on hand, to redeem the remaining outstanding $488 million in aggregate principal amount of the7% senior notes due 2020 (the “7% 2020 Notes”) (together with the 8% 2020 Notes, the “2020 Notes”) at a redemption price of 105.25% of the principal amount. In connection with the redemption, the Company recorded a loss on extinguishment of debt of $31 million in the third quarter of 2015, which included a pre‑payment premium of $25 million and the write-off of $6 million of debt issuance costs.

Interest Rate Swaps

Interest rate swap agreements in effect as of March 31, 2016 are as follows:

Trade Date	Effective Date	Expiration Date	Notional Amount	Fixed Rate(1)		Floating Rate
July 23, 2014	August 1, 2014	July 31, 2018	$300,000	1.786	%	One month LIBOR
July 23, 2014	March 1, 2015	July 31, 2018	$400,000	1.927	%	One month LIBOR

(1)Before the application of the applicable borrowing margin.

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Acquisitions

3 Months Ended

Mar. 31, 2016

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 three months ended March 31, 2016, the Company completed several pest control and termite acquisitions. The total purchase price for these acquisitions was $3  million. The Company recorded goodwill of $2 million and accounts receivable of $1 million related to these acquisitions.

During the three months ended March 31, 2015, the Company completed several pest control and termite acquisitions. The total purchase price for these acquisitions was $14 million. The Company recorded goodwill of $10 million and other intangibles, primarily customer relationships, of $4 million related to these acquisitions.

Supplemental cash flow information regarding the Company’s acquisitions is as follows:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Assets acquired	$	3	$	14
Liabilities assumed		—		—
Net assets acquired	$	3	$	14
Net cash paid	$	2	$	12
Seller financed debt		—		2
Purchase price	$	3	$	14

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Taxes [Abstract]

Income Taxes

Note 11. Income Taxes

As of March 31, 2016 and December 31, 2015, the Company had $17 million and $16 million, respectively, of tax benefits primarily reflected in state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $7 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.

The effective tax rate on income from continuing operations was 37.1 percent and 37.0 percent for the three months ended March 31, 2016 and 2015, respectively. The effective tax rate on income from continuing operations for the three months ended March 31, 2016 was primarily affected by excess tax benefits for share-based awards recorded discretely during the quarter. The effective tax rate on income from continuing operations for the three months ended March 31, 2015 was primarily affected by a reduction of the state valuation allowance on net operating losses during the quarter.

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Business Segment Reporting

3 Months Ended

Mar. 31, 2016

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 and Company-owned locations primarily under the Merry Maids brand name, on-site wood furniture and cabinet repair and restoration services primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate includes SMAC, the Company’s financing subsidiary exclusively dedicated to providing financing to its franchisees and retail customers of its operating units, and the Company’s headquarters operations (substantially all of which costs are allocated to the Company’s reportable segments), which provide various technology, marketing, finance, legal and other support services to the reportable segments. The composition of the Company’s reportable segments is consistent with that used by the Company’s chief operating decision maker (the “CODM”) to evaluate performance and allocate resources.

Information regarding the accounting policies used by the Company is described in the Company’s 2015 Form 10-K. The Company derives substantially all of its revenue from customers and franchisees in the United States with approximatelytwo percent generated in foreign markets. Operating expenses of the business units consist primarily of direct costs and indirect costs allocated from Corporate.

The Company uses Reportable Segment Adjusted EBITDA as its measure of segment profitability. Accordingly, the CODM evaluates performance and allocates resources based primarily on Reportable Segment Adjusted EBITDA. Reportable Segment Adjusted EBITDA is defined as net income before: unallocated corporate expenses; loss from discontinued operations, net of income taxes; provision for income taxes; loss on extinguishment of debt; interest expense; depreciation and amortization expense; 401(k) Plan corrective contribution; non-cash stock-based compensation expense; restructuring charges; gain on sale of Merry Maids branches; and other non-operating expenses. The Company’s definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. The Company believes Reportable Segment Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives, consulting agreements and equity-based, long-term incentive plans.

Information for continuing operations for each reportable segment and Corporate is presented below:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Revenue:
Terminix	$	364	$	336
American Home Shield		194		175
Franchise Services Group		49		59
Reportable Segment Revenue	$	607	$	571
Corporate		1		1
Total Revenue	$	608	$	571
Reportable Segment Adjusted EBITDA:(1)
Terminix	$	94	$	89
American Home Shield		19		29
Franchise Services Group		18		19
Reportable Segment Adjusted EBITDA	$	131	$	137

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(1) Presented below is a reconciliation of Reportable Segment Adjusted EBITDA to Net Income:

	Three Months Ended
	March 31,
(In millions)	2016		2015
Reportable Segment Adjusted EBITDA:
Terminix	$	94	$	89
American Home Shield		19		29
Franchise Services Group		18		19
Reportable Segment Adjusted EBITDA	$	131	$	137
Unallocated corporate expenses	$	(4)	$	(4)
Depreciation and amortization expense		(21)		(24)
Non-cash stock-based compensation expense		(3)		(2)
Restructuring charges		(1)		(2)
Gain on sale of Merry Maids branches		1		1
Provision for income taxes		(23)		(17)
Loss on extinguishment of debt		—		(13)
Interest expense		(38)		(46)
Other non-operating expenses		(3)		(1)
Net Income	$	39	$	28

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Related Party Transactions

3 Months Ended

Mar. 31, 2016

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 TruGreen Holding Corporation (“New TruGreen”) pursuant to which the Company provided New 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 were 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 January 14, 2016 (except certain information technology, human resources and accounts payable services, which the Company has continued to provide to New TruGreen beyond January 14, 2016). New TruGreen may terminate the transition services agreement (or certain services under the transition services agreement) for convenience upon 90 days written notice, in which case New TruGreen will be required to reimburse the Company for early termination costs.

Under this transition services agreement, the Company recorded $3million and $8 million in the three months ended March 31, 2016 and 2015, respectively, of fees due from New TruGreen, which is included as a reduction in Selling and administrative expenses in the condensed consolidated statement of operations and comprehensive income. As of March 31, 2016, all amounts owed by New TruGreen under this agreement have been paid.

In addition, the Company, New TruGreen and TruGreen Limited Partnership, an indirectly wholly-owned subsidiary of New TruGreen, entered into (1) a separation and distribution agreement containing key provisions relating to the separation of the TruGreen business and the distribution of New TruGreen common stock to the Company’s stockholders (including relating to specified TruGreen legal matters with respect to which the Company has agreed to retain liability, as well as insurance coverage, non-competition, indemnification and other matters), (2) an employee matters agreement allocating liabilities and responsibilities relating to employee benefit plans and programs and other related matters and (3) a tax matters agreement governing the respective rights, responsibilities and obligations of the parties thereto with respect to taxes, including allocating liabilities for income taxes attributable to New TruGreen and its subsidiaries generally to the Company for tax periods (or portions thereof) ending on or before January 14, 2014 and generally to New TruGreen for tax periods (or portions thereof) beginning after that date.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 14. Fair Value Measurements

The period-end carrying amounts of receivables, 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 $2,748 million and $2,752 million and the estimated fair value was $2,821 million and $2,813 million as of March 31, 2016 and December 31, 2015, 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 March 31, 2016 and December 31, 2015.

The Company has estimated the fair value of its financial instruments measured at fair value on a recurring basis using the market and income approaches. For investments in marketable securities, deferred compensation trust assets and derivative contracts, which are carried at their fair values, the Company’s fair value estimates incorporate quoted market prices, other observable inputs (for example, forward interest rates) and unobservable inputs (for example, forward commodity prices) at the balance sheet date.

Interest rate swap contracts are valued using forward interest rate curves obtained from third-party market data providers. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract interest rate to the expected forward interest rate as of each settlement date and applying the difference between the two rates to the notional amount of debt in the interest rate swap contracts.

Fuel swap contracts are valued using forward fuel price curves obtained from third-party market data providers. The fair value of each contract is the sum of the expected future settlements between the contract counterparties, discounted to present value. The expected future settlements are determined by comparing the contract fuel price to the expected forward fuel price as of each settlement date and applying the difference between the contract and expected prices to the notional gallons in the fuel swap contracts. The Company regularly reviews the forward price curves obtained from third-party market data providers and related changes in fair value for reasonableness utilizing information available to the Company from other published sources.

The Company has not changed its valuation techniques for measuring the fair value of any financial assets and liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period. There were no significant transfers between levels during each of the three month periods ended March 31, 2016 and 2015.

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 March 31, 2016:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	8	$	8	$	—	$	—
Investments in marketable securities	Marketable securities and Long-term marketable securities		74		41		33		—
Total financial assets		$	81	$	48	$	33	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	3	$	—	$	—	$	3
Interest rate swap contracts	Other long-term liabilities		11		—		11		—
Total financial liabilities		$	14	$	—	$	11	$	3
As of December 31, 2015:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	8	$	8	$	—	$	—
Investments in marketable securities	Marketable securities and Long-term marketable securities		73		38		35		—
Total financial assets		$	81	$	46	$	35	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	4	$	—	$	—	$	4
Interest rate swap contracts	Other long-term liabilities		8		—		8		—
Total financial liabilities		$	12	$	—	$	8	$	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, 2015	$	(4)
Total (losses) gains (realized and unrealized)
Included in earnings		(1)	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		1
Balance as of March 31, 2016	$	(3)
Balance as of December 31, 2014	$	(6)
Total (losses) gains (realized and unrealized)
Included in earnings		(2)	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		2
Balance as of March 31, 2015	$	(4)

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 March 31, 2016:
Fuel swap contracts	$	(3)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$1.91 - $2.45	$	2.16
As of December 31, 2015:
Fuel swap contracts	$	(4)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$1.91 - $2.55	$	2.22

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(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 were insignificant during the three months ended March 31, 2016. As of March 31, 2016, the Company had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $35 million, maturing through 2017. 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 March 31, 2016, the Company had posted $5 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 $6 million, net of tax, as of March 31, 2016. 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.

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Earnings Per Share

3 Months Ended

Mar. 31, 2016

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 dilutive 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
	March 31,
(In millions, except per share data)	2016		2015
Income from continuing operations	$	39	$	28
Weighted-average common shares outstanding		135.6		134.4
Effect of dilutive securities:
RSUs(1)		0.2		0.2
Stock options(2)		1.9		1.4
Weighted-average common shares outstanding—assuming dilution		137.8		136.1
Basic earnings per share from continuing operations	$	0.29	$	0.21
Diluted earnings per share from continuing operations	$	0.28	$	0.21

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(1) Unvested RSUs and performance shares of 0.3 million shares for each of the three month periods ended March 31, 2016 and 2015 were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

(2) Options to purchase 0.9 million and 0.4 million shares for the three months ended March 31, 2016 and 2015, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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Newly Issued Accounting Standards (Policy)

3 Months Ended

Mar. 31, 2016

Newly Issued Accounting Standards [Abstract]

Newly 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 adoptthe 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 period within those years, beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

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 Company is impacted as unrealized gains or losses on the Company’s available-for-sale securities are currently recognized in other comprehensive 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.

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 adopting ASU 2016-02.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” to require the recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled and the presentation of excess tax benefits as an operating activity on the statement of cash flows as part of the FASB’s simplification initiative. Under previous guidance, an entity generally recorded excess tax benefits and certain tax deficiencies in additional paid-in capital instead of through income tax expense or benefit in the income statement and presented excess tax benefits as a financing activity rather than an operating activity in the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. As allowed, the Company has elected to early adopt the amendments of ASU 2016-09. The adoption of ASU 2016-09 has been accounted for as a change in accounting principle prospectively for the income statement effect, as required, and retrospectively for the cash flow statement effect, as allowed. As a result of the implementation of ASU 2016-09, $8 million of excess tax benefits for the three months ended March 31, 2015 were retrospectively presented as an operating activity within the condensed consolidated statements of cash flows.

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2016

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, 2015	$	114
Provision for self-insured claims		13
Cash payments		(13)
Balance as of March 31, 2016	$	114
Balance as of December 31, 2014	$	104
Provision for self-insured claims		12
Cash payments		(6)
Balance as of March 31, 2015	$	109

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2016

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, 2015	$	1,567	$	381	$	182	$	2,129
Acquisitions		2		—		—		2
Disposals		—		—		(2)		(2)
Other (1)		1		—		—		2
Balance as of March 31, 2016	$	1,570	$	381	$	180	$	2,131

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(1) Reflects the impact of foreign exchange rates.

Schedule Of Other Intangible Asset Balances For Continuing Operations

	As of March 31, 2016						As of December 31, 2015
			Accumulated						Accumulated
(In millions)	Gross		Amortization		Net		Gross		Amortization		Net
Trade names(1)	$	1,608	$	—	$	1,608	$	1,608	$	—	$	1,608
Customer relationships		570		(523)		47		571		(517)		53
Franchise agreements		88		(64)		24		88		(63)		25
Other		54		(37)		16		53		(36)		18
Total	$	2,320	$	(624)	$	1,695	$	2,320	$	(616)	$	1,704

___________________________________

(1) Not subject to amortization.

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Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2016

Comprehensive Income [Abstract]

Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects

			Unrealized
			Gains on
	Unrealized		Available		Foreign
	Losses on		-for-Sale		Currency
(In millions)	Derivatives		Securities		Translation		Total
Balance as of December 31, 2015	$	(7)	$	2	$	(15)	$	(21)
Other comprehensive (loss) income before reclassifications:
Pre-tax amount		(5)		—		3		(2)
Tax benefit		(2)		—		—		(1)
After-tax amount		(3)		—		3		(1)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		2		—		—		2
Net current period other comprehensive (loss) income		(1)		—		3		1
Balance as of March 31, 2016	$	(9)	$	2	$	(12)	$	(19)
Balance as of December 31, 2014	$	(6)	$	6	$	(8)	$	(8)
Other comprehensive loss before reclassifications:
Pre-tax amount		(6)		—		(4)		(9)
Tax benefit		(2)		—		—		(2)
After-tax amount		(4)		—		(4)		(7)
Amounts reclassified from accumulated other comprehensive income (loss)(1)		2		—		—		1
Net current period other comprehensive loss		(2)		—		(4)		(6)
Balance as of March 31, 2015	$	(8)	$	6	$	(11)	$	(13)

___________________________________

(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				Condensed Consolidated Statements of
	March 31,				Operations and Comprehensive Income
(In millions)	2016		2015		Location
Losses on derivatives:
Fuel swap contracts	$	(1)	$	(2)	Cost of services rendered and products sold
Interest rate swap contracts		(2)		(1)	Interest expense
Net losses on derivatives		(3)		(2)
Impact of income taxes		1		1	Provision for income taxes
Total reclassifications related to derivatives	$	(2)	$	(2)
Total reclassifications for the period	$	(2)	$	(1)

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2016

Supplemental Cash Flow Information [Abstract]

Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows

	Three Months Ended
	March 31,
(In millions)	2016		2015
Cash paid for or (received from):
Interest expense	$	42	$	67
Interest and dividend income		(1)		(1)
Income taxes, net of refunds		3		1

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Cash and Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2016

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 and trading securities, March 31, 2016:
Debt securities	$	59	$	1	$	—	$	60
Equity securities		19		3		—		22
Total securities	$	78	$	4	$	—	$	81
Available-for-sale and trading securities, December 31, 2015:
Debt securities	$	60	$	1	$	—	$	60
Equity securities		18		3		—		21
Total securities	$	78	$	4	$	(1)	$	81

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Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2016

Long-Term Debt [Abstract]

Schedule Of Long-Term Debt

	As of		As of
	March 31,		December 31,
(In millions)	2016		2015
Senior secured term loan facility maturing in 2021(1)	$	2,332	$	2,336
Revolving credit facility maturing in 2019		—		—
7.10% notes maturing in 2018(2)		76		75
7.45% notes maturing in 2027(2)		165		164
7.25% notes maturing in 2038(2)		65		65
Vehicle capital leases(3)		49		47
Other		62		65
Less current portion		(55)		(54)
Total long-term debt	$	2,693	$	2,698

___________________________________

(1) As of March 31, 2016 and December 31, 2015, presented net of $20 million and $21 million, respectively, in unamortized debt issuance costs and $16 million and $17million, respectively, in unamortized original issue discount paid.

(2) As of March 31, 2016 and December 31, 2015, collectively presented net of $52 million and $53 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

(3) 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
July 23, 2014	August 1, 2014	July 31, 2018	$300,000	1.786	%	One month LIBOR
July 23, 2014	March 1, 2015	July 31, 2018	$400,000	1.927	%	One month LIBOR

(1)Before the application of the applicable borrowing margin.

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2016

Acquisitions [Abstract]

Schedule Of Supplemental Cash Flow Information Regarding Acquisitions

	Three Months Ended
	March 31,
(In millions)	2016		2015
Assets acquired	$	3	$	14
Liabilities assumed		—		—
Net assets acquired	$	3	$	14
Net cash paid	$	2	$	12
Seller financed debt		—		2
Purchase price	$	3	$	14

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Business Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2016

Business Segment Reporting [Abstract]

Schedule Of Information For Continuing Operations For Each Reportable Segment And Other Operations And Headquarters

	Three Months Ended
	March 31,
(In millions)	2016		2015
Revenue:
Terminix	$	364	$	336
American Home Shield		194		175
Franchise Services Group		49		59
Reportable Segment Revenue	$	607	$	571
Corporate		1		1
Total Revenue	$	608	$	571
Reportable Segment Adjusted EBITDA:(1)
Terminix	$	94	$	89
American Home Shield		19		29
Franchise Services Group		18		19
Reportable Segment Adjusted EBITDA	$	131	$	137

___________________________________

(1) Presented below is a reconciliation of Reportable Segment Adjusted EBITDA to Net Income:

Schedule Of Reconciliation Of Reportable Segment Adjusted EBITDA To Net Income (Loss)

	Three Months Ended
	March 31,
(In millions)	2016		2015
Reportable Segment Adjusted EBITDA:
Terminix	$	94	$	89
American Home Shield		19		29
Franchise Services Group		18		19
Reportable Segment Adjusted EBITDA	$	131	$	137
Unallocated corporate expenses	$	(4)	$	(4)
Depreciation and amortization expense		(21)		(24)
Non-cash stock-based compensation expense		(3)		(2)
Restructuring charges		(1)		(2)
Gain on sale of Merry Maids branches		1		1
Provision for income taxes		(23)		(17)
Loss on extinguishment of debt		—		(13)
Interest expense		(38)		(46)
Other non-operating expenses		(3)		(1)
Net Income	$	39	$	28

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2016

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 March 31, 2016:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	8	$	8	$	—	$	—
Investments in marketable securities	Marketable securities and Long-term marketable securities		74		41		33		—
Total financial assets		$	81	$	48	$	33	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	3	$	—	$	—	$	3
Interest rate swap contracts	Other long-term liabilities		11		—		11		—
Total financial liabilities		$	14	$	—	$	11	$	3
As of December 31, 2015:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	8	$	8	$	—	$	—
Investments in marketable securities	Marketable securities and Long-term marketable securities		73		38		35		—
Total financial assets		$	81	$	46	$	35	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	4	$	—	$	—	$	4
Interest rate swap contracts	Other long-term liabilities		8		—		8		—
Total financial liabilities		$	12	$	—	$	8	$	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, 2015	$	(4)
Total (losses) gains (realized and unrealized)
Included in earnings		(1)	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		1
Balance as of March 31, 2016	$	(3)
Balance as of December 31, 2014	$	(6)
Total (losses) gains (realized and unrealized)
Included in earnings		(2)	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		2
Balance as of March 31, 2015	$	(4)

Schedule Of Level 3 Financial Instruments

	Fair Value		Valuation			Weighted
	(in millions)		Technique	Unobservable Input	Range	Average
As of March 31, 2016:
Fuel swap contracts	$	(3)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$1.91 - $2.45	$	2.16
As of December 31, 2015:
Fuel swap contracts	$	(4)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$1.91 - $2.55	$	2.22

___________________________________

(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.

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2016

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
	March 31,
(In millions, except per share data)	2016		2015
Income from continuing operations	$	39	$	28
Weighted-average common shares outstanding		135.6		134.4
Effect of dilutive securities:
RSUs(1)		0.2		0.2
Stock options(2)		1.9		1.4
Weighted-average common shares outstanding—assuming dilution		137.8		136.1
Basic earnings per share from continuing operations	$	0.29	$	0.21
Diluted earnings per share from continuing operations	$	0.28	$	0.21

___________________________________

(1) Unvested RSUs and performance shares of 0.3 million shares for each of the three month periods ended March 31, 2016 and 2015 were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

(2) Options to purchase 0.9 million and 0.4 million shares for the three months ended March 31, 2016 and 2015, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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Newly Issued Accounting Standards (Narrative) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2015 USD ($)
Newly Issued Accounting Standards [Abstract]
Excess Tax Benefit from Share-based Compensation, Operating Activities	$ 8

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Commitments and Contingencies (Narrative) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($) item	Mar. 31, 2015 USD ($)
Maximum [Member]
Loss Contingencies [Line Items]
401(k) Plan corrective contribution	$ 85
Minimum [Member]
Loss Contingencies [Line Items]
401(k) Plan corrective contribution	23
U.S. Virgin Islands Matter [Member]
Loss Contingencies [Line Items]
Net charge related to unasserted civil claims		$ 3
Palm Beach County, Florida Matter [Member]
Loss Contingencies [Line Items]
Net charge related to unasserted civil claims	3
United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member]
Loss Contingencies [Line Items]
Net charge related to unasserted civil claims	2
United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member] | Plea Agreement [Member]
Loss Contingencies [Line Items]
Net charge related to unasserted civil claims	10
Terminix International USVI, LLC (“TMX USVI”) [Member] | United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member]
Loss Contingencies [Line Items]
Fines and penalties	5
The Terminix International Company Limited Partnership (“TMX LP”) [Member] | United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member]
Loss Contingencies [Line Items]
Fines and penalties	3
The Terminix International Company Limited Partnership (“TMX LP”) [Member] | United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member] | National Fish and Wildlife Foundation [Member]
Loss Contingencies [Line Items]
Fines and penalties	1
The Terminix International Company Limited Partnership (“TMX LP”) [Member] | United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member] | Environmental Protection Agency (the “EPA”) [Member]
Loss Contingencies [Line Items]
Fines and penalties	$ 1
TMX USVI and TMX LP [Member] | United States Department of Justice Environmental Crimes Section (the “DOJ”) Matter [Member]
Loss Contingencies [Line Items]
Number of misdemeanor violations | item	4
Probation period	3 years

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Commitments and Contingencies (Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims) (Details) - Accrued Self-Insured Claims, Net [Member] - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Commitments and Contingencies [Line Items]
Balance at the beginning of the period	$ 114	$ 104
Provision for self-insured claims	13	12
Cash payments	(13)	(6)
Balance at the end of the period	$ 114	$ 109

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Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Indefinite-lived Intangible Assets [Line Items]
Accumulated impairment losses recorded in continuing operations	$ 0
Amortization expense	8	$ 12
Amortization expense, for the remainder of 2016	22
Amortization expense, 2017	19
Amortization expense, 2018	13
Amortization expense, 2019	8
Amortization expense, 2020	5
Amortization expense, Thereafter	2
Trade Names [Member]
Indefinite-lived Intangible Assets [Line Items]
Goodwill and trade name impairment	$ 0	$ 0

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Goodwill and Intangible Assets (Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($)
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	$ 2,129
Acquisitions	2
Disposals	(2)
Other	2	[1]
Balance at the end of the period	2,131
Terminix [Member]
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	1,567
Acquisitions	2
Other	1	[1]
Balance at the end of the period	1,570
American Home Shield [Member]
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	381
Balance at the end of the period	381
Franchise Services Group [Member]
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	182
Disposals	(2)
Balance at the end of the period	$ 180

[1] Reflects the impact of foreign exchange rates.

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Goodwill and Intangible Assets (Schedule Of Other Intangible Asset Balances For Continuing Operations) (Details) - USD ($) $ in Millions		Mar. 31, 2016	Dec. 31, 2015
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Intangible Assets Gross, Excluding Goodwill		$ 2,320	$ 2,320
Accumulated Amortization		(624)	(616)
Intangible Assets Net, Excluding Goodwill		1,695	1,704
Customer Relationships [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Intangible Assets Gross, Excluding Goodwill		570	571
Accumulated Amortization		(523)	(517)
Intangible Assets Net, Excluding Goodwill		47	53
Franchise Agreements [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Intangible Assets Gross, Excluding Goodwill		88	88
Accumulated Amortization		(64)	(63)
Intangible Assets Net, Excluding Goodwill		24	25
Other [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Intangible Assets Gross, Excluding Goodwill		54	53
Accumulated Amortization		(37)	(36)
Intangible Assets Net, Excluding Goodwill		16	18
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.

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Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock-Based Compensation [Abstract]
Stock-based compensation expense	$ 3	$ 2
Stock-based compensation expense, net of tax	2	$ 1
Total unrecognized compensation costs related to non-vested stock options and restricted share units	$ 33
Weighted-average period of recognition of stock-based compensation cost	2 years 8 months 5 days

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Comprehensive Income (Summary Of The Activity In Other Comprehensive Income (Loss), Net Of The Related Tax Effects) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		$ (21)	$ (8)
Other comprehensive (loss) income before reclassifications:
Pre-tax amount		(2)	(9)
Tax benefit		(1)	(2)
After-tax amount		(1)	(7)
Amounts reclassified from accumulated other comprehensive income (loss)	[1]	2	1
Net current-period other comprehensive (loss) income		1	(6)
Balance at the end of period		(19)	(13)
Unrealized Losses on Derivatives [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		(7)	(6)
Other comprehensive (loss) income before reclassifications:
Pre-tax amount		(5)	(6)
Tax benefit		(2)	(2)
After-tax amount		(3)	(4)
Amounts reclassified from accumulated other comprehensive income (loss)	[1]	2	2
Net current-period other comprehensive (loss) income		(1)	(2)
Balance at the end of period		(9)	(8)
Unrealized Gains on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		2	6
Other comprehensive (loss) income before reclassifications:
Balance at the end of period		2	6
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		(15)	(8)
Other comprehensive (loss) income before reclassifications:
Pre-tax amount		3	(4)
After-tax amount		3	(4)
Net current-period other comprehensive (loss) income		3	(4)
Balance at the end of period		$ (12)	$ (11)

[1] Amounts are net of tax. See reclassifications out of accumulated other comprehensive income (loss) below for further details.

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Comprehensive Income (Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Cost of services rendered and products sold	$ 324	$ 303
Interest expense	38	46
Interest and net investment income	(1)	(1)
Provision for income taxes	(23)	(17)
Total reclassifications for the period	(39)	(28)
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications for the period	(2)	(1)
Unrealized 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)
Provision for income taxes	1	1
Total reclassifications for the period	(2)	(2)
Unrealized 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)	(2)
Unrealized 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	$ (2)	$ (1)

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Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash paid for or (received from):
Interest expense	$ 42	$ 67
Interest and dividend income	(1)	(1)
Income taxes, net of refunds	3	1
Capital lease and other non-cash financing transactions	6	2
Cash received for franchise	3	1
Merry Maids [Member]
Cash paid for or (received from):
Total purchase price for conversion of certain company-owned Merry Maids branches to franchises	4	2
Cash received for franchise	3	1
Financing provided for franchise	$ 1	$ 1

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Cash and Marketable Securities (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Cash and Marketable Securities [Abstract]
Portion of unrealized losses in loss position for more than one year	$ 0		$ 0
Aggregate fair value of investments with unrealized losses	28		$ 23
Gross realized losses or impairment charges due to other than temporary declines in the value of certain investments	$ 0	$ 0

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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	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of securities	$ 78	$ 78
Gross unrealized gains of securities	4	4
Gross unrealized losses of securities		(1)
Fair value of securities	81	81
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of debt securities	59	60
Gross unrealized gains on debt securities	1	1
Fair value of debt securities	60	60
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost of equity securities	19	18
Gross unrealized gains of equity securities	3	3
Fair value of equity securities	$ 22	$ 21

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Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2016	Dec. 31, 2015	Aug. 17, 2015	Feb. 17, 2015
Long-term debt [Line Items]
Less current portion		$ (55)	$ (54)
Total long-term debt		2,693	2,698
Vehicle Capital Leases [Member]
Long-term debt [Line Items]
Vehicle capital leases	[1]	$ 49	47
Borrowing margin (as a percent)		2.45%
Variable rate basis		one-month LIBOR
Senior Secured Term Loan Facility Maturing In 2021 [Member]
Long-term debt [Line Items]
Long-term debt	[2]	$ 2,332	2,336
Unamortized debt issuance costs		20	21
Unamortized original issue discount		$ 16	$ 17
7% 2020 Notes [Member]
Long-term debt [Line Items]
Interest rate (as a percent)				7.00%
8% 2020 Notes [Member]
Long-term debt [Line Items]
Interest rate (as a percent)					8.00%
Revolving Credit Facility Maturing In 2019 [Member]
Long-term debt [Line Items]
Long-term debt
7.10% Notes Maturing In 2018 [Member]
Long-term debt [Line Items]
Long-term debt	[3]	$ 76	$ 75
Interest rate (as a percent)		7.10%
7.45% Notes Maturing In 2027 [Member]
Long-term debt [Line Items]
Long-term debt	[3]	$ 165	164
Interest rate (as a percent)		7.45%
7.25% Notes Maturing In 2038 [Member]
Long-term debt [Line Items]
Long-term debt	[3]	$ 65	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		$ 52	53
Other [Member]
Long-term debt [Line Items]
Long-term debt		$ 62	$ 65

[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.

[2] As of March 31, 2016 and December 31, 2015, presented net of $20 million and $21 million, respectively, in unamortized debt issuance costs and $16 million and $17 million, respectively, in unamortized original issue discount paid.

[3] As of March 31, 2016 and December 31, 2015, collectively presented net of $52 million and $53 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

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Long-Term Debt (Schedule of Interest Rate Swap Agreements) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Interest rate swap agreements effective August 1, 2014 [Member]
Notional amount	$ 300,000
Fixed Rate (as a percent)	1.786%	[1]
Floating Rate	One month LIBOR
Interest rate swap agreements effective March 1, 2015 [Member]
Notional amount	$ 400,000
Fixed Rate (as a percent)	1.927%	[1]
Floating Rate	One month LIBOR

[1] Before the application of the applicable borrowing margin.

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Long-Term Debt (2020 Notes Narrative) (Details) - USD ($)			1 Months Ended	3 Months Ended
	Apr. 01, 2015	Feb. 17, 2015	Aug. 17, 2015	Mar. 31, 2015
Debt Instrument [Line Items]
Loss on extinguishment of debt				$ 13,000,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maximum borrowings	$ 300,000,000
8% 2020 Notes [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)		8.00%
Repayment of principal amount	200,000,000	$ 190,000,000
Loss on extinguishment of debt	14,000,000	13,000,000
Prepayment premium loss on extinguishment of debt	12,000,000	11,000,000
Write-off of debt issuance costs	$ 2,000,000	$ 2,000,000
Redemption percentage	106.00%	106.00%
7% 2020 Notes [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)			7.00%
Repayment of principal amount			$ 488,000,000
Loss on extinguishment of debt			31,000,000
Prepayment premium loss on extinguishment of debt			25,000,000
Write-off of debt issuance costs			$ 6,000,000
Redemption percentage			105.25%
Senior Secured Term Loan Facility Maturing In 2021 [Member]
Debt Instrument [Line Items]
Face amount of debt instrument	$ 1,825,000,000
April Incremental Term Loans [Member]
Debt Instrument [Line Items]
Face amount of debt instrument	$ 175,000,000
August Incremental Term Loans [Member]
Debt Instrument [Line Items]
Face amount of debt instrument			$ 400,000,000

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Acquisitions (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Acquisitions [Line Items]
Net purchase price	$ 3	$ 14
Goodwill	2,131		$ 2,129
Pest control, termite and franchise acquisitions [Member]
Acquisitions [Line Items]
Net purchase price	3	14
Goodwill	2	10
Accounts receivable related to acquisitions	$ 1
Other intangibles related to acquisitions		$ 4

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Acquisitions (Schedule Of Supplemental Cash Flow Information Regarding Acquisitions) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Supplemental cash flow information regarding acquisitions
Assets acquired	$ 3	$ 14
Net assets acquired	3	14
Net cash paid	2	12
Seller financed debt		2
Purchase price	$ 3	$ 14

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Income Taxes [Abstract]
Unrecognized tax benefits that would impact effective tax rate if recognized	$ 17		$ 16
Estimated reduction in unrecognized tax benefits during the next 12 months	$ 7
Effective tax rate on income from continuing operations (as a percent)	37.10%	37.00%

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Business Segment Reporting (Narrative) (Details)	3 Months Ended
	Mar. 31, 2016 segment
Business Segment Reporting [Abstract]
Number of reportable segments	3
Maximum percentage of revenue from customers and franchisees generated in foreign market	2.00%

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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
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Segment Reporting Information [Line Items]
Revenue	$ 608	$ 571
Adjusted EBITDA	131	137
Identifiable Assets	5,180		$ 5,098
Depreciation & Amortization Expense	21	24
Capital Expenditures	17	8
Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue	607	571
Adjusted EBITDA	131	137
Terminix [Member]
Segment Reporting Information [Line Items]
Adjusted EBITDA	94	89
Terminix [Member] | Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue	364	336
Adjusted EBITDA	94	89
American Home Shield [Member]
Segment Reporting Information [Line Items]
Adjusted EBITDA	19	29
American Home Shield [Member] | Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue	194	175
Adjusted EBITDA	19	29
Franchise Services Group [Member]
Segment Reporting Information [Line Items]
Adjusted EBITDA	18	19
Franchise Services Group [Member] | Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue	49	59
Adjusted EBITDA	18	19
Corporate [Member]
Segment Reporting Information [Line Items]
Revenue	1	1
Adjusted EBITDA	$ 4	$ 4

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Business Segment Reporting (Schedule Of Reconciliation Of Reportable Segment Adjusted EBITDA To Net Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	$ 131	$ 137
Depreciation and amortization expense	(21)	(24)
Non-cash stock-based compensation expense	(3)	(2)
Restructuring charges	(1)	(2)
Gain on sale of Merry Maids branches	$ 1	$ 1
Loss from discontinued operations, net of income taxes
Benefit (provision) for income taxes	$ (23)	$ (17)
Loss on extinguishment of debt		(13)
Interest expense	(38)	(46)
Other non-operating expenses	(3)	(1)
Net Income	39	28
Operating Segment [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	131	137
Terminix [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	94	89
Terminix [Member] | Operating Segment [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	94	89
American Home Shield [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	19	29
American Home Shield [Member] | Operating Segment [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	19	29
Franchise Services Group [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	18	19
Franchise Services Group [Member] | Operating Segment [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	18	19
Corporate [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Adjusted EBITDA	$ 4	$ 4

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Related Party Transactions (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
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	$ 3	$ 8

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Fair Value Measurements (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Letters of credit posted as collateral under fuel hedging program	$ 5,000,000
Hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings, net of tax	6,000,000
Carrying Value [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Long Term Debt And Capital Lease Obligation	2,748,000,000	$ 2,752,000,000
Fuel Swap Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Aggregate notional amount	$ 35,000,000

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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) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Recurring [Member] | Quoted Price In Active Markets (Level 1) [Member]
Financial Assets:
Deferred compensation trust assets	$ 8	$ 8
Investments in marketable securities	41	38
Total financial assets	48	46
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial Assets:
Investments in marketable securities	33	35
Total financial assets	33	35
Total financial liabilities	11	8
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Contracts [Member]
Financial Assets:
Derivative liability, Noncurrent	11	8
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Financial Assets:
Total financial liabilities	3	4
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fuel Swap Contracts [Member]
Financial Assets:
Derivative liability, Current	3	4
Carrying Value [Member] | Recurring [Member]
Financial Assets:
Deferred compensation trust assets	8	8
Investments in marketable securities	74	73
Total financial assets	81	81
Total financial liabilities	14	12
Carrying Value [Member] | Recurring [Member] | Fuel Swap Contracts [Member]
Financial Assets:
Derivative liability, Current	3	4
Carrying Value [Member] | Recurring [Member] | Interest Rate Swap Contracts [Member]
Financial Assets:
Derivative liability, Noncurrent	11	8
Estimated Fair Value [Member]
Carrying amount and estimated fair value of the company's financial instrument
Fair value of total debt	$ 2,821	$ 2,813

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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	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
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	$ (4)	$ (6)
Total gains (realized and unrealized):
Included in earnings	(1)	(2)
Included in accumulated other comprehensive income	1	1
Settlements	1	2
Balance at the end of the period	$ (3)	$ (4)

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Fair Value Measurements (Schedule Of Level 3 Financial Instruments) (Details) - Fuel Swap Contracts [Member] $ in Millions		Mar. 31, 2016 USD ($) $ / gal	Dec. 31, 2015 USD ($) $ / gal		Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Information relating to the significant unobservable inputs of Level 3 financial instruments
Fair value at the end of the period | $		$ (3)	$ (4)		$ (4)	$ (6)
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)		1.91	1.91	[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)		2.45	2.55	[1]
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]	2.16	2.22

[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.

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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
		Mar. 31, 2016	Mar. 31, 2015
(Loss) Income from continuing operations		$ 39	$ 28
Weighted average common shares outstanding		135.6	134.4
Effect of dilutive securities:
Weighted average common shares outstanding-assuming dilution		137.8	136.1
Basic earnings per share from continuing operations (in dollars per share)		$ 0.29	$ 0.21
Diluted earnings per share from continuing operations (in dollars per share)		$ 0.28	$ 0.21
RSUs [Member]
Effect of dilutive securities:
Dilutive securities	[1]	0.2	0.2
Antidilutive securities excluded from computation of diluted earnings per share (in shares)		0.3	0.3
Stock Options [Member]
Effect of dilutive securities:
Dilutive securities	[2]	1.9	1.4
Antidilutive securities excluded from computation of diluted earnings per share (in shares)		0.9	0.4

[1] Unvested RSUs and performance shares of 0.3 million shares for each of the three month periods ended March 31, 2016 and 2015 were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

[2] Options to purchase 0.9 million and 0.4 million shares for the three months ended March 31, 2016 and 2015, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.