10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________

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

For the quarterly period ended September 30, 2019

or

o 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.)

150 Peabody Place, Memphis, Tennessee 38103

(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 x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes x No o

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

Large Accelerated Filer x	Accelerated Filer o	Non-Accelerated Filer o	Smaller Reporting Company o
			Emerging Growth Company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

Yes o No x

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common, par value $0.01	SERV	NYSE

The number of shares of the registrant’s common stock outstanding as of October 31, 2019: 135,618,768 shares 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 Stockholders’ Equity	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	47
Part II. Other Information	48
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Registered Securities and Use of Proceeds	49
Item 6. Exhibits	49
Signature	51

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				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Revenue	$	528	$	496	$	1,570	$	1,443
Cost of services rendered and products sold		305		278		869		776
Selling and administrative expenses		149		146		436		417
Amortization expense		7		6		19		14
Acquisition-related costs		8		1		12		2
Fumigation related matters		—		1		—		1
Restructuring and other charges		5		1		15		13
Realized (gain) on investment in frontdoor, inc.		—		—		(40)		—
Interest expense		19		33		64		107
Interest and net investment income		(1)		(3)		(5)		(4)
Loss on extinguishment of debt		—		10		6		10
Income from Continuing Operations before Income Taxes		35		25		193		107
Provision for income taxes		9		7		39		32
Income from Continuing Operations		26		18		155		74
Gain (loss) from discontinued operations, net of income taxes		—		53		(1)		133
Net Income	$	25	$	71	$	154	$	207
Total Comprehensive Income	$	18	$	74	$	141	$	224
Weighted-average common shares outstanding - Basic		135.8		135.6		135.9		135.4
Weighted-average common shares outstanding - Diluted		136.5		136.0		136.5		135.8
Basic Earnings Per Share:
Income from Continuing Operations	$	0.19	$	0.13	$	1.14	$	0.55
Gain (loss) from discontinued operations, net of income taxes		—		0.39		—		0.98
Net Income		0.19		0.52		1.13		1.53
Diluted Earnings Per Share:
Income from Continuing Operations	$	0.19	$	0.13	$	1.13	$	0.55
Gain (loss) from discontinued operations, net of income taxes		—		0.39		—		0.98
Net Income		0.19		0.52		1.13		1.52

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

3

Condensed Consolidated Statements of Financial Position (Unaudited)

(In millions, except share data)

	As of		As of
	September 30,		December 31,
	2019		2018
Assets:
Current Assets:
Cash and cash equivalents	$	140	$	224
Investment in frontdoor, inc.		—		445
Receivables, less allowances of $24 and $21, respectively		214		186
Inventories		45		45
Prepaid expenses and other assets		72		61
Total Current Assets		470		962
Other Assets:
Property and equipment, net		208		201
Operating lease right-of-use assets		98		—
Goodwill		2,206		1,956
Intangible assets, primarily trade names, service marks and trademarks, net		1,718		1,588
Restricted cash		89		89
Notes receivable		47		43
Long-term marketable securities		19		21
Deferred customer acquisition costs		103		77
Other assets		60		87
Total Assets	$	5,017	$	5,023
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable	$	129	$	89
Accrued liabilities:
Payroll and related expenses		61		60
Self-insured claims and related expenses		48		58
Accrued interest payable		21		14
Other		72		61
Deferred revenue		99		95
Current portion of lease liability		18		—
Current portion of long-term debt		56		49
Total Current Liabilities		505		425
Long-Term Debt		1,398		1,727
Other Long-Term Liabilities:
Deferred taxes		507		484
Other long-term obligations, primarily self-insured claims		158		182
Long-term lease liability		113		—
Total Other Long-Term Liabilities		778		666
Commitments and Contingencies (Note 6)
Stockholders' Equity:
Common stock $0.01 par value (authorized 2,000,000,000 shares with 147,841,177 shares issued and 135,705,232 outstanding at September 30, 2019 and 147,209,928 shares issued and 135,687,558 outstanding at December 31, 2018)		2		2
Additional paid-in capital		2,330		2,309
Retained Earnings		313		156
Accumulated other comprehensive (loss) income		(8)		5
Less common stock held in treasury, at cost (12,135,945 shares at September 30, 2019 and 11,552,370 shares at December 31, 2018)		(300)		(267)
Total Stockholders' Equity		2,337		2,204
Total Liabilities and Stockholders' Equity	$	5,017	$	5,023

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

‎

4

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In millions)

							Retained		Accumulated
					Additional		Earnings		Other
			Common		Paid-in		(Accumulated		Comprehensive		Treasury				Total
	Shares		Stock		Capital		Deficit)		(Loss) Income		Shares		Amount		Equity
Balance December 31, 2017		147	$	2	$	2,321	$	(895)	$	5		(12)	$	(267)	$	1,167
Net income		—		—		—		40		—		—		—		40
Other comprehensive income, net of tax		—		—		—		—		10		—		—		10
Total comprehensive income		—		—		—		40		10		—		—		50
Cumulative effect of accounting changes		—		—		—		14		2		—		—		16
Exercise of stock options		—		—		2		—		—		—		—		2
Stock-based employee compensation		—		—		4		—		—		—		—		4
Balance March 31, 2018		147	$	2	$	2,328	$	(841)	$	17		(12)	$	(267)	$	1,239
Net income		—		—		—		96		—		—		—		96
Other comprehensive income, net of tax		—		—		—		—		3		—		—		3
Total comprehensive income		—		—		—		96		3		—		—		99
Exercise of stock options		—		—		4		—		—		—		—		4
Stock-based employee compensation		—		—		4		—		—		—		—		4
Balance June 30, 2018		147	$	2	$	2,336	$	(745)	$	20		(12)	$	(267)	$	1,346
Net income		—		—		—		71		—		—		—		71
Other comprehensive income, net of tax		—		—		—		—		3		—		—		3
Total comprehensive income		—		—		—		71		3		—		—		74
Stock-based employee compensation		—		—		3		—		—		—		—		3
Balance September 30, 2018		147	$	2	$	2,339	$	(674)	$	23		(12)	$	(267)	$	1,423
Balance December 31, 2018		147	$	2	$	2,309	$	156	$	5		(12)	$	(267)	$	2,204
Net income		—		—		—		70		—		—		—		70
Other comprehensive loss, net of tax		—		—		—		—		(2)		—		—		(2)
Total comprehensive income (loss)		—		—		—		70		(2)		—		—		68
Exercise of stock options		—		—		5		—		—		—		—		5
Stock-based employee compensation		—		—		4		—		—		—		—		4
Repurchase of common stock		—		—		—		—		—		—		(2)		(2)
Balance March 31, 2019		148	$	2	$	2,318	$	226	$	3		(12)	$	(269)	$	2,280
Net income		—		—		—		59		—		—		—		59
Other comprehensive loss, net of tax		—		—		—		—		(4)		—		—		(4)
Total comprehensive income (loss)		—		—		—		59		(4)		—		—		55
Exercise of stock options		—		—		4		—		—		—		—		4
Stock-based employee compensation		—		—		4		—		—		—		—		4
Repurchase of common stock		—		—		—		—		—		—		(15)		(15)
Balance June 30, 2019		148	$	2	$	2,326	$	285	$	(1)		(12)	$	(283)	$	2,329
Net income		—		—		—		25		—		—		—		25
Other comprehensive loss, net of tax		—		—		—		—		(7)		—		—		(7)
Total comprehensive income (loss)		—		—		—		25		(7)		—		—		18
Cumulative effect of accounting changes		—		—		—		3		—		—		—		3
Exercise of stock options		—		—		1		—		—		—		—		1
Stock-based employee compensation		—		—		3		—		—		—		—		3
Repurchase of common stock		—		—		—		—		—		—		(16)		(16)
Balance September 30, 2019		148	$	2	$	2,330	$	313	$	(8)		(12)	$	(300)	$	2,337

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements

5

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

	Nine Months Ended
	September 30,
	2019		2018
Cash and Cash Equivalents and Restricted Cash at Beginning of Period	$	313	$	563
Cash Flows from Operating Activities from Continuing Operations:
Net Income		154		207
Adjustments to reconcile net income to net cash provided from operating activities:
Loss (gain) from discontinued operations, net of income taxes		1		(133)
Depreciation expense		56		54
Amortization expense		19		14
Amortization of debt issuance costs		2		4
Amortization of lease right-of-use assets		14		—
Fumigation related matters		—		1
Payments on fumigation related matters		(2)		(1)
Realized (gain) on investment in frontdoor, inc.		(40)		—
Loss on extinguishment of debt		6		10
Deferred income tax provision		12		21
Stock-based compensation expense		12		10
Gain on sale of marketable securities		(1)		(1)
Restructuring and other charges		15		13
Payments for restructuring and other charges		(15)		(11)
Other		(25)		(9)
Change in working capital, net of acquisitions:
Receivables		(14)		(6)
Inventories and other current assets		(11)		(6)
Accounts payable		21		13
Deferred revenue		1		2
Accrued liabilities		(3)		3
Accrued interest payable		7		4
Current income taxes		3		16
Net Cash Provided from Operating Activities from Continuing Operations		213		204
Cash Flows from Investing Activities from Continuing Operations:
Property additions		(22)		(42)
Government grant fundings for property additions		—		7
Sale of equipment and other assets		1		1
Business acquisitions, net of cash acquired		(345)		(160)
Sales and maturities of available-for-sale securities		3		—
Origination of notes receivable		(84)		(79)
Collections on notes receivable		95		74
Other investments		—		1
Net Cash Used for Investing Activities from Continuing Operations		(352)		(197)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt		720		1,000
Payments of debt		(640)		(1,102)
Repurchase of common stock		(33)		—
Issuance of common stock		10		6
Net Cash Provided from (Used for) Financing Activities from Continuing Operations		56		(96)
Cash Flows from Discontinued Operations:
Cash (used for) provided from operating activities		(2)		160
Cash used for investing activities		—		(1)
Cash used for financing activities		—		(24)
Net Cash (Used for) Provided from Discontinued Operations		(2)		136
Cash (Decrease) Increase During the Period		(85)		47
Cash and Cash Equivalents and Restricted Cash at End of Period	$	228	$	610

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements 

6

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 services to residential and commercial customers in the termite, pest control, cleaning and restoration markets, operating through an extensive service network of more than 8,000 company‑owned locations and franchise and license agreements. Our mission is to simplify and improve the quality of our customers’ lives by delivering services that help them protect and maintain their homes or businesses, typically their most highly valued assets. Our portfolio of well‑recognized brands includes AmeriSpec (home inspections), Copesan (commercial national accounts pest management), Furniture Medic (cabinet and furniture repair), Merry Maids (residential cleaning), Nomor (European pest control), ServiceMaster Clean (commercial cleaning), ServiceMaster Restore (restoration), Terminix (residential termite and pest control) and Terminix Commercial (commercial termite and pest control). All consolidated Company subsidiaries are wholly-owned. Intercompany transactions and balances have been eliminated.

The unaudited condensed consolidated financial statements have been prepared by us 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”). We recommend that the quarterly unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC (the “2018 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 necessarily indicative of the results that might be achieved for any other interim period or for the full year.

American Home Shield Spin-off

On October 1, 2018, we completed the spin-off of our American Home Shield business. The separation was effectuated through a pro rata dividend (the “Distribution”) to our stockholders of approximately 80.2% of the outstanding shares of common stock of frontdoor, inc. (“Frontdoor”), which was formed as a wholly owned subsidiary to hold our American Home Shield business. The Distribution was made to our stockholders of record as of the close of business on September 14, 2018 (the “Record Date”), and such stockholders received one share of Frontdoor common stock for every two shares of ServiceMaster common stock held as of the close of business on the Record Date.

In March 2019, we exchanged all of the 19.8% of the outstanding shares of common stock of Frontdoor we retained for certain of our outstanding indebtedness, which obligations were subsequently cancelled and discharged upon delivery to us. See Note 12 for further discussion regarding this transaction.

The American Home Shield Segment is reported in this Quarterly Report on Form 10-Q in discontinued operations.

Note 2. Significant Accounting Policies

Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in our 2018 Form 10-K. There have been no material changes to the significant accounting policies for the three and nine months ended September 30, 2019, other than those described below.

Adoption of New Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (codified within FASB Accounting Standards Codification (“ASC”) 842) which is the final standard on accounting for leases. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, which amend ASU 2016-02 to provide companies an alternative transition method whereby it may elect to recognize and measure leases by applying the cumulative impact of adopting ASU 2016-02 to the opening retained earnings balance in the period of adoption, thereby removing the requirement that the financial statements of prior periods be restated. We utilized this alternative transition method. While both lessees and lessors are affected by the new guidance, the effects on lessees are much more significant. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. Entities are required to use a modified retrospective approach to adopt the guidance. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. We adopted the new lease guidance effective January 1, 2019, and elected certain of the available practical expedients upon adoption. See Note 13 for further discussion of our lease assets and liabilities.

‎

7

The impacts of the adoption of this ASU on our condensed consolidated statements of financial position are as follows:

	As previously reported,		Impact of adopting
(In millions)	December 31, 2018		ASC 842		January 1, 2019
Operating lease right-of-use assets	$	—	$	107	$	107
Finance lease assets, within Property and equipment, net		89		—		89
Total right-of-use assets	$	89	$	107	$	195
Other assets		87		—		86
Total assets	$	5,023	$	106	$	5,129
Current portion of long-term lease liability	$	—	$	15	$	15
Long-term lease liability		—		120		120
Current finance lease liability, within Current portion of long-term debt		31		—		31
Long-term finance lease liability, within Long-term debt		60		—		60
Total lease liabilities	$	90	$	135	$	225
Accrued liabilities, Other		61		(1)		60
Other long-term obligations, primarily self-insured claims		182		(28)		155
Total liabilities	$	2,818	$	106	$	2,925

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU simplifies certain aspects of hedge accounting and improves disclosures of hedging arrangements through the elimination of the requirement to separately measure and report hedge ineffectiveness. The ASU generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item in order to align financial reporting of hedging relationships with economic results. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. We adopted this ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements.” This ASU does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. We adopted this ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The amendments in ASU 2018-15 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We early adopted this ASU on January 1, 2019, resulting in the capitalization of certain development costs of approximately $9 million as of September 30, 2019, primarily related to our implementation of Salesforce to replace legacy operating systems.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018, with relief provided for filings made shortly after the final rule’s effective date in SEC Question 105.09 of the Exchange Act Forms C&DIs. We adopted this final rule on November 5, 2018, and modified our disclosures as necessary, which included the presentation of a condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018.

In October 2018, the FASB issued ASU No. 2018-16, “Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes,” which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. We adopted the ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations. 

‎

8

Accounting Standards Issued But Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments in ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments — Credit Losses.” This ASU does not change the core principle of the guidance in ASU 2016-13; instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. This ASU will have the same effective date and transition requirements as ASU 2016-13. We are currently evaluating the impact the adoption of ASU 2016-13 and ASU 2018-19 will have on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement.” This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The amendments in ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for the removed disclosures and delayed adoption is permitted until fiscal 2021 for the new disclosures. We are currently evaluating the disclosure changes necessary to our consolidated financial statements.

We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do not expect the future adoption of any such pronouncements will have a material impact on our financial condition or the results of our operations. 

Note 3. Revenues

Effective January 1, 2018, we adopted ASC 606, “Revenue from Contracts with Customers,” using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. During the quarter ended September 30, 2019, we corrected our calculation of deferred tax assets related to the adoption of ASC 606. As a result, approximately $3 million was recognized in Retained earnings in the condensed consolidated statements of financial position.

The following table presents our reportable segment revenues, disaggregated by revenue source. We disaggregate revenue from contracts with customers into major product lines. We have determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. On April 1, 2019, we divested the assets associated with our fumigation service line and now provide fumigation services to our customers through arrangements with independent third parties. Revenue related to fumigation completion services and the related renewals (the “Fumigation Services”) is shown in Fumigation below and prior period amounts related to the Fumigation Services have been reclassified from Termite and Home Services to Fumigation to conform to the current period presentation. Additionally, prior period revenue for Residential Pest Control and Commercial Pest Control has been reclassified to conform to the current period presentation of acquired branches as commercial or residential based on the current reporting structure at Terminix.

As noted in the business segment reporting information in Note 16, our reportable segments are Terminix and ServiceMaster Brands.

	Terminix				ServiceMaster Brands				Corporate and Other Operations				Total
	Three months ended				Three months ended				Three months ended				Three months ended
	September 30,				September 30,				September 30,				September 30,
(In millions)		2019		2018		2019		2018		2019		2018		2019		2018
Major service line
Residential Pest Control	$	189	$	178	$	—	$	—	$	—	$	—	$	189	$	178
Commercial Pest Control		105		93		—		—		—		—		105		93
Termite and Home Services		133		129		—		—		—		—		133		129
Royalty Fees		—		—		32		31		—		—		32		31
Commercial Cleaning and other National Accounts		—		—		18		17		—		—		18		17
Sales of Products and Other		24		22		13		12		—		—		37		34
Fumigation		11		14		—		—		—		—		11		14
European Pest Control		—		—		—		—		4		—		4		—
Total	$	461	$	436	$	63	$	60	$	4	$	—	$	528	$	496

‎

9

	Terminix				ServiceMaster Brands				Corporate and Other Operations				Total
	Nine months ended				Nine months ended				Nine months ended				Nine months ended
	September 30,				September 30,				September 30,				September 30,
(In millions)		2019		2018		2019		2018		2019		2018		2019		2018
Major service line
Residential Pest Control	$	535	$	484	$	—	$	—	$	—	$	—	$	535	$	484
Commercial Pest Control		293		243		—		—		—		—		293		243
Termite and Home Services		450		432		—		—		—		—		450		432
Royalty Fees		—		—		101		99		—		—		101		99
Commercial Cleaning and other National Accounts		—		—		54		48		—		—		54		48
Sales of Products and Other		64		61		36		36		—		—		100		97
Fumigation		33		40		—		—		—		—		33		40
European Pest Control		—		—		—		—		4		—		4		—
Corporate		—		—		—		—		1		1		1		1
Total	$	1,375	$	1,259	$	191	$	183	$	4	$	1	$	1,570	$	1,443

Corporate and Other Operations

Beginning in the quarter ended September 30, 2019, Corporate and Other Operations includes our pest control operations in Europe and our financing subsidiary. As of September 30, 2019, this includes our September 6, 2019 acquisition of Nomor, which provides pest control services throughout Sweden and Norway.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Contracts with customers are generally for a period of one year or less and are generally renewable. We record a receivable related to revenue recognized on services once we have an unconditional right to invoice and receive payment in the future related to the services provided. All accounts receivables are recorded within Receivables, less allowances, on the condensed consolidated statements of financial position. The current portion of Notes receivable, which represents amounts financed for customers through our financing subsidiary, are included within Receivables, less allowances, on the condensed consolidated statement of financial position and totaled $45 million and $42 million as of September 30, 2019 and December 31, 2018, respectively.

Deferred revenue represents a contract liability and is recognized when cash payments are received in advance of the performance of services, including when the amounts are refundable. For Terminix, amounts are recognized as revenue upon completion of services.

Deferred revenue by reportable segment was as follows:

	As of		As of
(In millions)	September 30, 2019		December 31, 2018
Terminix	$	96	$	91
ServiceMaster Brands(1)		9		11
Total	$	105	$	101

___________________________________

(1)Includes approximately $6 million and $7 million of ServiceMaster Brands Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of September 30, 2019 and December 31, 2018, respectively.

‎

10

Changes in deferred revenue for the nine months ended September 30, 2019 and 2018 were as follows:

(In millions)	Deferred revenue
Balance, December 31, 2018	$	101
Deferral of revenue		106
Recognition of deferred revenue		(102)
Balance, September 30, 2019	$	105
Balance, January 1, 2018	$	101
Deferral of revenue		114
Recognition of deferred revenue		(111)
Balance, September 30, 2018	$	104

There was approximately $12 million and $59 million of revenue recognized in the three and nine months ended September 30, 2019, respectively, that was included in the deferred revenue balance as of December 31, 2018. There was approximately $12 million and $61 million of revenue recognized in the three and nine months ended September 30, 2018, respectively, that was included in the deferred revenue balance as of January 1, 2018, the date we adopted ASC 606.

Note 4. Restructuring and Other Charges

Restructuring Charges

We incurred restructuring charges of $3 million ($2 million, net of tax) and $1 million ($1 million, net of tax) in the three months ended September 30, 2019 and 2018, respectively. We incurred restructuring charges of $13 million ($10 million, net of tax) in each of the nine months ended September 30, 2019 and 2018. Restructuring charges were comprised of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Terminix(1)	$	1	$	—	$	4	$	2
ServiceMaster Brands(2)		—		—		2		1
Corporate and Other Operations(3)		1		—		6		3
Global Service Center relocation(4)		—		—		1		8
Total restructuring charges	$	3	$	1	$	13	$	13

___________________________________

(1)For the three and nine months ended September 30, 2019, these charges included $1 million and $4 million, respectively, of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018. For the nine months ended September 30, 2018, restructuring charges included $2 million of severance and other costs.

(2)For the nine months ended September 30, 2019, these charges included $2 million of severance costs, of which less than $1 million were unpaid as of September 30, 2019. For the nine months ended September 30, 2018, these charges included $1 million of severance and other costs.

(3)We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services to support operations. For the three and nine months ended September 30, 2019, these charges included $1 million and $5 million, respectively, of professional fees, accelerated depreciation and other costs to enhance capabilities and align corporate functions with those required to support our strategic needs after the American Home Shield spin-off. For the nine months ended September 30, 2019 and 2018, these charges included $1 million and $3 million of severance and other costs. Corporate restructuring costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018.

(4)For the nine months ended September 30, 2019 and 2018, these charges included lease termination and other charges of $1 million and $8 million, respectively, related to the relocation. Global Service Center relocation costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018.

The pretax charges discussed above are reported in Restructuring charges in the unaudited condensed consolidated statements of operations and comprehensive income.

11

A reconciliation of the beginning and ending balances of accrued restructuring charges, which are included in Accrued liabilities—Other on the unaudited condensed consolidated statements of financial position, is presented as follows:

	Accrued
	Restructuring
(In millions)	Charges
Balance as of December 31, 2018	$	7
Costs incurred		13
Costs paid or otherwise settled		(17)
Balance as of September 30, 2019	$	3
Balance as of December 31, 2017	$	6
Costs incurred		13
Costs paid or otherwise settled		(11)
Balance as of September 30, 2018	$	8

We expect substantially all of our accrued restructuring charges to be paid by December 31, 2019.

Other Charges

Other charges represent professional fees incurred that are not closely associated with our ongoing operations. Other charges were $2 million ($1 million, net of tax) for the three and nine months ended September 30, 2019. We incurred no such other charges for the three and nine months ended September 30, 2018.

Note 5. Discontinued Operations

American Home Shield Spin-off

On October 1, 2018, we completed the spin-off of our American Home Shield business. The separation was effectuated through a Distribution to our stockholders of approximately 80.2% of the outstanding shares of common stock of Frontdoor. The Distribution was made to our stockholders of record as of the close of business on September 14, 2018, and such stockholders received one share of Frontdoor common stock for every two shares of ServiceMaster common stock held as of the close of business on the Record Date.

In March 2019, we exchanged all of the 19.8% of the outstanding shares of common stock of Frontdoor we retained for certain of our outstanding indebtedness, which obligations were subsequently cancelled and discharged upon delivery to us. See Note 12 for further discussion regarding this transaction.

The American Home Shield Segment is reported in this Quarterly Report on Form 10-Q in discontinued operations.

In connection with the American Home Shield spin-off, the Company and Frontdoor entered into (1) a separation and distribution agreement containing key provisions relating to the separation of Frontdoor effectuated through the Distribution, as well as insurance coverage, non-competition, indemnification and other matters, (2) an employee matters agreement allocating liabilities and responsibilities relating to employee benefit plans and programs and other related matters and (3) a tax matters agreement governing the respective rights, responsibilities and obligations of the parties thereto with respect to taxes, including allocating liabilities for income taxes attributable to Frontdoor and its subsidiaries generally to the Company for tax periods (or portions thereof) ending on or before October 1, 2018, and generally to Frontdoor for tax periods (or portions thereof) beginning after that date.

The charges for the transition services are designed to allow us to fully recover the direct costs of providing the services, plus specified margins and any out-of-pocket costs and expenses. The services provided under the transition services agreement will terminate at various specified times, and in no event later than December 31, 2019. Frontdoor may terminate the transition services agreement (or certain services under the transition services agreement) for convenience upon 90 days written notice, in which case Frontdoor will be required to reimburse us for early termination costs. Under this transition services agreement, in the three and nine months ended September 30, 2019, we recorded approximately $1 million and $2 million, respectively, of fees from Frontdoor, which are included, net of costs incurred, in Selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income. Less than $1 million and $1 million of payments were received during the three and nine months ended September 30, 2019, respectively.

The Company and Frontdoor also entered into a sublease agreement for the space Frontdoor retained in our Global Service Center and Memphis customer care center after the spin-off. We recognized approximately $1 million and $2 million, respectively of rental income in the three and nine months ended September 30, 2019, respectively, and less than $1 million and $4 million of other cost reimbursements related to these sublease agreements during the three and nine months ended September 30, 2019, respectively, which were recorded as a reduction of Selling and administrative expenses on the condensed consolidated statements of operations and comprehensive income. Payments received under the sublease agreements for rental income and other cost reimbursements during the three and nine months ended September 30, 2019 totaled approximately $1 million and $6 million, respectively.

‎

12

Financial Information for Discontinued Operations

Gain from discontinued operations, net of income taxes, for all periods presented includes the operating results of Frontdoor and previously sold businesses.

	Three Months Ended		Nine Months Ended
(In millions)	September 30, 2018		September 30, 2018
Revenue	$	377	$	979
Cost of services rendered and products sold		203		534
Operating expenses(1)		100		269
Interest and net investment income		—		(1)
Income before income taxes		75		177
Provision for income taxes		22		45
Gain from discontinued operations, net of income taxes	$	53	$	133

___________________________________

(1)Includes spin-off transaction costs incurred of $8 million and $23 million for the three and nine months ended September 30, 2018.

The following selected financial information of Frontdoor is included in the statements of cash flows as cash flows from discontinued operations:

	Nine Months Ended
(In millions)	September 30, 2018
Depreciation	$	8
Amortization		6
Capital expenditures		(18)

Note 6. Commitments and Contingencies

We carry insurance policies on insurable risks at levels that we believe to be appropriate, including workers’ compensation, automobile and general liability risks. We purchase insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. We are responsible for all claims that fall below the retention limits, exceed our coverage limits or are otherwise not covered by our insurance policies. In determining our accrual for self-insured claims, we use historical claims experience to establish both the current year accrual and the underlying provision for future losses. This actuarially determined provision and related accrual include known claims, as well as incurred but not reported claims. We adjust our estimate of accrued self-insured claims when required to reflect changes based on factors such as changes in health care costs, accident frequency and claim severity.

In the normal course of business, we periodically enter into agreements that incorporate indemnification provisions. While the maximum amount to which we may be exposed under such agreements cannot be estimated, we do not expect these guarantees and indemnifications to have a material effect on our business, financial condition, results of operations or cash flows.

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, 2018	$	111
Provision for self-insured claims		26
Cash payments		(28)
Balance as of September 30, 2019	$	108
Balance as of December 31, 2017	$	115
Provision for self-insured claims		23
Cash payments		(26)
Balance as of September 30, 2018	$	112

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. Termite damage claims can take years to resolve, and timing can be difficult to predict. Current activity could differ causing a change in estimates.

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We have certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. We accrue for these liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified.

We also have certain liabilities with respect to litigated claims arising from alleged termite damage. We have experienced an increase in such asserted claims, principally related to Formosan termite activity in the Mobile, Alabama area. Due to the uncertainties involved, management is unable to predict the number or nature of possible future claims and proceedings or their outcomes. We investigate each claim as it arises and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified.

On December 16, 2016, the U.S. Virgin Islands Department of Justice filed a civil complaint in the Superior Court of the Virgin Islands related to a fumigation incident in a matter styled Government of the United States Virgin Islands v. The ServiceMaster Company, LLC, The Terminix International Company Limited Partnership, and Terminix International USVI, LLC. The amount and extent of any potential penalties, fines sanctions, costs and damages that the federal or other governmental authorities may yet impose, investigation or other costs and reputational harm, as well as the impact of any additional civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands fumigation matter, which could be material, is not currently known, and any such further penalties, fines, sanctions, costs or damages would not be covered under our general liability insurance policies.

In addition to the matter 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, and which require compliance with the terms of the agreements. If one or more of our settlements are not finally approved and implemented, 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.

Note 7. Goodwill and Intangible Assets

Goodwill and indefinite-lived intangible assets, primarily trade names, are not amortized and are subject to assessment for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate a potential impairment. Our annual assessment date is October 1. There were no impairment charges recorded in the three and nine months ended September 30, 2019 and 2018. There were no accumulated impairment losses recorded as of September 30, 2019. The table below summarizes the goodwill balances for continuing operations by reportable segment and Corporate and Other Operations:

					Corporate and
			ServiceMaster		Other
(In millions)	Terminix		Brands		Operations(1)		Total
Balance as of December 31, 2018	$	1,781	$	175	$	—	$	1,956
Acquisitions		78		7		167		251
Impact of foreign exchange rates		—		—		(2)		(2)
Balance as of September 30, 2019	$	1,859	$	182	$	164	$	2,206

___________________________________

(1)Corporate and Other Operations includes goodwill related to pest control acquisitions in Europe completed during the nine months ended September 30, 2019. See Note 14 for further discussion of these acquisitions and purchase price allocations.

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

	As of September 30, 2019						As of December 31, 2018
			Accumulated						Accumulated
(In millions)	Gross		Amortization		Net		Gross		Amortization		Net
Trade names(1)	$	1,482	$	—	$	1,482	$	1,482	$	—	$	1,482
Customer relationships		593		(418)		176		469		(406)		64
Franchise agreements		88		(75)		13		88		(73)		15
Other		86		(39)		47		62		(35)		27
Total	$	2,249	$	(531)	$	1,718	$	2,101	$	(513)	$	1,588

___________________________________

(1)Not subject to amortization.

For the existing intangible assets, we anticipate amortization expense for the remainder of 2019 and each of the next five years of $6 million, $24 million, $22 million, $20 million, $17 million and $12 million, respectively. These amounts exclude the

14

intangible assets acquired in connection with the European pest control acquisitions completed during the three months ended September 30, 2019, as intangible asset values and the related useful lives have not yet been finalized.

Note 8. Stock-Based Compensation

For each of the three months ended September 30, 2019 and 2018, we recognized stock-based compensation expense of $3 million ($2 million, net of tax) and $2 million ($2 million, net of tax), respectively. For the nine months ended September 30, 2019 and 2018, we recognized stock-based compensation expense of $12 million ($9 million, net of tax) and $10 million ($7 million, net of tax), respectively. These charges are recorded within Selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

As of September 30, 2019, there was $29 million of total unrecognized compensation costs related to non-vested stock options, restricted stock units (“RSUs”) and performance share units granted under the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). These remaining costs are expected to be recognized over a weighted-average period of 2.15 years.

On February 24, 2015, our board of directors approved and recommended for approval by our stockholders the ServiceMaster Global Holdings, Inc. Employee Stock Purchase Plan (“Employee Stock Purchase Plan”), which became effective for offering periods commencing July 1, 2015. The Employee Stock Purchase Plan was intended to qualify for the favorable tax treatment under Section 423 of the Code. Under the plan, eligible employees of the Company may purchase common stock, subject to IRS limits, during pre-specified offering periods at a discount established by the Company not to exceed 10 percent of the then current fair market value. On April 27, 2015, our stockholders approved the Employee Stock Purchase Plan with a maximum of one million shares of common stock authorized for sale under the plan. On November 3, 2015, we filed a registration statement on Form S-8 under the Securities Act to register the one million shares of common stock that may be issued under the Employee Stock Purchase Plan and, as a result, all shares of common stock acquired under the Employee Stock Purchase Plan will be freely tradable under the Securities Act, unless purchased by our affiliates. Our Compensation Committee amended the Employee Stock Purchase Plan in February 2019 to allow for more frequent purchase periods and to change the allowed 10 percent discount to a company match of 10 percent of employee contributions. The authorized number of shares remaining in the Employee Stock Purchase Plan was not changed from 843,584 and the expiration date of the Employee Stock Purchase Plan was not changed from April 27, 2025. As of September 30, 2019, there were 839,784 shares available for issuance under the Employee Stock Purchase Plan.

Stock Options

In February 2019, our board of directors approved an amended Employee Stock Option Agreement, whereby all options granted in 2019 and thereafter will generally vest in three equal annual installments (rather than four), have a term of eight years (rather than 10 years) and remain subject to an employee’s continued employment. The three year vesting period is the requisite service period over which compensation cost will be recognized on a straight-line basis for all grants. All options issued are accounted for as equity-classified awards.

On January 1, 2019, in connection with an acquisition, we granted 136,092 RSUs to an executive key to our urban markets strategy. All such RSUs cliff vest on the third anniversary of their grant and are subject to the executive’s continued employment.

‎

15

Note 9. Comprehensive Income

Comprehensive income, which primarily includes net income, unrealized gain (loss) on derivative instruments and the effect of foreign currency translation, is included in the condensed consolidated statements of operations and comprehensive income. Unrealized gains on marketable securities of $3 million ($2 million, net of tax) were included in other comprehensive income prior to our adoption of ASU 2016-01 on January 1, 2018. Subsequent to the adoption, these unrealized gains have been reclassified to retained earnings. Additionally, stranded tax effects of approximately $4 million resulting from the corporate income tax rate change in U.S. Tax Reform were reclassified upon our adoption of ASU 2018-02 on January 1, 2018. The income tax effects remaining in Accumulated other comprehensive income will be released into earnings as the related pre-tax amounts are reclassified to earnings.

During the nine months ended September 30, 2019, we terminated $479 million of our interest rate swap and received $12 million from the counterparty. The fair value of the terminated portion of the interest rate swap of $12 million was recorded within accumulated other comprehensive income on the condensed consolidated statements of financial position and is being amortized into interest expense over the original term of the agreement. The remaining unamortized balance at September 30, 2019 is $10 million.

The following tables summarize the activity in accumulated other comprehensive income, net of the related tax effects.

			Unrealized
	Unrealized		Gains (Losses)
	Gains		on Available		Foreign
	(Losses) on		-for-Sale		Currency
(In millions)	Derivatives		Securities		Translation		Total
Balance as of December 31, 2018	$	20	$	—	$	(15)	$	5
Other comprehensive income before reclassifications:
Pre-tax amount		(14)		—		(2)		(16)
Tax provision		7		—		—		7
After-tax amount		(7)		—		(2)		(9)
Amounts reclassified from accumulated other comprehensive income(1)		(3)		—		—		(3)
Net current period other comprehensive income		(10)		—		(2)		(13)
Balance as of September 30, 2019	$	9	$	—	$	(18)	$	(8)
Balance as of December 31, 2017	$	16	$	2	$	(12)	$	5
Reclassification of unrealized gain/loss on equity securities		—		(2)		—		(2)
Reclassification of tax rate change		3		1		—		4
As revised, January 1, 2018		19		—		(12)		7
Other comprehensive income before reclassifications:
Pre-tax amount		25		—		(1)		24
Tax benefit		(7)		—		—		(7)
After-tax amount		18		—		(1)		17
Amounts reclassified from accumulated other comprehensive income(1)		(1)		—		—		(1)
Net current period other comprehensive income		17		—		(1)		16
Balance as of September 30, 2018	$	36	$	—	$	(13)	$	23

___________________________________

(1)Amounts are net of tax. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated.

	Amounts Reclassified from Accumulated
	Other Comprehensive Income
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Gains (losses) on derivatives:
Fuel swap contracts	$	—	$	1	$	—	$	3
Interest rate swap contracts		1		1		4		—
Net losses on derivatives		1		3		4		2
Impact of income taxes		—		(1)		—		(1)
Total reclassifications for the period	$	1	$	2	$	3	$	1

‎

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Note 10. Supplemental Cash Flow Information

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

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Cash paid for or (received from):
Interest expense(1)	$	55	$	95
Interest and dividend income		(2)		(1)
Income taxes, net of refunds		23		40

___________________________________

(1)For the nine months ended September 30, 2019, excludes $12 million received in connection with our partial terminations of the interest rate swap.

As of September 30, 2019 and December 31, 2018, Cash and cash equivalents of $140 million and $224 million, respectively, and Restricted cash of $89 million and $89 million, respectively, as presented on the condensed consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and Restricted cash of $228 million and $313 million, respectively, on the condensed consolidated statement of cash flows.

As of September 30, 2018 and December 31, 2017, Cash and cash equivalents of $216 million and $192 million, respectively, and Restricted cash of $89 million and $89 million, respectively, as presented on the condensed consolidated statements of financial position, and cash related to discontinued operations of $305 million and $282 million, respectively, represent the amounts comprising Cash and cash equivalents and restricted cash of $610 million and $563 million, respectively, on the condensed consolidated statement of cash flows.

We acquired $39 million and $23 million of property and equipment through finance leases and other non-cash financing transactions in each of the nine months ended September 30, 2019 and 2018, respectively, which have been excluded from the condensed consolidated statements of cash flows as non-cash investing and financing activities. 

The proceeds from the Frontdoor debt issuances described in Note 12 were retained by the lender in satisfaction of the short-term credit facility and have been excluded from the condensed consolidated statements of cash flows as non-cash financing activities.

The non-cash lease transactions resulting from our adoption of ASC 842 are described in Note 13.

Note 11. Cash and Marketable Securities

Cash, money market funds and certificates of deposits with maturities of three months or less when purchased are included in Cash and cash equivalents on the condensed consolidated statements of financial position. As of September 30, 2019 and December 31, 2018, our marketable securities consisted primarily of a deferred compensation trust (“Debt securities”) and common equity securities (“Equity securities”). The amortized cost, fair value and gross realized and unrealized gains and losses of our short- and long-term investments in Debt and Equity securities are as follows:

			Gross Realized		Gross Realized
	Amortized		and Unrealized		and Unrealized		Fair
(In millions)	Cost		Gains		Losses		Value
September 30, 2019:
Debt securities	$	4	$	—	$	—	$	4
Equity securities		13		2		—		14
Total securities	$	17	$	2	$	—	$	19
December 31, 2018:
Debt securities	$	4	$	—	$	—	$	4
Equity securities		15		1		—		16
Total securities	$	19	$	1	$	—	$	21

We account for Equity securities at fair value with adjustments to fair value recognized in Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2019, approximately $1 million of unrealized gains were recognized within Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. There were no unrealized gains or losses recognized for the three months ended September 30, 2019. For the nine months ended September 30, 2018, approximately $1 million of unrealized losses were recorded within Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. There were no unrealized gains or losses recognized for the three months ended September 30, 2018.

We periodically review our Debt securities to determine whether there has been an other than temporary decline in value. There were no impairment charges due to declines in the value of these investments for the three and nine months ended September 30, 2019 and 2018.

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Additionally, we hold minority interests in several strategic investments that do not have readily determinable fair values and are recorded at cost and are remeasured upon the occurrence of observable price changes or impairments. We account for these investments at fair value with adjustments to fair value recognized in our condensed consolidated statements of operations within Interest and net investment income. The investments are included within Other Assets on the condensed consolidated statements of financial position. At September 30, 2019, the carrying amount of these investments was $4 million.

Note 12. Long-Term Debt

Long-term debt is summarized in the following table:

	As of		As of
	September 30,		December 31,
(In millions)	2019		2018
Senior secured term loan facility maturing in 2023(1)	$	170	$	637
Revolving credit facility maturing in 2021		120		—
5.125% notes maturing in 2024(2)		742		740
7.45% notes maturing in 2027(3)		166		172
7.25% notes maturing in 2038(3)		40		42
Vehicle finance leases(4)		100		90
Other(5)		116		94
Less current portion		(56)		(49)
Total long-term debt	$	1,398	$	1,727

__________________________________

(1)As of September 30, 2019 and December 31, 2018, presented net of $1 million and $5 million, respectively, in unamortized debt issuance costs. As of December 31, 2018, presented net of $1 million in unamortized original issue discount paid.

(2)As of September 30, 2019 and December 31, 2018, presented net of $8 million and $10 million, respectively, in unamortized debt issuance costs.

(3)As of September 30, 2019 and December 31, 2018, collectively presented net of $29 million and $33 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

(4)We have entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows us to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are finance 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.

(5)As of September 30, 2019 and December 31, 2018, includes approximately $105 million and $82 million, respectively, of future payments in connection with our acquisitions as further described in Note 14.

Borrowing under the Revolving Credit Facility

On September 5, 2019, we borrowed an aggregate principal amount of $120 million under our revolving credit facility to finance our acquisition of Nomor Holding AB.

Extinguishment of Debt and Repurchase of Notes

On March 12, 2019, we borrowed an aggregate principal amount of $600 million under a short-term credit facility to effectuate a debt-for-equity exchange of our Frontdoor retained shares. The proceeds of this short-term credit facility were used to repay $468 million aggregate principal amount of term loans outstanding under our senior secured term loan facility in March and April of 2019. Such prepayments resulted in a loss on extinguishment of debt of $4 million for the nine months ended September 30, 2019.

On March 27, 2019, we completed a non-cash debt-for-equity exchange in which we exchanged the 16.7 million retained shares of Frontdoor common stock (proceeds of $486 million, net), plus used $114 million of proceeds from the short-term credit facility, to extinguish $600 million of our indebtedness under the short-term credit facility. The sale of the Frontdoor common stock resulted in a realized gain of $40 million, which was recorded within Realized (gain) on investment in frontdoor, inc. on the condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2019.

In March 2019, we purchased approximately $7 million in aggregate principal amount of our 7.45% notes maturing in 2027 at a price of 105.5% and $3 million in aggregate principal amount of our 7.25% notes maturing in 2038 at a price of 99.5% using available cash. The repurchased notes were delivered to the trustee for cancellation. In connection with these partial repurchases, we recorded a loss on extinguishment of debt of $2 million in the nine months ended September 30, 2019.

In April 2019, we purchased $1 million in aggregate principal amount of our 7.45% notes maturing in 2027 at a price of 105.5%.

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The proceeds from and the use of proceeds in connection with the debt-for-equity exchange are as follows:

(in millions)
Proceeds from the short-term credit facility	$	600
Proceeds from the Frontdoor common shares retained, net of $16 million of fees paid		486
Total proceeds	$	1,086
Repayment of the term loan facility, including loss on extinguishment of debt of $4 million	$	(472)
Debt-for-equity exchange using net proceeds from the Frontdoor common shares retained		(486)
Repurchase of 2027 and 2038 notes, including loss on extinguishment of debt of $2 million		(12)
Interest and other payments		(1)
Use of cash to retire short-term credit facility		(114)
Total uses	$	(1,086)

In connection with the prepayments on our senior secured term loan facility, we terminated $479 million of our interest rate swap agreement, receiving $12 million in connection with the terminations. The fair value of the terminated portions of the agreement of $12 million is recorded within accumulated other comprehensive income on the condensed consolidated statements of financial position and will be amortized into interest expense over the original term of the agreement.

Interest Rate Swaps

On November 7, 2016, we entered into a seven year interest rate swap agreement effective November 8, 2016. The notional amount of the agreement was $650 million. Under the terms of the agreement, we will pay a fixed rate of interest of 1.493 percent on the $650 million notional amount, and we will receive a floating rate of interest (based on one-month LIBOR, subject to a floor of zero percent) on the notional amount. Therefore, during the term on the agreement, the effective interest rate on $650 million of the Term Loan Facility is fixed at a rate of 1.493 percent, plus the incremental borrowing margin of 2.50 percent.

The changes in our interest rate swap agreement, as well as the cumulative interest rate swap outstanding, are as follows:

	Notional
(In millions)	Amount		Fixed Rate(1)
Interest rate swap agreement in effect as of December 31, 2018	$	650	1.493	%
Terminated		(441)
Interest rate swap agreement in effect as of March 31, 2019		209	1.493	%
Terminated		(38)
Interest rate swap agreement in effect as of June 30, 2019 and September 30, 2019	$	171	1.493	%

___________________________________

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

In accordance with accounting standards for derivative instruments and hedging activities, and as further described in Note 17, our interest rate swap agreement is classified as a cash flow hedge, and, as such, is recorded on the condensed consolidated statements of financial position as either an asset or liability at fair value, with changes in fair value attributable to the hedged risks recorded in accumulated other comprehensive income.

On October 15, 2019, we terminated the remaining $171 million of our interest rate swap in advance of our debt refinancing.

Refinancing of Indebtedness

On November 5, 2019, the Company closed on an amended $600 million Term Loan B due 2026, as well as a $400 million revolving credit agreement due 2024. The proceeds of the transaction were used to repay approximately $171 million of debt outstanding under its previous Term Loan B due 2023, $120 million outstanding under its previous revolving credit agreement due 2021, as well as $150 million from a recent short-term borrowing entered on October 4, 2019. Concurrently with the refinancing, we entered into a seven year interest rate swap agreement with a notional amount of $550 million. During the term on the agreement, the effective interest rate on $550 million of the new Term Loan B is fixed at a rate of 1.615 percent, plus the incremental borrowing margin of 1.75 percent.

2018

In connection with the spin-off of the American Home Shield Segment, the Company borrowed an aggregate principal amount of $1 billion under a short-term credit facility on August 1, 2018, the proceeds of which were used to prepay $982 million aggregate principal amount of term loans outstanding under the Company’s senior secured term loan facility. Such prepayment resulted in a loss on extinguishment of debt of $10 million for the three and nine months ended September 30, 2018. On August 16, 2018, Frontdoor incurred in favor of the Company $350 million aggregate principal of 6.75% Senior Notes due 2026 and a $650 million senior secured term loan facility, and obtained a $250 million senior secured revolving credit facility. The Company

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then transferred and assigned its rights and obligations in respect of Frontdoor’s senior notes and senior secured term loan facility to the lender under such short-term credit facility through a debt-for-debt exchange to satisfy the Company’s obligations thereunder.

On October 1, 2018, in connection with the spin-off of the American Home Shield business, Frontdoor’s senior secured term loan facility and senior notes were included in the transfer of assets and liabilities to Frontdoor, reducing the Company’s total long-term debt by approximately $1 billion.

In the nine months ended September 30, 2018, concurrent with the repayment of $982 million of our term loan facility, we de-designated $7 million of our $650 million interest rate swap.

Note 13. Leases

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, Current portion of lease liability and Long-term lease liability on the condensed consolidated statements of financial position. Finance leases are included in Property and equipment, net; Current portion of long-term debt and Long-term debt on the condensed consolidated statements of financial position.

We lease a variety of facilities, principally in the United States, for branch and service center operations and for office, storage, customer care centers and data processing space. These leases are classified as operating leases. Our facilities leases have remaining lease terms of less than one year to 23 years, some of which may include options to extend the leases for up to 15 years, and some of which may include options to terminate the leases within one year. These lease agreements contain lease and non-lease components. Non-lease components include items such as common area maintenance. For facility leases, we account for the lease and non-lease components as a single lease component.

Additionally, our Fleet Agreement allows us to obtain fleet vehicles through a leasing program. These leases are classified as finance leases. Our vehicle leases have remaining lease terms of less than one year to eight years. For vehicle leases, we account for the lease and non-lease components separately.

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments, including fixed non-lease components, over the lease term at commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments and fixed non-lease components is recognized on a straight-line basis over the lease term.

As of September 30, 2019, assets recorded under finance leases were $219 million and accumulated depreciation associated with finance leases was $121 million.

The components of lease expense were as follows:

	Three months ended		Nine months ended
(In millions)	September 30, 2019		September 30, 2019
Finance lease cost
Depreciation of finance lease ROU assets	$	9	$	25
Interest on finance lease liabilities		1		4
Operating lease cost		7		20
Variable lease cost		1		3
Sublease income		(1)		(2)
Total lease cost	$	17	$	49

Supplemental cash flow information and other information for leases was as follows:

	Nine months ended
(In millions)	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	18
Operating cash flows for finance leases		4
Financing cash flows for finance leases		25
ROU assets obtained in exchange for lease obligations:
Operating leases		8
Finance leases		39
Weighted Average Remaining Lease Term (in years):
Operating leases		10.70
Finance leases		3.44
Weighted Average Discount Rate:

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Operating leases	5.54	%
Finance leases	3.84	%

As of September 30, 2019, there was $35 million and $65 million of finance leases included within Current portion of long-term debt and Long-term debt, respectively, on the condensed consolidated statements of financial position. Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows:

(In millions)	Operating Leases		Finance Leases
Year ended December 31,
2019 (excluding the nine months ended September 30, 2019)	$	6	$	10
2020		26		36
2021		21		28
2022		19		18
2023		15		11
Thereafter		95		4
Total future minimum lease payments		181		107
Less imputed interest		(50)		(8)
Total	$	131	$	100

Following is a summary of the future minimum lease payments due under capital and operating leases with terms of more than one year at December 31, 2018:

(In millions)	Operating Leases		Capital Leases
Year ended December 31,
Less than 1 Yr	$	17	$	31
1 - 3 Yrs		36		46
3 - 5 Yrs		25		14
More than 5 Yrs		67		1
Total future minimum lease payments	$	146	$	92

As of September 30, 2019, we have additional vehicle finance leases that have not yet commenced of $6 million. These leases are scheduled to commence in 2019 with lease terms generally of five years.

Practical Expedients

We adopted the new standard using the modified retrospective approach and applied the transition approach as of the beginning of the period of adoption. We adopted the package of practical expedients and therefore did not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases. We elected to make the accounting policy election for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term. We elected to not separate lease and non-lease components for real estate operating leases. We did not elect the hindsight practical expedient.

Impact of ASC 842 on the Condensed Consolidated Financial Statements

Changes to the condensed consolidated statements of financial position include the recognition of an operating lease right-of-use asset, a current portion of lease liability and long-term lease liability. Changes to the condensed consolidated statements of cash flows include the presentation of ROU asset amortization. The adoption of ASC 842 did not have a significant impact on the Company’s condensed consolidated statements of operations and comprehensive income.

Note 14. Acquisitions

Acquisitions have been accounted for as business combinations using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. Asset acquisitions have been accounted for under ASU 2017-01. The assets and liabilities of these businesses were recorded in the financial statements at their estimated fair values as of the acquisition dates.

During the nine months ended September 30, 2019, we completed 30 acquisitions, including 27 pest control acquisitions, the reacquisition of two ServiceMaster Brands franchisees and a ServiceMaster Brands tuck-in. Of these, 27 were accounted for as business combinations and three as asset acquisitions. We funded approximately $345 million at closing for these acquisitions using available cash on hand and borrowings under our revolving credit facility. Another $14 million of deferred purchase price is due to the sellers between one year and five years from the acquisition dates.

On September 6, 2019, we acquired Nomor, a leading provider of pest control services in Sweden and Norway, for approximately 2 billion Swedish krona (approximately $207 million). This strategic acquisition launches our expansion into the European pest control market. Cash acquired in the acquisition was approximately $9 million. We funded the acquisition using cash on hand and proceeds from a $120 million borrowing under our revolving credit facility. Nomor contributed approximately $4 million

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of revenue and $1 million of Adjusted EBITDA since the date of acquisition through September 30, 2019. We granted 87,920 of performance shares to Nomor executives in connection with this acquisition. The grant had a grant date fair value of $56.87 per share, which represented the then current fair value of our common stock at the grant date. These performance shares are scheduled to vest on December 31, 2022, based on the achievement of three year cumulative Adjusted EPS and revenue targets established at the grant date and subject to an executive’s continued employment. As the performance shares contain a performance condition, stock-based compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the number of awards expected to vest.

Nomor is included in the condensed consolidated statements of financial position based on an allocation of the purchase price. Given the timing and complexity of this acquisition, the presentation of Nomor in our financial statements, including the allocation of the purchase price, is preliminary and will likely change in future periods, perhaps significantly, as fair value estimates of the assets acquired and liabilities assumed are refined during the measurement period. Specifically, we are still evaluating working capital balances, the intangible and tangible assets acquired, deferred revenue balances, as well as the appropriate useful lives to assign to all assets, including intangibles. The majority of this purchase price allocated to goodwill is not expected to be deductible for income tax purposes. We recognized approximately $4 million as Acquisition-related costs on the condensed consolidated statements of operations and comprehensive income related to our acquisition of Nomor in the three and nine months ended September 30, 2019. We will complete the purchase price allocation no later than the third quarter of 2020.

A preliminary purchase price allocation is as follows (in millions):

Current assets(1)	$	19
Property and equipment		6
Goodwill(2)		152
Identifiable intangible assets(3)		94
Current liabilities(4)		(21)
Long-term liabilities(2)		(44)
Total purchase price	$	207

___________________________________

(1)Primarily trade receivables and cash.

(2)Includes $20 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets.

(3)Primarily customer lists.

(4)Primarily advanced collections from customers.

The following unaudited pro forma consolidated financial information presents the combined operations of ServiceMaster and Nomor for the three and nine months ended September 30, 2019 and 2018, as if the acquisition had occurred at the beginning of 2018 (in millions, except per share data):  

	(Unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Consolidated revenue	$	537	$	508	$	1,605	$	1,480
Consolidated net income	$	29	$	71	$	160	$	205
Basic earnings per share	$	0.22	$	0.53	$	1.18	$	1.51
Diluted earnings per share	$	0.21	$	0.52	$	1.17	$	1.51

ASC 805, “Business Combinations,” establishes guidelines regarding the presentation of the unaudited pro forma information. Therefore, this unaudited pro forma information is not intended to represent, nor do we believe it is indicative of, the consolidated results of operations of ServiceMaster that would have been reported had the acquisition been completed at the beginning of 2018. This unaudited pro forma information does not give effect to the anticipated business and tax synergies of the acquisition and is not representative or indicative of the anticipated future consolidated results of operations of ServiceMaster.

The unaudited pro forma consolidated financial information reflects our historical financial information and the historical results of Nomor, after the conversion of Nomor’s accounting methods from local reporting standards to U.S. generally accepted accounting principles and adjusted to reflect the acquisition had it been completed as of the beginning of 2018. The most significant adjustments made to the pro forma financial information are the inclusion of $4 million of acquisition-related costs as if incurred in the first quarter of 2018, estimated quarterly interest expense of approximately $1 million related to financing obtained for the transaction and the estimated tax impact related to these pro forma adjustments. The unaudited pro forma financial information includes various assumptions, including those related to the preliminary purchase price allocation, that may be impacted upon the finalization of the purchase price allocation. The tax impact of these adjustments was calculated based on Nomor’s statutory rate.

As a result of all other acquisitions completed during the nine months ended September 30, 2019, we recorded preliminary values of $99 million of goodwill, $56 million of other intangible assets, primarily customer relationships, and $11 million of other

22

assets, primarily trade receivables and fixed assets. Given the timing and complexity of some of the acquisitions, their presentation in our financial statements, including the allocation of the purchase price, is preliminary and will likely change in future periods. Specifically, we are still evaluating working capital balances, the intangible and tangible assets acquired and the appropriate useful lives to assign to all assets. We will complete the purchase price allocations for these acquisitions no later than the third quarter of 2020, and in no instance more than one year from the date of acquisition.

On September 30, 2019, we also completed seven minority investments in pest control companies that are accounted for under the equity method and presented in Other assets on the condensed consolidated statements of financial position.

During the nine months ended September 30, 2018, we completed the acquisition of Copesan and six additional pest control acquisitions which have been accounted for as business combinations and purchased a ServiceMaster Restore master distributor within ServiceMaster Brands which has been accounted for as an asset acquisition in accordance with ASU 2017-01. We funded $161 million at closing for these acquisitions using available cash on hand. An additional $42 million of deferred purchase price and up to $14 million of earnouts contingent on the successful achievement of projected revenue and earnings targets are due to the sellers between one year and five years from the acquisition dates. During the nine months ended September 30, 2019, $4 million was paid related to these earnouts. In connection with these acquisitions, we recorded $145 million of goodwill and $72 of other intangibles, primarily customer lists and reacquired rights. As of September 30, 2019, the purchase price allocations for these acquisitions have been finalized.

Supplemental cash flow information regarding the acquisitions is as follows:

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Assets acquired	$	431	$	241
Liabilities assumed(1)		(72)		(27)
Net assets acquired	$	359	$	214
Net cash paid	$	345	$	160
Seller financed debt		11		42
Contingent earnout		4		12
Purchase price	$	359	$	214

___________________________________

(1)Includes $21 million and $11 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets for the nine months ended September 30, 2019 and 2018, respectively. 

Subsequent to September 30, 2019, we acquired two commercial pest control companies for approximately $140 million.

Note 15. Income Taxes

As required by ASC 740, “Income Taxes,” we compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from continuing operations before income taxes, except for significant unusual or infrequently occurring items. Our estimated tax rate is adjusted each quarter in accordance with ASC 740.

The effective tax rate on income from continuing operations was 26.5 percent and 28.1 percent for the three months ended September 30, 2019 and 2018, respectively.

The effective tax rate on income from continuing operations was 20.0 percent and 30.3 percent for the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate on income from continuing operations for the nine months ended September 30, 2019, was primarily affected by the disposition of the Frontdoor retained shares in a non-taxable debt-for-equity exchange that was recorded discretely in the three months ended March 31, 2019.

As of both September 30, 2019 and December 31, 2018, we had $15 million of tax benefits primarily reflected in US Federal and state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $2 million as the result of settlements of ongoing audits, statute of limitation expirations or final settlements of uncertain tax positions in multiple jurisdictions. Our policy is to recognize interest income, interest expense and penalties related to our tax positions within the tax provision.

Note 16. Business Segment Reporting

Our business is conducted through two reportable segments: Terminix and ServiceMaster Brands.

In accordance with accounting standards for segments, our reportable segments are strategic business units that offer different services. The Terminix segment provides termite and pest control services to residential and commercial customers and distributes pest control products primarily under the Terminix, Terminix Commercial and Copesan brand names. The ServiceMaster Brands segment provides residential and commercial disaster restoration and commercial cleaning services through franchises primarily under

23

the ServiceMaster, ServiceMaster Restore and ServiceMaster Clean brand names, home cleaning services through franchises primarily under the Merry Maids brand name, cabinet and furniture repair primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate and Other Operations includes our European pest control operations, primarily under our Nomor brand, our financing subsidiary exclusively dedicated to providing financing to our franchisees and retail customers of our operating units and our headquarters operations (substantially all of which costs are allocated to our reportable segments), which provide various technology, marketing, finance, legal and other support services to the reportable segments. The composition of our reportable segments is consistent with that used by our chief operating decision maker (the “CODM”) to evaluate performance and allocate resources.

Information regarding the accounting policies used by us are described in our 2018 Form 10-K. We derive substantially all of our revenue from customers and franchisees in the United States with approximately three percent generated in foreign markets. Operating expenses of the business units consist primarily of direct costs and indirect costs allocated from Corporate.

We use Reportable Segment Adjusted EBITDA as our measure of segment profitability. Accordingly, the CODM evaluates performance and allocates resources based primarily on Reportable Segment Adjusted EBITDA. Reportable Segment Adjusted EBITDA is defined as net income before: unallocated corporate expenses; European pest control; costs historically allocated to American Home Shield; (gain) loss from discontinued operations, net of income taxes; provision for income taxes; interest expense; depreciation and amortization expense; acquisition-related costs; fumigation related matters; non-cash stock-based compensation expense; restructuring and other charges; loss on extinguishment of debt; and realized (gain) on investment in frontdoor, inc. European pest control includes the results of our pest control operations in Europe that are recorded within Corporate and Other Operations. Our definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. We believe Reportable Segment Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives and equity-based, long-term incentive plans.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Revenue:
Terminix	$	461	$	436	$	1,375	$	1,259
ServiceMaster Brands		63		60		191		183
Reportable Segment Revenue	$	524	$	496	$	1,566	$	1,442
Corporate and Other Operations		4		—		4		1
Total Revenue	$	528	$	496	$	1,570	$	1,443
Reportable Segment Adjusted EBITDA:(1)
Terminix	$	72	$	81	$	261	$	277
ServiceMaster Brands		22		21		70		67
Reportable Segment Adjusted EBITDA	$	95	$	102	$	330	$	344

___________________________________

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

24

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Net Income	$	25	$	71	$	154	$	207
Unallocated corporate expenses		(2)		(4)		(6)		(6)
European pest control		(1)		—		(1)		—
Costs historically allocated to American Home Shield		—		11		—		33
Depreciation and amortization expense		26		24		74		68
Acquisition-related costs		8		1		12		2
Fumigation related matters		—		1		—		1
Non-cash stock-based compensation expense		3		2		12		10
Restructuring and other charges		5		1		15		13
Realized (gain) on investment in frontdoor, inc.		—		—		(40)		—
(Gain) loss from discontinued operations, net of income taxes		—		(53)		1		(133)
Provision for income taxes		9		7		39		32
Loss on extinguishment of debt		—		10		6		10
Interest expense		19		33		64		107
Reportable Segment Adjusted EBITDA	$	95	$	102	$	330	$	344

Note 17. Fair Value Measurements

The period-end carrying amounts of cash and cash equivalents, receivables, restricted cash, accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The period-end carrying amounts of long-term notes receivable approximate fair value as the effective interest rates for these instruments are comparable to period-end market rates. The period-end carrying amounts of short- and long-term marketable securities also approximate fair value, with unrealized gains and losses reported in interest and net investment income in the condensed consolidated statements of operations and comprehensive income. The carrying amount of total debt was $1,454 million and $1,776 million, and the estimated fair value was $1,553 million and $1,791 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our debt is estimated based on available market prices for the same or similar instruments which are considered significant other observable inputs (Level 2) within the fair value hierarchy. The fair values presented reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value estimates presented in this report are based on information available to us as of September 30, 2019 and December 31, 2018.

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

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

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

We have not changed our valuation techniques for measuring the fair value of any financial assets and liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period. There were no significant transfers between levels during each of the nine month periods ended September 30, 2019 and 2018.

‎

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The carrying amount and estimated fair value of our financial instruments that are recorded at fair value on a recurring basis for the periods presented are as follows:

				Estimated Fair Value Measurements
				Quoted		Significant
				Prices In		Other		Significant
				Active		Observable		Unobservable
	Statement of Financial	Carrying		Markets		Inputs		Inputs
(In millions)	Position Location	Value		(Level 1)		(Level 2)		(Level 3)
As of September 30, 2019:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	13	$	13	$	—	$	—
Investments in marketable securities	Long-term marketable securities		6		6		—		—
Total financial assets		$	19	$	19	$	—	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	1	$	—	$	—	$	1
Interest rate swap contract	Other accrued liabilities		1		—		1		—
Total financial liabilities		$	2	$	—	$	1	$	1
As of December 31, 2018:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	13	$	13	$	—	$	—
Investment in Frontdoor	Investment in frontdoor, inc.		445		—		445		—
Investments in marketable securities	Long-term marketable securities		8		8		—		—
Interest rate swap contract	Other assets		30		—		30		—
Total financial assets		$	496	$	21	$	475	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	4	$	—	$	—	$	4
Total financial liabilities		$	4	$	—	$	—	$	4

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, 2018	$	(4)
Total gains (losses) (realized and unrealized)
Included in earnings		—	Cost of services rendered and products sold
Included in other comprehensive income		2
Settlements		—
Balance as of September 30, 2019	$	(1)
Balance as of December 31, 2017	$	3
Total gains (losses) (realized and unrealized)
Included in earnings		3	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		(3)
Balance as of September 30, 2018	$	4

26

The following tables present information relating to the significant unobservable inputs of our Level 3 financial instruments:

	Fair Value		Valuation			Weighted
	(in millions)		Technique	Unobservable Input	Range	Average
As of September 30, 2019:
Fuel swap contracts	$	(1)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$2.24 - $2.60	$	2.44
As of December 31, 2018:
Fuel swap contracts	$	(4)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$2.09 - $2.43	$	2.26

___________________________________

(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.

We use derivative financial instruments to manage risks associated with changes in fuel prices and interest rates. We do not hold or issue derivative financial instruments for trading or speculative purposes. In designating our derivative financial instruments as hedging instruments under accounting standards for derivative instruments, we formally document the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for the use of the hedging instrument. This documentation includes linking the derivatives to forecasted transactions. We assess at the time a derivative contract is entered into, and at least quarterly thereafter, whether the derivative item is effective in offsetting the projected changes in cash flows of the associated forecasted transactions. All of our designated hedging instruments are classified as cash flow hedges.

We have historically hedged a significant portion of our annual fuel consumption. We have also historically hedged the interest payments on a portion of our variable rate debt through the use of interest rate swap agreements. All of our fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the 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. Cash flows related to fuel and interest rate derivatives are classified as operating activities in the condensed consolidated statements of cash flows.

As of September 30, 2019, we had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $30 million, maturing through 2020. Under the terms of our fuel swap contracts, we are required to post collateral in the event that the fair value of the contracts exceeds a certain agreed upon liability level and in other circumstances required by the counterparty. As of September 30, 2019, we had posted $2 million in letters of credit as collateral under our fuel hedging program, which were issued under the Revolving Credit Facility.

The effective portion of the gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments is recorded in accumulated other comprehensive income. These amounts are reclassified into earnings in the same period or periods during which the hedged forecasted debt interest settlement or the fuel settlement affects earnings. See Note 9 to the condensed consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in accumulated other comprehensive income and for the amounts reclassified out of accumulated other comprehensive income and into earnings. The amount expected to be reclassified into earnings during the next 12 months includes unrealized gains and losses related to open fuel hedges and interest rate swaps. Specifically, as the underlying forecasted transactions occur during the next 12 months, the hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings is a gain of $2 million, net of tax, as of September 30, 2019. 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.

‎

27

Note 18. 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 share units are reflected in diluted earnings per share by applying the treasury stock method.

A reconciliation of the amounts included in the computation of basic earnings per share from continuing operations and diluted earnings per share from continuing operations is as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions, except per share data)	2019		2018		2019		2018
Income from continuing operations	$	26	$	18	$	155	$	74
Weighted-average common shares outstanding		135.8		135.6		135.9		135.4
Effect of dilutive securities:
RSUs		0.3		0.2		0.3		0.2
Stock options(1)		0.3		0.2		0.3		0.2
Weighted-average common shares outstanding—assuming dilution		136.5		136.0		136.5		135.8
Basic earnings per share from continuing operations	$	0.19	$	0.13	$	1.14	$	0.55
Diluted earnings per share from continuing operations	$	0.19	$	0.13	$	1.13	$	0.55

___________________________________

(1)Options to purchase 0.5 million shares for the three months ended September 30, 2018, and 0.5 million and 0.4 million shares for the nine months ended September 30, 2019 and 2018, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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28

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 residential and commercial termite and pest control, restoration, commercial and residential cleaning, cabinet and furniture repair and home inspection under the following leading brands: AmeriSpec, Copesan, Furniture Medic, Merry Maids, Nomor, ServiceMaster Clean, ServiceMaster Restore, Terminix and Terminix Commercial. Our operations for the periods presented in this report are organized into two reportable segments: Terminix and ServiceMaster Brands.

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,

net income,

earnings per share,

Adjusted EBITDA, and

organic revenue 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, Terminix Commercial and Copesan is impacted by new unit sales, the retention of our existing customers and acquisitions. Revenue results in the ServiceMaster Brands are driven principally by royalty fees earned from our franchisees. Revenue results presented in Corporate and Other Operations are primarily comprised of our pest control operations in Europe. We serve both residential and commercial customers, principally in the United States. In 2018, approximately 97 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, wages and salaries, employee benefits and health care, vehicles, self-insurance costs and other insurance premiums, as well as various regulatory compliance costs.

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 basic and diluted 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.

Adjusted EBITDA. We evaluate performance and allocate resources based primarily on Adjusted EBITDA. We define Adjusted EBITDA as net income before: (gain) loss from discontinued operations, net of income taxes; provision for income taxes; interest expense; depreciation and amortization expense; acquisition-related costs; fumigation related matters; non-cash stock-based compensation expense; restructuring and other charges; loss on extinguishment of debt; and realized (gain) on investment in frontdoor, inc. 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 and equity-based, long-term incentive plans.

Organic Revenue Growth. We evaluate organic revenue growth to track the performance of Terminix, 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.

29

Seasonality

We have seasonality in our business, which drives fluctuations in revenue and Adjusted EBITDA for interim periods. In 2018, approximately 23 percent, 27 percent, 26 percent and 24 percent of our revenue and approximately 25 percent, 31 percent, 24 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. For example, in the third quarter of 2017, our Terminix business was negatively impacted by hurricanes Harvey and Irma, which resulted in 53 branches, primarily in Texas and Florida, being temporarily closed for a period of time during August and September. 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; and severe storms which can lead to an increase in demand for restoration services. For example, in the third and fourth quarters of 2018, our ServiceMaster Restore business saw a significant increase in royalty fees related to hurricanes Florence and Michael.

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 $21 million and $20 million for the three months ended September 30, 2019 and 2018, respectively and $68 million and $66 million for the nine months ended September 30, 2019 and 2018, respectively. Nearly all of the franchise fees received by our ServiceMaster Brands 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 and nine months ended September 30, 2019. 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 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.

For the three months ended September 31, 2019 51 percent of our revenue in the ServiceMaster Brands segment consisted of ongoing monthly royalty fees. For the nine months ended September 30, 2019, 53 percent of our revenue in the ServiceMaster Brands segment consisted of ongoing monthly royalty fees. Royalty fees are the amounts paid to us by our franchisees and are based on a percentage of our franchisees’ customer-level revenue. We estimate that customer-level revenue for the ServiceMaster Brands segment and Terminix segment were $680 million and $555 million, respectively, for the three months ended September 30, 2019, and $2,018 million and $1,651 million, respectively, for the nine months ended September 30, 2019.

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30

Results of Operations

	Three Months Ended				Increase
	September 30,				(Decrease)		% of Revenue
(In millions)	2019		2018		2019 vs. 2018		2019		2018
Revenue	$	528	$	496	7	%	100	%	100	%
Cost of services rendered and products sold		305		278	10		58		56
Selling and administrative expenses		149		146	2		28		29
Amortization expense		7		6	19		1		1
Acquisition-related costs		8		1	*		2		—
Fumigation related matters		—		1	*		—		—
Restructuring and other charges		5		1	*		1		—
Interest expense		19		33	(41)		4		7
Interest and net investment income		(1)		(3)	*		—		(1)
Loss on extinguishment of debt		—		10	*		—		2
Income from Continuing Operations before Income Taxes		35		25	40		7		5
Provision for income taxes		9		7	35		2		1
Income from Continuing Operations	$	26	$	18	43	%	5	%	4	%

________________________________

* not meaningful

	Nine Months Ended				Increase
	September 30,				(Decrease)		% of Revenue
(In millions)	2019		2018		2019 vs. 2018		2019		2018
Revenue	$	1,570	$	1,443	9	%	100	%	100	%
Cost of services rendered and products sold		869		776	12		55		54
Selling and administrative expenses		436		417	5		28		29
Amortization expense		19		14	34		1		1
Acquisition-related costs		12		2	*		1		—
Fumigation related matters		—		1	*		—		—
Realized (gain) on investment in frontdoor, inc.		(40)		—	*		(3)		—
Restructuring and other charges		15		13	*		1		1
Interest expense		64		107	(40)		4		7
Interest and net investment income		(5)		(4)	*		—		—
Loss on extinguishment of debt		6		10	*		—		1
Income from Continuing Operations before Income Taxes		193		107	81		12		7
Provision for income taxes		39		32	20		2		2
Income from Continuing Operations	$	155	$	74	108	%	10	%	5	%

________________________________

* not meaningful

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31

Revenue

We reported revenue of $528 million and $496 million for the three months ended September 30, 2019 and 2018, respectively, and revenue of $1,570 million and $1,443 million for the nine months ended September 30, 2019 and 2018, respectively. A summary of changes in revenue for each of our reportable segments and Corporate and Other Operations is included in the tables below. See “—Segment Review” for a discussion of the drivers of the year-over-year changes.

					Corporate
			ServiceMaster		and Other
(In millions)	Terminix		Brands		Operations		Total
Three Months Ended September 30, 2018	$	436	$	60	$	—	$	496
Residential Pest Control(1)		11		—		—		11
Commercial Pest Control(2)		12		—		—		12
Termite and Home Services(3)		4		—		—		4
Royalty Fees		—		1		—		1
Commercial Cleaning and other National Accounts		—		1		—		1
Sale of Products and Other		2		1		—		3
Fumigation		(3)		—		—		(3)
European Pest Control		—		—		4		4
Three Months Ended September 30, 2019	$	461	$	63	$	4	$	528

_________________________________

(1)Includes growth from acquisitions of approximately $7 million for the three months ended September 30, 2019.

(2)Includes growth from acquisitions of approximately $11 million for the three months ended September 30, 2019.

(3)Includes growth from acquisitions of approximately $2 million for the three months ended September 30, 2019.

					Corporate
			ServiceMaster		and Other
(In millions)	Terminix		Brands		Operations		Total
Nine Months Ended September 30, 2018	$	1,259	$	183	$	1	$	1,443
Residential Pest Control (1)		51		—		—		51
Commercial Pest Control (2)		50		—		—		50
Termite and Home Services(3)		19		—		—		19
Royalty Fees		—		2		—		2
Commercial Cleaning and other National Accounts		—		6		—		6
Sale of Products and Other		4		(1)		—		3
Fumigation		(7)		—		—		(7)
European Pest Control		—		—		4		4
Nine Months Ended September 30, 2019	$	1,375	$	191	$	4	$	1,570

_________________________________

(1)Includes growth from acquisitions of approximately $31 million for the nine months ended September 30, 2019.

(2)Includes growth from acquisitions of approximately $47 million for the nine months ended September 30, 2019.

(3)Includes growth from acquisitions of approximately $6 million for the nine months ended September 30, 2019.

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32

Cost of Services Rendered and Products Sold

We reported cost of services rendered and products sold of $305 million and $278 million for the three months ended September 30, 2019 and 2018, respectively, and $869 million and $776 million for the nine months ended September 30, 2019 and 2018, respectively. The following tables provide a summary of changes in cost of services rendered and products sold for each of our reportable segments and Corporate and Other Operations:

					Corporate
			ServiceMaster		and Other
(In millions)	Terminix		Brands		Operations		Total
Three Months Ended September 30, 2018	$	257	$	25	$	(4)	$	278
Impact of change in revenue(1)		17		2		2		21
Damage claims		2		—		—		2
Insurance program		—		—		1		1
Fumigation services		4		—		—		4
Other		(2)		—		1		(1)
Three Months Ended September 30, 2019	$	278	$	27	$	—	$	305

_________________________________

(1)For Terminix, includes approximately $13 million for the three months ended September 30, 2019 from acquisitions. For Corporate and Other Operations, includes approximately $2 million for the three months ended September 30, 2019 from acquisitions.

For Terminix, the increase in damage claims was driven by increased termite warranty claims and includes the resolution of a single $2 million termite damage claim from 2016. Termite damage claims can take years to resolve and costs and timing can be difficult to predict. Assuming the continuation of recent trends, the company expects elevated claims costs to continue in the short-term due to Formosan termite activity in the Mobile, Alabama area. Fumigation services represents the reduced fumigation margin driven by the outsourcing of fumigation completion services.

For Corporate and Other Operations, we realized favorable claims results in our automobile, general liability and workers’ compensation program at a lesser extent than generated in the three months ended September 30, 2018.

					Corporate
			ServiceMaster		and Other
(In millions)	Terminix		Brands		Operations		Total
Nine Months Ended September 30, 2018	$	710	$	72	$	(6)	$	776
Impact of change in revenue(1)		74		6		2		83
Damage claims		3		—		—		3
Insurance program		—		—		(1)		(1)
Fumigation services		8		—		—		8
Other		(1)		—		1		—
Nine Months Ended September 30, 2019	$	794	$	79	$	(4)	$	869

_________________________________

(1)For Terminix, includes approximately $59 million for the nine months ended September 30, 2019 from acquisitions. For Corporate and Other Operations, includes approximately $2 million for the three months ended September 30, 2019 from acquisitions.

For Terminix, the increase in damage claims was driven by increased termite warranty claims and includes the resolution of a single $2 million termite damage claim from 2016. Termite damage claims can take years to resolve and costs and timing can be difficult to predict. Assuming the continuation of recent trends, the company expects elevated claims costs to continue in the short-term due to Formosan termite activity in the Mobile, Alabama area. Fumigation services represents the reduced fumigation margin driven by the outsourcing of fumigation completion services.

For Corporate and Other Operations, the decrease in insurance program expense was primarily attributable to favorable claims results in our automobile, general liability and workers’ compensation program.

33

Selling and Administrative Expenses

We reported selling and administrative expenses of $149 million and $146 million for the three months ended September 30, 2019 and 2018, respectively, and $436 million and $417 million for the nine months ended September 30, 2019, and 2018, respectively. For the three months ended September 30, 2019 and 2018, selling and administrative expenses comprised general and administrative expenses of $74 million and $72 million, respectively, and selling and marketing expenses of $76 million and $74 million, respectively. For the nine months ended September 30, 2019 and 2018, selling and administrative expenses comprised general and administrative expenses of $228 million and $216 million, respectively, and selling and marketing expenses of $208 million and $202 million, respectively. The following tables provide a summary of changes in selling and administrative expenses for each of our reportable segments and Corporate and Other Operations:

					Corporate
			ServiceMaster		and Other
(In millions)	Terminix		Brands		Operations		Total
Three Months Ended September 30, 2018	$	109	$	15	$	21	$	146
Sales and marketing costs		2		(1)		—		1
Impact of acquisitions on selling and administrative expenses		3		—		—		3
Investments in growth		4		—		—		4
Spin-off dis-synergies		4		—		—		4
Costs historically allocated to American Home Shield		—		—		(11)		(11)
Other		2		—		—		3
Three Months Ended September 30, 2019	$	124	$	15	$	11	$	149

The increase in sales and marketing costs at Terminix was driven by targeted investments to drive sales growth. Additionally, Terminix incurred incremental selling and administrative expenses as a result of acquisitions. The increase in investments in growth primarily includes our partnership with Salesforce to replace legacy operating systems, investments to optimize our commercial pest business and investments to transform our operating model.

					Corporate
			ServiceMaster		and Other
(In millions)	Terminix		Brands		Operations		Total
Nine Months Ended September 30, 2018	$	305	$	47	$	66	$	417
Sales and marketing costs		7		(2)		—		5
Impact of acquisitions on selling and administrative expenses		12		—		—		12
Investments in growth		14		—		—		14
Spin-off dis-synergies		11		1		—		12
Incentive compensation		2		—		—		2
Investments in training		2		—		—		2
Executive recruiting		2		—		—		2
Costs historically allocated to American Home Shield		—		—		(33)		(33)
Admin labor and other		4		—		—		4
Nine Months Ended September 30, 2019	$	358	$	45	$	33	$	436

The increase in sales and marketing costs at Terminix was driven by targeted investments to drive sales growth. Additionally, Terminix incurred incremental selling and administrative expenses as a result of acquisitions. Investments in growth primarily includes our partnership with Salesforce to replace legacy operating systems, investments to optimize our commercial pest business and investments to transform our operating model. Executive recruiting includes key executive transition costs related to the hiring and onboarding of members of ServiceMaster’s executive leadership team. These charges include recruiting and relocation costs. Admin labor and other includes investments in our branches to improve customer service levels.

Amortization Expense

Amortization expense was $7 million and $6 million in the three months ended September 30, 2019 and 2018, respectively, and $19 million and $14 million in the nine months ended September 30, 2019 and 2018, respectively.

Acquisition-Related Costs

Acquisition-related costs were $8 million and $1 million in the three months ended September 30, 2019 and 2018, respectively, and $12 million and $2 million in the nine months end September 30, 2019 and 2018, respectively.

Fumigation Related Matters

There were $1 million charges for fumigation related matters in the three and nine months ended September 30, 2018.

34

Restructuring and Other Charges

We incurred restructuring charges of approximately $3 million and $1 million in the three months ended September 30, 2019 and 2018, respectively and $13 million in each of the nine months ended September 30, 2019 and 2018. Restructuring charges were comprised of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Terminix(1)	$	1	$	—	$	4	$	2
ServiceMaster Brands(2)		—		—		2		1
Corporate and Other Operations(3)		1		—		6		3
Global Service Center relocation(4)		—		—		1		8
Total restructuring charges	$	3	$	1	$	13	$	13

___________________________________

(1)For the three and nine months ended September 30, 2019, these charges included $1 million and $4 million, respectively, of severance and other costs. For the nine months ended September 30, 2018, restructuring charges included $2 million of severance and other costs.

(2)For the nine months ended September 30, 2019, these charges included $2 million of severance costs. For the nine months ended September 30, 2018, these charges included $1 million of severance and other costs.

(3)We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services to support operations. For the three and nine months ended September 30, 2019, these charges included $1 million and $5 million, respectively, of professional fees, accelerated depreciation and other costs to enhance capabilities and align corporate functions with those required to support our strategic needs after the American Home Shield spin-off. For the nine months ended September 30, 2019 and 2018, these charges included $1 million and $3 million of severance and other costs.

(4)For the nine months ended September 30, 2019 and 2018, these charges included lease termination and other charges of $1 million and $8 million, respectively, related to the relocation.

Other charges represent professional fees incurred that are not closely associated with our ongoing operations. Other charges were $2 million for the three and nine months ended September 30, 2019. We incurred no such other charges for the three and nine months ended September 30, 2018.

Realized (Gain) on Investment in frontdoor, inc.

We recorded a gain of $40 million related to the sale of our retained investment in Frontdoor in the nine months ended September 30, 2019. There was no gain recorded in the three months ended September 30, 2019, or in the three and nine months ended September 30, 2018.

Interest Expense

Interest expense was $19 million and $33 million in the three months ended September 30, 2019 and 2018, respectively, and $64 million and $107 million in the nine months ended September 30, 2019 and 2018, respectively. The decrease in interest expense was driven by the repayment of approximately $1 billion of our senior secured term loan facility in connection with the spin-off of the American Home Shield segment, as well as the repayment of approximately $484 million in debt in connection with the monetization of our shares of Frontdoor.

Interest and Net Investment Income

Interest and net investment income was $1 million and $3 million for the three months ended September 30, 2019 and 2018, respectively, and $5 million and $4 million in the nine months ended September 30, 2019 and 2018, respectively. Interest and net investment income is comprised of net investment gains and losses from equity investments and other strategic investments and interest income on other cash balances. 

Loss on Extinguishment of Debt

A loss on extinguishment of debt of $6 million was recorded in the nine months ended September 30, 2019. No similar loss was recognized in the three months ended September 30, 2019. A loss on extinguishment of debt of $10 million was recorded in the three months and nine months ended September 30, 2018. See Note 12 to the condensed consolidated financial statements for more details.

35

Income from Continuing Operations before Income Taxes

Income from continuing operations before income taxes was $35 million and $25 million for the three months ended September 30, 2019 and 2018, respectively, and $193 million and $107 million in the nine months ended September 30, 2019 and 2018, 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		Nine Months Ended
	September 30,		September 30,
(In millions)	2019 vs. 2018		2019 vs. 2018
Reportable segments and Corporate and Other Operations(1)	$	2	$	20
Depreciation expense(2)		(1)		(2)
Amortization expense(3)		(1)		(5)
Acquisition-related costs(4)		(8)		(11)
Restructuring and other charges(5)		(5)		(2)
Loss on extinguishment of debt(6)		10		4
Realized (gain) on investment in frontdoor, inc.(7)		—		40
Interest Expense(8)		13		43
Other(9)		(1)		—
Increase in income from continuing operations before income taxes	$	10	$	87

___________________________________

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

(2)Represents the net change in depreciation expense, driven by investments in vehicles and technology.

(3)Represents the net change in amortization expense as described in “—Amortization Expense.”

(4)Represents the net change in acquisition-related costs as described in “—Acquisition-Related Costs.”

(5)Represents the net change in restructuring and other charges as described in “—Restructuring and Other Charges.”

(6)Represents the net change in the loss on extinguishment of debt as described in “—Loss on Extinguishment of Debt.”

(7)Represents the net change in the investment in frontdoor, inc. as described in “—Realized (Gain) on Investment in frontdoor, inc.”

(8)Primarily represents the net change in interest expense, as described in “—Interest Expense.”

(9)Primarily represents the net change in stock-based compensation.

Provision for Income Taxes

The effective tax rate on income from continuing operations was 26.5 percent and 28.1 percent for the three months ended September 30, 2019 and 2018, respectively, and 20.0 percent and 30.3 percent in the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate on income from continuing operations for the nine months ended September 30, 2019, was primarily affected by the disposition of the Frontdoor retained shares in a non-taxable debt-for-equity exchange pursuant to the private letter ruling from the IRS that was recorded discretely in the three months ended March 31, 2019.

Gain (Loss) from Discontinued Operations, Net of Income Taxes

Gain from discontinued operations, net of income taxes, was $53 million for the three months ended September 30, 2018, and $133 million in the nine months ended September 30, 2018, related to operating results of Frontdoor. There was a $1 million loss from discontinued operations, net of taxes, for the nine months ended September 30, 2019.

Net Income

Net income was $25 million and $71 million for the three months ended September 30, 2019 and 2018, respectively, and was primarily driven by a $10 million increase in income from continuing operations before income taxes offset by a gain from discontinued operations in the three months ended September 30, 2018 of $53 million. Net income was $154 million and $207 million in the nine months ended September 30, 2019 and 2018, respectively, and was primarily driven by a $87 million increase in income from continuing operations before income taxes offset by a gain from discontinued operations in the nine months ended September 30, 2018 of $133 million.

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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 and Other Operations are as follows:

	Three Months Ended						Nine Months Ended
	September 30,				Increase		September 30,				Increase
(In millions)	2019		2018		(Decrease)		2019		2018		(Decrease)
Revenue:
Terminix	$	461	$	436	6	%	$	1,375	$	1,259	9	%
ServiceMaster Brands		63		60	5			191		183	4
Corporate and Other Operations		4		—	*			4		1	*
Total Revenue:	$	528	$	496	7	%	$	1,570	$	1,443	9	%
Adjusted EBITDA:(1)
Terminix	$	72	$	81	(11)	%	$	261	$	277	(6)	%
ServiceMaster Brands		22		21	7			70		67	4
Reportable Segment Adjusted EBITDA		95		102	(7)			330		344	(4)
Corporate and Other Operations(2)		3		4	*			7		6	*
Costs historically allocated to American Home Shield(3)		—		(11)	*			—		(33)	*
Total Adjusted EBITDA	$	97	$	95	2	%	$	337	$	317	6	%

___________________________________

* not meaningful

(1)See Note 16 to the condensed consolidated financial statements for our definition of Adjusted EBITDA and a reconciliation of Net Income to Reportable Segment Adjusted EBITDA.

(2)Represents results from our pest control operations in Europe and unallocated corporate gains, net of expenses.

(3)Includes amounts historically allocated to the American Home Shield business not permitted to be classified as discontinued operations under GAAP.

Terminix Segment

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

The Terminix segment, which provides termite and pest control services to residential and commercial customers and distributes pest control products, reported a six percent increase in revenue and a 11 percent decrease in Adjusted EBITDA for the three months ended September 30, 2019 compared to the three months ended September 30, 2018.

On April 1, 2019, we divested the assets associated with our fumigation service line and now provide fumigation services to our customers through arrangements with independent third parties. Revenue related to the Fumigation Services is shown in Fumigation below and prior period amounts related to the Fumigation Services have been reclassified from Termite and Home Services to Fumigation to conform to the current period presentation. Additionally, prior period revenue for Residential Pest Control and Commercial Pest Control has been reclassified to conform to the current period presentation of acquired branches as commercial or residential based on the current reporting structure at Terminix.

Revenue

Revenue by service line is as follows:

	Three Months Ended
	September 30,
(In millions)	2019		2018		Growth				Acquired				Organic
Residential Pest Control	$	189	$	178	$	11	6	%	$	7	4	%	$	4	2	%
Commercial Pest Control		105		93		12	13	%		11	12	%		1	1	%
Termite and Home Services		133		129		4	3	%		2	1	%		2	2	%
Other		24		22		2	8	%		—	—	%		2	8	%
	$	450	$	421	$	29	7	%	$	20	5	%	$	9	2	%
Fumigation		11		14		(3)	(22)	%		—	—	%		(3)	(22)	%
Total revenue	$	461	$	436	$	26	6	%	$	20	5	%	$	6	1	%

Residential pest control revenue increased six percent. Residential pest control organic revenue growth was two percent, reflecting improved price realization as well as unit growth in mosquito and non-recurring services. Residential pest control revenue also increased four percent from acquisitions completed during the last 12 months.

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Commercial pest control revenue increased 13 percent. Commercial pest control organic revenue growth was one percent, approximately half of which reflects growth at Copesan. The remaining organic growth was driven by higher customer retention and higher price realization, offset, in part, by lower sales of non-recurring services. We completed the acquisition of Copesan on March 30, 2018. Beginning on March 31, 2019, Copesan is included in our evaluation of organic revenue growth. Commercial pest control revenue also increased 12 percent from acquisitions completed during the last 12 months, the most significant of which was Assured Environments, an acquisition completed in January 2019.

Termite revenue, including wildlife exclusion, crawl space encapsulation and attic insulation, which are managed as a component of our termite line of business, increased three percent compared to prior year, primarily reflecting improved price realization in termite completions and new unit growth in home services, offset in part by a reduction in termite renewals driven by price increases in the Mobile, Alabama area. In the three months ended September 30, 2019, termite renewal revenue comprised 46 percent of total termite revenue, while the remainder consisted of termite new unit revenue. 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 September 30, 2018	$	81
Impact of change in revenue		2
Sales and marketing		(2)
Damage claims		(2)
Investments in growth		(4)
Spin-off dis-synergies		(4)
Fumigation services		(4)
Impact of acquisitions		4
Three Months Ended September 30, 2019	$	72

The increase in sales and marketing costs was driven by targeted investments to drive sales growth. The increase in damage claims was driven by increased termite warranty claims. Termite damage claims can take years to resolve and costs and timing can be difficult to predict. Assuming the continuation of recent trends, the company expects elevated claims costs to continue in the short-term due to Formosan termite activity in the Mobile, Alabama area. The increase in investments in growth primarily includes our partnership with Salesforce to replace legacy operating systems, investments to optimize our commercial pest business and investments to transform our operating model. The increase in spin-off dis-synergies represents increased corporate allocations to Terminix as a result of the American Home Shield spin-off. The increase in fumigation services represents margin compression driven by the impact of outsourcing our fumigation services.

Nine months Ended September 30, 2019 Compared to Nine months Ended September 30, 2018

The Terminix segment reported a nine percent increase in revenue and a six percent decrease in Adjusted EBITDA for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

Revenue

Revenue by service line is as follows:

	Nine Months Ended
	September 30,
(In millions)	2019		2018		Growth				Acquired				Organic
Residential Pest Control	$	535	$	484	$	51	10	%	$	31	6	%	$	20	4	%
Commercial Pest Control		293		243		50	21	%		47	19	%		3	1	%
Termite and Home Services		450		432		19	4	%		6	1	%		13	3	%
Other		64		61		4	6	%		—	—	%		4	6	%
	$	1,342	$	1,219	$	123	10	%	$	84	7	%	$	39	3	%
Fumigation		33		40		(7)	(18)	%		—	—	%		(7)	(18)	%
Total revenue	$	1,375	$	1,259	$	116	9	%	$	84	7	%	$	32	3	%

Residential pest control revenue increased 10 percent. Residential pest control organic revenue growth was four percent, reflecting improved price realization, unit growth in mosquito services and non-recurring services and higher customer retention, offset, in part, by lower unit sales in core pest. Residential pest control revenue also increased six percent from acquisitions completed during the last 12 months.

Commercial pest control revenue increased 21 percent. Commercial pest control organic revenue growth was one percent, reflecting growth at Copesan for the six months ended September 30, 2019. We completed the acquisition of Copesan on March 30,

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2018. Beginning on March 31, 2019, Copesan is included in our evaluation of organic revenue growth. The remaining organic growth was driven by higher customer retention and higher price realization, offset, in part, by lower sales of non-recurring services. Commercial pest control revenue also increased 19 percent from acquisitions completed during the last 12 months and included Copesan for the three months ended March 31, 2019.

Termite revenue, including wildlife exclusion, crawl space encapsulation and attic insulation, which are managed as a component of our termite line of business, increased four percent compared to prior year, primarily reflecting new unit growth in home services and improved price realization, offset in part by a reduction in termite renewals driven by price increases in the Mobile, Alabama area. In the nine months ended September 30, 2019, termite renewal revenue comprised 49 percent of total termite revenue, while the remainder consisted of termite new unit revenue. Termite activity is unpredictable in its nature. Factors that can impact termite activity include conducive weather conditions and consumer awareness of termite swarms.

There were no significant weather events in the three months ended September 30, 2019. Revenue growth for the three months ended June 30, 2019 was negatively impacted by approximately $3 million due to wet weather conditions and flooding that affected low margin product sales and branch operations and lead flow, primarily in termite completion revenue. The three months ended March 31, 2019 and 2018 were each negatively impacted by approximately $3 million due to unfavorable weather conditions.

Adjusted EBITDA

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

(In millions)
Nine Months Ended September 30, 2018	$	277
Impact of change in revenue		18
Sales and marketing		(7)
Damage claims		(3)
Investments in growth		(14)
Spin-off dis-synergies		(11)
Fumigation services		(8)
Incentive compensation		(2)
Investments in training		(2)
Executive recruiting		(2)
Admin labor and other		(1)
Impact of acquisitions		14
Nine Months Ended September 30, 2019	$	261

The increase in sales and marketing costs was driven by targeted investments to drive sales growth. The increase in damage claims was driven by increased termite warranty claims. Termite damage claims can take years to resolve and costs and timing can be difficult to predict. Historically, termite damage claims costs have been four to four and one-half percent of termite revenue annually. For the nine months ended September 30, 2019, termite damage claims costs were approximately seven percent of termite revenue. Assuming the continuation of recent trends, the company expects elevated claims costs to continue in the short-term due to Formosan termite activity in the Mobile, Alabama area. The increase in investments in growth primarily includes our partnership with Salesforce to replace legacy operating systems, investments to optimize our commercial pest business and investments to transform our operating model. The increase in spin-off dis-synergies represents increased corporate allocations to Terminix as a result of the American Home Shield spin-off. The increase in fumigation services represents margin compression driven by the impact of outsourcing our fumigation services. Executive recruiting includes key executive transition costs related to the hiring and onboarding of members of ServiceMaster’s executive leadership team. These charges include recruiting and relocation costs. Admin labor and other includes investments in our branches to improve service levels and customer retention.

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ServiceMaster Brands Segment

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

The ServiceMaster Brands segment, which consists of the ServiceMaster Restore (disaster restoration), ServiceMaster Clean (commercial cleaning), Merry Maids (residential cleaning), Furniture Medic (cabinet and furniture repair) and AmeriSpec (home inspection) businesses, reported a five percent increase in revenue and a seven percent increase in Adjusted EBITDA for the three months ended September 30, 2019 compared to the three months ended September 30, 2018.

Revenue

Revenue by service line is as follows:

	Three Months Ended				% of		% of
	September 30,				Revenue		Revenue
(In millions)	2019		2018		2019		2018
Royalty Fees	$	32	$	31	51	%	52	%
Commercial Cleaning and other National Accounts		18		17	28		28
Sales of Products		3		4	5		7
Other		10		8	16		14
Total revenue	$	63	$	60	100	%	100	%

The increase in royalty fees was driven by higher disaster restoration services due to focused sales efforts to commercial segment customers. The increase in revenue from commercial cleaning and other national accounts was driven by increased sales activity.

Adjusted EBITDA

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

(In millions)
Three Months Ended September 30, 2018	$	21
Impact of change in revenue		1
Sales and marketing		1
Three Months Ended September 30, 2019	$	22

Nine months Ended September 30, 2019 Compared to Nine months Ended September 30, 2018

The ServiceMaster Brands segment reported a four percent increase in revenue and a four percent increase in Adjusted EBITDA for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

Revenue

Revenue by service line is as follows:

	Nine Months Ended				% of		% of
	September 30,				Revenue		Revenue
(In millions)	2019		2018		2019		2018
Royalty Fees	$	101	$	99	53	%	54	%
Commercial Cleaning and other National Accounts		54		48	28		26
Sales of Products		10		11	5		6
Other		26		25	13		14
Total revenue	$	191	$	183	100	%	100	%

The increase in royalty fees was driven by higher disaster restoration services due to focused sales efforts to commercial segment customers. The increase in revenue from commercial cleaning and other national accounts was driven by increased sales activity.

Adjusted EBITDA

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

(In millions)
Nine Months Ended September 30, 2018	$	67
Impact of change in revenue		1
Sales and marketing		2
Spin-off dis-synergies		(1)
Nine Months Ended September 30, 2019	$	70

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Corporate and Other Operations

Corporate and Other Operations includes our pest control operations in Europe, our financing subsidiary and our headquarters functions.

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

The following table provides a summary of changes in Corporate and Other Operations’ Adjusted EBITDA:

(In millions)
Three Months Ended September 30, 2018	$	4
European pest control		1
Insurance program		(1)
Other		(2)
Three Months Ended September 30, 2019	$	3

Nine months Ended September 30, 2019 Compared to Nine months Ended September 30, 2018

The following table provides a summary of changes in Corporate and Other Operations’ Adjusted EBITDA:

(In millions)
Nine Months Ended September 30, 2018	$	6
European pest control		1
Insurance program		1
Other		—
Nine Months Ended September 30, 2019	$	7

Costs Historically Allocated to American Home Shield

We have historically incurred the cost of certain corporate-level activities which we performed on behalf of our businesses, including American Home Shield, such as executive functions, communications, public relations, finance and accounting, tax treasury, internal audit, human resources operations and benefits, risk management and insurance, supply management, real estate management, legal, marketing, facilities, information technology and other general corporate support services. The cost of such activities were historically allocated to our segments, including American Home Shield. Certain corporate expenses which were historically allocated to the American Home Shield business are not permitted to be classified as discontinued operations under GAAP (“Historically Allocated Services”). Such Historically Allocated Services amounted to $11 million and $33 million for the three and nine months ended September 30, 2018, and are included in Corporate and Other Operations through the date of the Separation.

On the date of the spin-off, where it was practicable, employees who provided Historically Allocated Services to the American Home Shield business were separated from us and transferred to Frontdoor.

The costs of Historically Allocated Services which were not transferred to Frontdoor will be borne by our remaining businesses in the future as dis-synergies. We continue to estimate these dis-synergies to be approximately $18 million in 2019.

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Liquidity and Capital Resources

Liquidity

A portion of our liquidity needs are due to service requirements on our indebtedness. The agreements governing our term loan facility maturing November 8, 2023 and revolving credit facility maturing November 8, 2021 (together, 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 September 30, 2019, we were in compliance with the covenants under the agreements that were in effect on such date.

On October 1, 2018, we completed the spin-off of our American Home Shield business. The separation was effectuated through the Distribution to our stockholders of approximately 80.2% of the outstanding shares of common stock of Frontdoor, which was formed as a wholly owned subsidiary to hold our American Home Shield business. The Distribution was made to our stockholders of record as of the close of business on September 14, 2018, and such stockholders received one share of Frontdoor common stock for every two shares of ServiceMaster common stock held as of the close of business on the Record Date. Subsequent to the Distribution, we retained 16,734,092 shares, or approximately 19.8%, of the common stock of Frontdoor immediately following the Distribution.

On March 12, 2019, we borrowed an aggregate principal amount of $600 million under a short-term credit facility to effectuate a debt-for-equity exchange of our Frontdoor retained shares. The proceeds of this short-term credit facility were used to repay $468 million aggregate principal amount of term loans outstanding under our senior secured term loan facility in March and April of 2019. Such prepayments resulted in a loss on extinguishment of debt of $4 million for the nine months ended September 30, 2019.

On March 27, 2019, we completed a non-cash debt-for-equity exchange in which we exchanged the 16.7 million retained shares of Frontdoor common stock (proceeds of $486 million, net), plus used $114 million of proceeds from the short-term credit facility, to extinguish $600 million of our indebtedness under the short-term credit facility. The sale of the Frontdoor common stock resulted in a realized gain of $40 million, which was recorded within Realized (gain) on investment in frontdoor, inc. on the condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2019.

In March 2019, we purchased approximately $7 million in aggregate principal amount of our 7.45% notes maturing in 2027 at a price of 105.5% and $3 million in aggregate principal amount of our 7.25% notes maturing in 2038 at a price of 99.5% using available cash. The repurchased notes were delivered to the trustee for cancellation. In connection with these partial repurchases, we recorded a loss on extinguishment of debt of $2 million in the nine months ended September 30, 2019.

In April 2019, we purchased $1 million in aggregate principal amount of our 7.45% notes maturing in 2027 at a price of 105.5%.

The proceeds from and the use of proceeds in connection with the debt-for-equity exchange are as follows:

(in millions)
Proceeds from the short-term credit facility	$	600
Proceeds from the Frontdoor common shares retained, net of $16 million of fees paid		486
Total proceeds	$	1,086
Repayment of the term loan facility, including loss on extinguishment of det of $4 million	$	(472)
Debt-for-equity exchange using net proceeds from the Frontdoor common shares retained		(486)
Repurchase of 2027 and 2038 notes, including loss on extinguishment of debt of $2 million		(12)
Interest and other payments		(1)
Use of cash to retire short-term credit facility		(114)
Total uses	$	(1,086)

In connection with the prepayments on our senior secured term loan facility, we terminated $479 million of our interest rate swap, receiving $12 million in connection with the terminations. The fair value of the terminated agreements of $12 million was recorded within accumulated other comprehensive income on the condensed consolidated statements of financial position and is being amortized into interest expense over the original term of the agreement. The remaining unamortized balance at September 30, 2019 is $10 million.

On September 5, 2019, we borrowed an aggregate principal amount of $120 million under the revolving credit facility to finance our acquisition of Nomor Holding AB.

On October 15, 2019, we terminated the remaining $171 million of our interest rate swap in advance of our debt refinancing.

On November 5, 2019, the Company closed on an amended $600 million Term Loan B due 2026, as well as a $400 million revolving credit agreement due 2024. The proceeds of the transaction were used to repay approximately $171 million of debt outstanding under its previous Term Loan B due 2023, $120 million outstanding under its previous revolving credit agreement due 2021, as well as $150 million from a recent short-term borrowing entered on October 4, 2019. Concurrently with the refinancing, we

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entered into a seven year interest rate swap agreement with a notional amount of $550 million. During the term on the agreement, the effective interest rate on $550 million of the new Term Loan B is fixed at a rate of 1.615 percent, plus the incremental borrowing margin of 1.75 percent.

Our ongoing liquidity needs are expected to be funded by cash on hand, net cash provided by operating activities and, as required, borrowings under the 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 $158 million as of September 30, 2019, compared with $690 million as of December 31, 2018, which included our investment in Frontdoor. As of September 30, 2019, there were $23 million of letters of credit outstanding and $157 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.

In 2016, our board of directors authorized a three-year share repurchase program (that expired in February 2019), under which we may repurchase up to $300 million of outstanding shares of our common stock. On February 19, 2019, our board of directors approved a three-year extension of the share repurchase plan allowing for an aggregate of $150 million of repurchases though February 19, 2022. As of September 30, 2019, we have repurchased $33 million of outstanding shares under this program, which are included in treasury stock on the condensed consolidated statements of financial position.

Cash and short- and long-term marketable securities include balances associated with a subsidiary borrowing arrangement at our financing subsidiary. See “—Limitations on Distributions and Dividends by Subsidiaries.” As of September 30, 2019, the total net assets subject to these third-party restrictions was $23 million. We expect that such limitations will be in effect for the foreseeable future.

As of September 30, 2019, we had posted $21 million in letters of credit, which were issued under the Revolving Credit Facility, and $89 million of cash, which is included in Restricted cash on the condensed consolidated statements of financial position, as collateral under our automobile, general liability and workers’ compensation insurance program. We may from time to time change the amount of cash or marketable securities used 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 new Revolving Credit Facility and our cash position. Any change in cash or marketable securities used as collateral would result in a corresponding change in our available borrowing capacity under the new 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 September 30, 2019, the estimated fair value of our fuel swap contracts was $1 million, and we had posted $2 million in letters of credit as collateral under our fuel hedging program, which were also issued under the old 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 the new Revolving 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.

Fleet and Equipment Financing Arrangements

We have entered into a fleet management services agreement (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 nine months ended September 30, 2019, we acquired $38 million of vehicles through the leasing program under the Fleet Agreement. All leases under the Fleet Agreement are finance 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.

Additionally, a portion of our property and equipment is leased through programs outside the scope of the Fleet Agreement. For the nine months ended September 30, 2019, an immaterial amount of property and equipment that was acquired through these incremental leasing programs. We anticipate new lease financings, including the Fleet Agreement and incremental leasing programs, for the full year 2019 will range from $35 million to $45 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

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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 agreements governing the Credit Facilities may 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 a subsidiary borrowing arrangement at our financing subsidiary. As of September 30, 2019, the total net assets subject to these third-party restrictions was $23 million. We expect that such limitations will be in effect for the foreseeable future. None of our subsidiaries are obligated to make funds available to us through the payment of dividends.

We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. The Act imposes a one-time tax (“Transition Tax”) on undistributed and previously untaxed post-1986 foreign earnings and profits, as determined in accordance with U.S. tax principles, of certain foreign owned corporations owned by U.S. stockholders. While the Transition Tax resulted in all pre-2018 undistributed foreign earnings being subject to U.S. tax, an actual repatriation from our non-U.S. subsidiaries could still be subject to additional foreign withholding taxes and U.S. state taxes.

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.

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Net cash provided from (used for):
Operating activities	$	213	$	204
Investing activities		(352)		(197)
Financing activities		56		(96)
Discontinued operations		(2)		136
Cash increase (decrease) during the period	$	(85)	$	47

Operating Activities

Net cash provided from operating activities from continuing operations increased $9 million to $213 million for the nine months ended September 30, 2019 compared to $204 million for the nine months ended September 30, 2018.

Net cash provided from operating activities for the nine months ended September 30, 2019 comprised $224 million in earnings adjusted for non-cash charges, offset, in part, by $16 million in payments related to restructuring and other and fumigation matters and a $5 million decrease in cash required for working capital (a $5 million increase excluding the working capital impact of accrued interest and taxes). For the nine months ended September 30, 2019, working capital requirements were favorably impacted by seasonal activity and the timing of interest and income tax payments.

Net cash provided from operating activities for the nine months ended September 30, 2018 comprised $190 million in earnings adjusted for non-cash charges, offset, in part, by $11 million in payments related to restructuring and other, and a $25 million decrease in cash required for working capital (a $5 million decrease excluding the working capital impact of accrued interest and taxes). For the nine months ended September 30, 2018, working capital requirements were favorably impacted by seasonal activity and the timing of income tax payments.

Investing Activities

Net cash used for investing activities from continuing operations was $352 million for the nine months ended September 30, 2019, compared to $197 million for the nine months ended September 30, 2018.

Cash paid for business acquisitions, which increased to $345 million, net of $9 million of cash acquired, for the nine months ended September 30, 2019, from $160 million, net of $1 million of cash acquired, for the nine months ended September 30, 2018. We expect to continue our tuck-in acquisition program at Terminix and to periodically evaluate other strategic acquisitions.

Capital expenditures decreased to $22 million for the nine months ended September 30, 2019 from $42 million ($35 million net of government grants) in the nine months ended September 30, 2018 and included recurring capital needs, information technology projects and a reduction in Global Service Center relocation costs. We anticipate capital expenditures for the full year 2019 will range from $35 million to $45 million, reflecting recurring capital needs. We expect to fulfill our ongoing vehicle fleet needs through vehicle finance leases. We have no additional material capital commitments at this time.

44

Cash flows received from the sale and maturity of securities for the nine months ended September 30, 2019 totaled $3 million and was driven by the sale of equity securities. There was no cash received from the sale and maturity of securities for the nine months ended September 30, 2018.

Cash flows received for notes receivable, net, for the nine months ended September 30, 2019 totaled $11 million. Cash flows used for notes receivable, net, for the nine months ended September 30, 2018 totaled $5 million. This was a result of a net increase in financing provided by our financing subsidiary to our franchisees and retail customers of our operating units and collections from other long-term financing arrangements.

Financing Activities

Net cash provided from financing activities from continuing operations was $56 million for the nine months ended September 30, 2019. Net cash used for financing activities from continuing operations was $96 million for the nine months ended September 30, 2018.

During the first quarter of 2019, we completed a debt-for-equity exchange which resulted in $600 million of borrowings of debt under a short-term credit facility, $472 million of repayments of our senior secured term loan facility and $114 million of repayments under a short-term credit facility. In addition, we repaid $14 million of other debt.

During the nine months ended September 30, 2019, we completed a debt-for-equity exchange and made other debt payments which impacted net cash used for financing activities as follows:

(in millions)
Proceeds from the short-term credit facility	$	600
Repayment of the term loan facility, including prepayment penalty of $4 million	$	(472)
Repurchase of 2027 and 2038 notes, including prepayment penalty of $2 million		(12)
Use of cash to retire short-term credit facility		(114)
Total uses		(599)
Other debt payments		(42)
	$	(640)

During the nine months ended September 30, 2019, we borrowed an aggregate principal amount of $120 million under our revolving credit facility to finance our acquisition of Nomor Holding AB.

During the nine months ended September 30, 2019, we repurchased $33 million of common stock and received $10 million from the issuance of common stock through the exercise of stock options.

During the nine months ended September 30, 2018, in connection with the spin-off of the American Home Shield Segment, we borrowed $1 billion under a short-term credit facility on August 1, 2018, the proceeds of which were used to pay $982 million towards its term loan facility resulting in a loss on extinguishment of debt of $10 million for the three and nine months ended September 30, 2018. On August 16, 2018, Frontdoor issued $350 million aggregate principal of 6.75% Senior Notes due 2026, a $650 million senior secured term loan facility and a $250 million senior secured revolving credit facility in favor of the Company. The Company then used the aforementioned indebtedness of Frontdoor to repay the short-term credit facility through a debt-for-debt exchange. In addition, during the nine months ended September 30, 2018, the Company made scheduled principal payments on long-term debt of $127 million, which included a $79 million payment upon maturity of the 2018 Notes using cash on hand from operations. We paid $16 million in debt issuance costs related to the debt transactions entered into in connection with the spin-off of the American Home Shield Segment. We received $6 million from the issuance of common stock upon the exercise of stock options.

Contractual Obligations

Our Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”) includes disclosures of our contractual obligations and commitments as of December 31, 2018. As indicated above, on November 5, 2019, we refinanced our existing debt with a new $600 million Term Loan B due 2026, and a $400 million revolving credit facility due 2024. We continue to make the contractually required payments, and, therefore, the 2019 obligations and commitments as listed in our 2018 Form 10-K have been reduced by the required payments and the debt-for-equity exchange and impacted by the November 2019 refinancing.

Off-Balance Sheet Arrangements

As of September 30, 2019, 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.

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Regulatory Matters

On December 16, 2016, the U.S. Virgin Islands Department of Justice filed a civil complaint in the Superior Court of the Virgin Islands related to a fumigation incident in a matter styled Government of the United States Virgin Islands v. The ServiceMaster Company, LLC, The Terminix International Company Limited Partnership, and Terminix International USVI, LLC. The amount and extent of any potential penalties, fines sanctions, costs and damages that the federal or other governmental authorities may yet impose, investigation or other costs and reputational harm, as well as the impact of any additional civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands fumigation matter, which could be material, is not currently known, and any such further penalties, fines, sanctions, costs or damages would not be covered under our general liability policies.

Information Regarding Forward-Looking Statements

This report contains forward-looking statements and cautionary statements. 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 are subject to known and unknown risks and uncertainties. These forward-looking statements also include, but are not limited to 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 future payments under operating and finance 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 2018 Form 10-K and in “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:

risks associated with acquisitions, including, without limitation, retaining customers from businesses acquired, difficulties in integrating acquired businesses and achieving expected synergies therefrom;

risks associated with litigated claims arising from alleged termite damage, principally related to Formosan termite activity in the Mobile, Alabama area;

risks associated with international operations and foreign currency exchange fluctuations as we expand into foreign countries;

our ability to successfully implement our business strategies;

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;

resolution of fumigation related matters;

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

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

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

adverse weather conditions;

weakening general economic conditions, unemployment and consumer confidence or spending levels;

our ability to generate the cash needed to fund our operations and service our debt obligations;

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;

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

46

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

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 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;

the effects of our indebtedness and the limitations contained in the agreements governing such indebtedness; 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 normal course of business to manage certain market risks, with a policy of matching positions and limiting the terms of contracts to relatively short durations. The effect of derivative financial instrument transactions could have a material impact on our financial statements.

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, other than the impact of our repayment of $468 million of our term loan facility and the termination of $479 million of our interest rate swap, the market risk associated with our remaining debt obligations and other significant instruments as of September 30, 2019 has not materially changed from December 31, 2018 (see Item 7A of the 2018 Form 10-K).

On October 15, 2019, we terminated the remaining $171 million of our interest rate swap in advance of our debt refinancing.

On November 5, 2019, we refinanced approximately $171 million of debt outstanding under the existing Term Loan B due 2023, $120 million outstanding under the existing revolving credit agreement due 2021, and $150 million from a recent short-term borrowing entered on October 4, 2019. We refinanced the approximately $441 million in debt with the proceeds from a new $600 million Term Loan B due 2026, and a $400 million revolving credit facility due 2024. Concurrently with the refinancing, we entered into a seven year interest rate swap agreement with a notional amount of $550 million. During the term on the agreement, the effective interest rate on $550 million of the new Term Loan B is fixed at a rate of 1.615 percent, plus the incremental borrowing margin of 1.75 percent.

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 12 million gallons of fuel in 2019. As of September 30, 2019, a 10 percent change in fuel prices would result in a change of approximately $2 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 September 30, 2019, we had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $30 million, maturing through 2020. The estimated fair value of these contracts as of September 30, 2019 was a net liability of $1 million. These fuel swap contracts provide a fixed price for approximately 83 percent and 80 percent of our estimated fuel usage for the remainder of 2019 and 2020 respectively. 

‎

47

Foreign Currency Risk

We are principally exposed to foreign currency exchange risk in Swedish krona and Norwegian krone, but also have foreign currency exchange risk related to the euro, British pound, Canadian dollar, Mexican peso and Chinese yuan. A strengthening of the U.S. dollar relative to the currencies of the foreign countries in which we operate can have an impact on our operating results. As of September 30, 2019, a 10 percent change in average exchange rates would not have a material impact on our results of operations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our Chief Executive Officer, Nikhil M. Varty, and Senior Vice President and Chief Financial Officer, Anthony D. DiLucente, 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. Varty and DiLucente have concluded that both the design and operation of our disclosure controls and procedures were effective as of September 30, 2019.

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 September 30, 2019 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 December 16, 2016, the U.S. Virgin Islands Department of Justice filed a civil complaint in the Superior Court of the Virgin Islands related to a fumigation incident in a matter styled Government of the United States Virgin Islands v. The ServiceMaster Company, LLC, The Terminix International Company Limited Partnership, and Terminix International USVI, LLC. The amount and extent of any potential penalties, fines sanctions, costs and damages that the federal or other governmental authorities may yet impose, investigation or other costs and reputational harm, as well as the impact of any additional civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands fumigation matter, which could be material, is not currently known, and any such further penalties, fines, sanctions, costs or damages would not be covered under our general liability insurance policies.

In addition to the matter 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, and which require compliance with the terms of the agreements. If one or more of our settlements are not finally approved and implemented, 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 6 to the condensed consolidated financial statement for more details.

ITEM 1A. RISK FACTORS

We discuss in our 2018 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 2018 Form 10-K. The materialization of any risks and uncertainties identified in Forward-Looking Statements contained in this report, together with those previously disclosed in the 2018 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 Condition and Results of Operations — Information Regarding Forward-Looking Statements” above.

‎

48

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

Issuer Purchases of Equity Securities

				Total number of	Maximum dollar value
				shares purchased as	of shares that may yet
				part of publicly	be purchased under
	Total number of	Average price		announced plans or	the plans or programs
Period	shares purchased	paid per share		programs	(in millions)(1)
July 1, 2019 through July 31, 2019	99,990	$	53.04	99,990	$	128
August 1, 2019 through August 31, 2019	99,990		56.02	99,990		123
September 1, 2019 through September 30, 2019	90,900		56.27	90,900		118
Total	290,880	$	55.07	290,880	$	118

___________________________________

(1)On February 23, 2016, our board of directors authorized a three-year share repurchase program (that expired February 23, 2019), under which we were authorized to repurchase up to $300 million of outstanding shares of our common stock. Of the total amount authorized, $155 million was remaining on the date the program expired. On February 19, 2019, our board of directors approved a three-year extension of the share repurchase plan allowing for an aggregate of $150 million of repurchases through February 19, 2022.

49

ITEM 6. EXHIBITS

Exhibit ‎Number	Description
10.1	Schedule of Signatories to a Director Indemnification Agreement, incorporated by reference to Exhibit 10.2 in the quarterly report on Form 10-Q for the quarter ended June 30, 2019.
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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

___________________________________

# Denotes management compensatory plans, contracts or arrangements.

* Filed herewith. 

50

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: November 6, 2019

SERVICEMASTER GLOBAL HOLDINGS, INC.
(Registrant)
By:	/s/ Anthony D. DiLucente
	Anthony D. DiLucente
	Senior Vice President and Chief Financial Officer (Principal Financial Officer)

51

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Nikhil M. Varty, 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: November  6, 2019
	/s/ Nikhil M. Varty
	Nikhil M. Varty
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Anthony D. DiLucente, 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:November  6, 2019
	/s/ Anthony D. DiLucente
	Anthony D. DiLucente
	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, Nikhil M. Varty, the Chief Executive Officer of ServiceMaster Global Holdings,Inc., certify that (i) the Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, 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/ Nikhil M. Varty
	Nikhil M. Varty
	November  6, 2019

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, Anthony D. DiLucente, 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 September 30, 2019, 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/ Anthony D. DiLucente
	Anthony D. DiLucente
	November  6, 2019

XML

Long-Term Debt (Summary Of Proceeds And Use Related To Debt-For-Equity Exchange) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Debt Instrument [Line Items]
Proceeds from the short-term credit facility			$ 600
Proceeds from the Frontdoor common shares retained, net of $16 million of fees paid			486
Total proceeds			1,086
Repayment of the term loan facility, including loss on extinguishment of debt of $4 million			(472)
Debt-for-equity exchange using net proceeds from the Frontdoor common shares retained			(486)
Repurchase of 2027 and 2038 notes, including loss on extinguishment of debt of $2 million			(12)
Interest and other payments			(1)
Use of cash to retire short-term credit facility			(114)
Total uses			(1,086)
Fee paid			16
Loss on extinguishment of debt		$ (10)	(6)	$ (10)
Loans Payable [Member] | Notes 7.45%, And 7.25% Collectively [Member]
Debt Instrument [Line Items]
Loss on extinguishment of debt	$ (2)		(2)
Secured Debt [Member] | Senior Secured Term Loan Facility Maturing In 2023 [Member]
Debt Instrument [Line Items]
Loss on extinguishment of debt			$ (4)

XML

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	Sep. 30, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Amortized cost of securities	$ 17	$ 19
Gross Realized and Unrealized Gains	2	1
Fair value of securities	19	21
Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized cost of debt securities	4	4
Fair value of debt securities	4	4
Equity Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized cost of equity securities	13	15
Gross Realized and Unrealized Gains	2	1
Fair value of equity securities	$ 14	$ 16

XML

Comprehensive Income (Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income taxes	$ (9)			$ (7)			$ (39)	$ (32)
Net Income	25	$ 59	$ 70	71	$ 96	$ 40	154	207
Unrealized Gains (Losses) on Derivatives [Member] | Amount Reclassified from Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net losses on derivatives	1			3			4	2
Provision for income taxes				(1)				(1)
Net Income	1			2			3	1
Unrealized Gains (Losses) on Derivatives [Member] | Amount Reclassified from Accumulated Other Comprehensive Income [Member] | Fuel Swap Contracts [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gains (losses) on derivatives:				1				$ 3
Unrealized Gains (Losses) on Derivatives [Member] | Amount Reclassified from Accumulated Other Comprehensive Income [Member] | Interest Rate Swap Contracts [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gains (losses) on derivatives:	$ 1			$ 1			$ 4

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Significant Accounting Policies (Narrative) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Accounting Standards Update 2018-15 [Member]
Capitalization of certain development costs	$ 9

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Revenues (Deferred Revenue By Segment) (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Segment Reporting Information [Line Items]
Deferred revenue	$ 105	$ 101	$ 104	$ 101
Terminix [Member]
Segment Reporting Information [Line Items]
Deferred revenue	96	91
ServiceMaster Brands [Member]
Segment Reporting Information [Line Items]
Deferred revenue	9	11
ServiceMaster Brands [Member] | Royalty Arrangement [Member]
Segment Reporting Information [Line Items]
Deferred revenue	$ 6	$ 7

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Revenues (Tables)

9 Months Ended

Sep. 30, 2019

Revenues[Abstract]

Disaggregation of Revenue

	Terminix				ServiceMaster Brands				Corporate and Other Operations				Total
	Three months ended				Three months ended				Three months ended				Three months ended
	September 30,				September 30,				September 30,				September 30,
(In millions)		2019		2018		2019		2018		2019		2018		2019		2018
Major service line
Residential Pest Control	$	189	$	178	$	—	$	—	$	—	$	—	$	189	$	178
Commercial Pest Control		105		93		—		—		—		—		105		93
Termite and Home Services		133		129		—		—		—		—		133		129
Royalty Fees		—		—		32		31		—		—		32		31
Commercial Cleaning and other National Accounts		—		—		18		17		—		—		18		17
Sales of Products and Other		24		22		13		12		—		—		37		34
Fumigation		11		14		—		—		—		—		11		14
European Pest Control		—		—		—		—		4		—		4		—
Total	$	461	$	436	$	63	$	60	$	4	$	—	$	528	$	496

‎

	Terminix				ServiceMaster Brands				Corporate and Other Operations				Total
	Nine months ended				Nine months ended				Nine months ended				Nine months ended
	September 30,				September 30,				September 30,				September 30,
(In millions)		2019		2018		2019		2018		2019		2018		2019		2018
Major service line
Residential Pest Control	$	535	$	484	$	—	$	—	$	—	$	—	$	535	$	484
Commercial Pest Control		293		243		—		—		—		—		293		243
Termite and Home Services		450		432		—		—		—		—		450		432
Royalty Fees		—		—		101		99		—		—		101		99
Commercial Cleaning and other National Accounts		—		—		54		48		—		—		54		48
Sales of Products and Other		64		61		36		36		—		—		100		97
Fumigation		33		40		—		—		—		—		33		40
European Pest Control		—		—		—		—		4		—		4		—
Corporate		—		—		—		—		1		1		1		1
Total	$	1,375	$	1,259	$	191	$	183	$	4	$	1	$	1,570	$	1,443

Deferred Revenue By Segment

	As of		As of
(In millions)	September 30, 2019		December 31, 2018
Terminix	$	96	$	91
ServiceMaster Brands(1)		9		11
Total	$	105	$	101

___________________________________

(1)Includes approximately $6 million and $7 million of ServiceMaster Brands Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of September 30, 2019 and December 31, 2018, respectively.

Movement In Deferred Revenue

(In millions)	Deferred revenue
Balance, December 31, 2018	$	101
Deferral of revenue		106
Recognition of deferred revenue		(102)
Balance, September 30, 2019	$	105
Balance, January 1, 2018	$	101
Deferral of revenue		114
Recognition of deferred revenue		(111)
Balance, September 30, 2018	$	104

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 17. Fair Value Measurements

The period-end carrying amounts of cash and cash equivalents, receivables, restricted cash, accounts payable and accrued liabilities approximate fair value because of the short maturity of these instruments. The period-end carrying amounts of long-term notes receivable approximate fair value as the effective interest rates for these instruments are comparable to period-end market rates. The period-end carrying amounts of short- and long-term marketable securities also approximate fair value, with unrealized gains and losses reported in interest and net investment income in the condensed consolidated statements of operations and comprehensive income. The carrying amount of total debt was $1,454 million and $1,776 million, and the estimated fair value was $1,553 million and $1,791 million as of September 30, 2019 and December 31, 2018, respectively. The fair value of our debt is estimated based on available market prices for the same or similar instruments which are considered significant other observable inputs (Level 2) within the fair value hierarchy. The fair values presented reflect the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value estimates presented in this report are based on information available to us as of September 30, 2019 and December 31, 2018.

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

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

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

We have not changed our valuation techniques for measuring the fair value of any financial assets and liabilities during the year. Transfers between levels, if any, are recognized at the end of the reporting period. There were no significant transfers between levels during each of the nine month periods ended September 30, 2019 and 2018.

‎

The carrying amount and estimated fair value of our financial instruments that are recorded at fair value on a recurring basis for the periods presented are as follows:

				Estimated Fair Value Measurements
				Quoted		Significant
				Prices In		Other		Significant
				Active		Observable		Unobservable
	Statement of Financial	Carrying		Markets		Inputs		Inputs
(In millions)	Position Location	Value		(Level 1)		(Level 2)		(Level 3)
As of September 30, 2019:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	13	$	13	$	—	$	—
Investments in marketable securities	Long-term marketable securities		6		6		—		—
Total financial assets		$	19	$	19	$	—	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	1	$	—	$	—	$	1
Interest rate swap contract	Other accrued liabilities		1		—		1		—
Total financial liabilities		$	2	$	—	$	1	$	1
As of December 31, 2018:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	13	$	13	$	—	$	—
Investment in Frontdoor	Investment in frontdoor, inc.		445		—		445		—
Investments in marketable securities	Long-term marketable securities		8		8		—		—
Interest rate swap contract	Other assets		30		—		30		—
Total financial assets		$	496	$	21	$	475	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	4	$	—	$	—	$	4
Total financial liabilities		$	4	$	—	$	—	$	4

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, 2018	$	(4)
Total gains (losses) (realized and unrealized)
Included in earnings		—	Cost of services rendered and products sold
Included in other comprehensive income		2
Settlements		—
Balance as of September 30, 2019	$	(1)
Balance as of December 31, 2017	$	3
Total gains (losses) (realized and unrealized)
Included in earnings		3	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		(3)
Balance as of September 30, 2018	$	4

The following tables present information relating to the significant unobservable inputs of our Level 3 financial instruments:

	Fair Value		Valuation			Weighted
	(in millions)		Technique	Unobservable Input	Range	Average
As of September 30, 2019:
Fuel swap contracts	$	(1)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$2.24 - $2.60	$	2.44
As of December 31, 2018:
Fuel swap contracts	$	(4)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$2.09 - $2.43	$	2.26

___________________________________

(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.

We use derivative financial instruments to manage risks associated with changes in fuel prices and interest rates. We do not hold or issue derivative financial instruments for trading or speculative purposes. In designating our derivative financial instruments as hedging instruments under accounting standards for derivative instruments, we formally document the relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for the use of the hedging instrument. This documentation includes linking the derivatives to forecasted transactions. We assess at the time a derivative contract is entered into, and at least quarterly thereafter, whether the derivative item is effective in offsetting the projected changes in cash flows of the associated forecasted transactions. All of our designated hedging instruments are classified as cash flow hedges.

We have historically hedged a significant portion of our annual fuel consumption. We have also historically hedged the interest payments on a portion of our variable rate debt through the use of interest rate swap agreements. All of our fuel swap contracts and interest rate swap contracts are classified as cash flow hedges, and, as such, the hedging instruments are recorded on the 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. Cash flows related to fuel and interest rate derivatives are classified as operating activities in the condensed consolidated statements of cash flows.

As of September 30, 2019, we had fuel swap contracts to pay fixed prices for fuel with an aggregate notional amount of $30 million, maturing through 2020. Under the terms of our fuel swap contracts, we are required to post collateral in the event that the fair value of the contracts exceeds a certain agreed upon liability level and in other circumstances required by the counterparty. As of September 30, 2019, we had posted $2 million in letters of credit as collateral under our fuel hedging program, which were issued under the Revolving Credit Facility.

The effective portion of the gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments is recorded in accumulated other comprehensive income. These amounts are reclassified into earnings in the same period or periods during which the hedged forecasted debt interest settlement or the fuel settlement affects earnings. See Note 9 to the condensed consolidated financial statements for the effective portion of the gain or loss on derivative instruments recorded in accumulated other comprehensive income and for the amounts reclassified out of accumulated other comprehensive income and into earnings. The amount expected to be reclassified into earnings during the next 12 months includes unrealized gains and losses related to open fuel hedges and interest rate swaps. Specifically, as the underlying forecasted transactions occur during the next 12 months, the hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings is a gain of $2 million, net of tax, as of September 30, 2019. 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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Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements of Operations and Comprehensive Income [Abstract]
Revenue	$ 528	$ 496	$ 1,570	$ 1,443
Cost of services rendered and products sold	305	278	869	776
Selling and administrative expenses	149	146	436	417
Amortization expense	7	6	19	14
Acquisition-related costs	8	1	12	2
Fumigation related matters		1		1
Restructuring and other charges	5	1	15	13
Realized (gain) on investment in frontdoor, inc.			(40)
Interest expense	19	33	64	107
Interest and net investment income	(1)	(3)	(5)	(4)
Loss on extinguishment of debt		10	6	10
Income from Continuing Operations before Income Taxes	35	25	193	107
Provision for income taxes	9	7	39	32
Income from Continuing Operations	26	18	155	74
Gain (loss) from discontinued operations, net of income taxes		53	(1)	133
Net Income	25	71	154	207
Total Comprehensive Income	$ 18	$ 74	$ 141	$ 224
Weighted-average common shares outstanding - Basic	135.8	135.6	135.9	135.4
Weighted-average common shares outstanding - Diluted	136.5	136.0	136.5	135.8
Basic Earnings Per Share:
Income from Continuing Operations (in dollars per share)	$ 0.19	$ 0.13	$ 1.14	$ 0.55
Gain (loss) from discontinued operations, net of income taxes (in dollars per share)		0.39		0.98
Net Income (in dollars per share)	0.19	0.52	1.13	1.53
Diluted Earnings Per Share:
Income from Continuing Operations (in dollars per share)	0.19	0.13	1.13	0.55
Gain (loss) from discontinued operations, net of income taxes (in dollars per share)		0.39		0.98
Net Income (in dollars per share)	$ 0.19	$ 0.52	$ 1.13	$ 1.52

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements of Cash Flows [Abstract]
Cash and Cash Equivalents and Restricted Cash at Beginning of Period	$ 313	$ 563
Cash Flows from Operating Activities from Continuing Operations:
Net Income	154	207
Adjustments to reconcile net income to net cash provided from operating activities:
Loss (gain) from discontinued operations, net of income taxes	1	(133)
Depreciation expense	56	54
Amortization expense	19	14
Amortization of debt issuance costs	2	4
Amortization of lease right-of-use assets	14
Fumigation related matters		1
Payments on fumigation related matters	(2)	(1)
Realized (gain) on investment in frontdoor, inc.	(40)
Loss on extinguishment of debt	6	10
Deferred income tax provision	12	21
Stock-based compensation expense	12	10
Gain on sale of marketable securities	(1)	(1)
Restructuring and other charges	15	13
Payments for restructuring and other charges	(15)	(11)
Other	(25)	(9)
Change in working capital, net of acquisitions:
Receivables	(14)	(6)
Inventories and other current assets	(11)	(6)
Accounts payable	21	13
Deferred revenue	1	2
Accrued liabilities	(3)	3
Accrued interest payable	7	4
Current income taxes	3	16
Net Cash Provided from Operating Activities from Continuing Operations	213	204
Cash Flows from Investing Activities from Continuing Operations:
Property additions	(22)	(42)
Government grant fundings for property additions		7
Sale of equipment and other assets	1	1
Business acquisitions, net of cash acquired	(345)	(160)
Sales and maturities of available-for-sale securities	3
Origination of notes receivable	(84)	(79)
Collections on notes receivable	95	74
Other investments		1
Net Cash Used for Investing Activities from Continuing Operations	(352)	(197)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt	720	1,000
Payments of debt	(640)	(1,102)
Repurchase of common stock	(33)
Issuance of common stock	10	6
Net Cash Provided from (Used for) Financing Activities from Continuing Operations	56	(96)
Cash Flows from Discontinued Operations:
Cash (used for) provided from operating activities	(2)	160
Cash used for investing activities		(1)
Cash used for financing activities		(24)
Net Cash (Used for) Provided from Discontinued Operations	(2)	136
Cash (Decrease) Increase During the Period	(85)	47
Cash and Cash Equivalents and Restricted Cash at End of Period	$ 228	$ 610

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Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2019

Comprehensive Income [Abstract]

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

			Unrealized
	Unrealized		Gains (Losses)
	Gains		on Available		Foreign
	(Losses) on		-for-Sale		Currency
(In millions)	Derivatives		Securities		Translation		Total
Balance as of December 31, 2018	$	20	$	—	$	(15)	$	5
Other comprehensive income before reclassifications:
Pre-tax amount		(14)		—		(2)		(16)
Tax provision		7		—		—		7
After-tax amount		(7)		—		(2)		(9)
Amounts reclassified from accumulated other comprehensive income(1)		(3)		—		—		(3)
Net current period other comprehensive income		(10)		—		(2)		(13)
Balance as of September 30, 2019	$	9	$	—	$	(18)	$	(8)
Balance as of December 31, 2017	$	16	$	2	$	(12)	$	5
Reclassification of unrealized gain/loss on equity securities		—		(2)		—		(2)
Reclassification of tax rate change		3		1		—		4
As revised, January 1, 2018		19		—		(12)		7
Other comprehensive income before reclassifications:
Pre-tax amount		25		—		(1)		24
Tax benefit		(7)		—		—		(7)
After-tax amount		18		—		(1)		17
Amounts reclassified from accumulated other comprehensive income(1)		(1)		—		—		(1)
Net current period other comprehensive income		17		—		(1)		16
Balance as of September 30, 2018	$	36	$	—	$	(13)	$	23

___________________________________

(1)Amounts are net of tax. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated.

Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income (Loss)

	Amounts Reclassified from Accumulated
	Other Comprehensive Income
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Gains (losses) on derivatives:
Fuel swap contracts	$	—	$	1	$	—	$	3
Interest rate swap contracts		1		1		4		—
Net losses on derivatives		1		3		4		2
Impact of income taxes		—		(1)		—		(1)
Total reclassifications for the period	$	1	$	2	$	3	$	1

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components Of Lease Expense

	Three months ended		Nine months ended
(In millions)	September 30, 2019		September 30, 2019
Finance lease cost
Depreciation of finance lease ROU assets	$	9	$	25
Interest on finance lease liabilities		1		4
Operating lease cost		7		20
Variable lease cost		1		3
Sublease income		(1)		(2)
Total lease cost	$	17	$	49

Supplemental Cash Flow Information And Other Information For Leases

	Nine months ended
(In millions)	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	18
Operating cash flows for finance leases		4
Financing cash flows for finance leases		25
ROU assets obtained in exchange for lease obligations:
Operating leases		8
Finance leases		39
Weighted Average Remaining Lease Term (in years):
Operating leases		10.70
Finance leases		3.44
Weighted Average Discount Rate:

Operating leases	5.54	%
Finance leases	3.84	%

Future Minimum Lease Payments Under Non-Cancellable Leases

(In millions)	Operating Leases		Finance Leases
Year ended December 31,
2019 (excluding the nine months ended September 30, 2019)	$	6	$	10
2020		26		36
2021		21		28
2022		19		18
2023		15		11
Thereafter		95		4
Total future minimum lease payments		181		107
Less imputed interest		(50)		(8)
Total	$	131	$	100

Future Minimum Lease Payments Due Under Capital And Operating Leases

(In millions)	Operating Leases		Capital Leases
Year ended December 31,
Less than 1 Yr	$	17	$	31
1 - 3 Yrs		36		46
3 - 5 Yrs		25		14
More than 5 Yrs		67		1
Total future minimum lease payments	$	146	$	92

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Note 13. Leases

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, Current portion of lease liability and Long-term lease liability on the condensed consolidated statements of financial position. Finance leases are included in Property and equipment, net; Current portion of long-term debt and Long-term debt on the condensed consolidated statements of financial position.

We lease a variety of facilities, principally in the United States, for branch and service center operations and for office, storage, customer care centers and data processing space. These leases are classified as operating leases. Our facilities leases have remaining lease terms of less than one year to 23 years, some of which may include options to extend the leases for up to 15 years, and some of which may include options to terminate the leases within one year. These lease agreements contain lease and non-lease components. Non-lease components include items such as common area maintenance. For facility leases, we account for the lease and non-lease components as a single lease component.

Additionally, our Fleet Agreement allows us to obtain fleet vehicles through a leasing program. These leases are classified as finance leases. Our vehicle leases have remaining lease terms of less than one year to eight years. For vehicle leases, we account for the lease and non-lease components separately.

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments, including fixed non-lease components, over the lease term at commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments and fixed non-lease components is recognized on a straight-line basis over the lease term.

As of September 30, 2019, assets recorded under finance leases were $219 million and accumulated depreciation associated with finance leases was $121 million.

The components of lease expense were as follows:

	Three months ended		Nine months ended
(In millions)	September 30, 2019		September 30, 2019
Finance lease cost
Depreciation of finance lease ROU assets	$	9	$	25
Interest on finance lease liabilities		1		4
Operating lease cost		7		20
Variable lease cost		1		3
Sublease income		(1)		(2)
Total lease cost	$	17	$	49

Supplemental cash flow information and other information for leases was as follows:

	Nine months ended
(In millions)	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	18
Operating cash flows for finance leases		4
Financing cash flows for finance leases		25
ROU assets obtained in exchange for lease obligations:
Operating leases		8
Finance leases		39
Weighted Average Remaining Lease Term (in years):
Operating leases		10.70
Finance leases		3.44
Weighted Average Discount Rate:

Operating leases	5.54	%
Finance leases	3.84	%

As of September 30, 2019, there was $35 million and $65 million of finance leases included within Current portion of long-term debt and Long-term debt, respectively, on the condensed consolidated statements of financial position. Future minimum lease payments under non-cancellable leases as of September 30, 2019 were as follows:

(In millions)	Operating Leases		Finance Leases
Year ended December 31,
2019 (excluding the nine months ended September 30, 2019)	$	6	$	10
2020		26		36
2021		21		28
2022		19		18
2023		15		11
Thereafter		95		4
Total future minimum lease payments		181		107
Less imputed interest		(50)		(8)
Total	$	131	$	100

Following is a summary of the future minimum lease payments due under capital and operating leases with terms of more than one year at December 31, 2018:

(In millions)	Operating Leases		Capital Leases
Year ended December 31,
Less than 1 Yr	$	17	$	31
1 - 3 Yrs		36		46
3 - 5 Yrs		25		14
More than 5 Yrs		67		1
Total future minimum lease payments	$	146	$	92

As of September 30, 2019, we have additional vehicle finance leases that have not yet commenced of $6 million. These leases are scheduled to commence in 2019 with lease terms generally of five years.

Practical Expedients

We adopted the new standard using the modified retrospective approach and applied the transition approach as of the beginning of the period of adoption. We adopted the package of practical expedients and therefore did not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases. We elected to make the accounting policy election for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term. We elected to not separate lease and non-lease components for real estate operating leases. We did not elect the hindsight practical expedient.

Impact of ASC 842 on the Condensed Consolidated Financial Statements

Changes to the condensed consolidated statements of financial position include the recognition of an operating lease right-of-use asset, a current portion of lease liability and long-term lease liability. Changes to the condensed consolidated statements of cash flows include the presentation of ROU asset amortization. The adoption of ASC 842 did not have a significant impact on the Company’s condensed consolidated statements of operations and comprehensive income.

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Comprehensive Income

9 Months Ended

Sep. 30, 2019

Comprehensive Income [Abstract]

Comprehensive Income

‎

Note 9. Comprehensive Income

Comprehensive income, which primarily includes net income, unrealized gain (loss) on derivative instruments and the effect of foreign currency translation, is included in the condensed consolidated statements of operations and comprehensive income. Unrealized gains on marketable securities of $3 million ($2 million, net of tax) were included in other comprehensive income prior to our adoption of ASU 2016-01 on January 1, 2018. Subsequent to the adoption, these unrealized gains have been reclassified to retained earnings. Additionally, stranded tax effects of approximately $4 million resulting from the corporate income tax rate change in U.S. Tax Reform were reclassified upon our adoption of ASU 2018-02 on January 1, 2018. The income tax effects remaining in Accumulated other comprehensive income will be released into earnings as the related pre-tax amounts are reclassified to earnings.

During the nine months ended September 30, 2019, we terminated $479 million of our interest rate swap and received $12 million from the counterparty. The fair value of the terminated portion of the interest rate swap of $12 million was recorded within accumulated other comprehensive income on the condensed consolidated statements of financial position and is being amortized into interest expense over the original term of the agreement. The remaining unamortized balance at September 30, 2019 is $10 million.

The following tables summarize the activity in accumulated other comprehensive income, net of the related tax effects.

			Unrealized
	Unrealized		Gains (Losses)
	Gains		on Available		Foreign
	(Losses) on		-for-Sale		Currency
(In millions)	Derivatives		Securities		Translation		Total
Balance as of December 31, 2018	$	20	$	—	$	(15)	$	5
Other comprehensive income before reclassifications:
Pre-tax amount		(14)		—		(2)		(16)
Tax provision		7		—		—		7
After-tax amount		(7)		—		(2)		(9)
Amounts reclassified from accumulated other comprehensive income(1)		(3)		—		—		(3)
Net current period other comprehensive income		(10)		—		(2)		(13)
Balance as of September 30, 2019	$	9	$	—	$	(18)	$	(8)
Balance as of December 31, 2017	$	16	$	2	$	(12)	$	5
Reclassification of unrealized gain/loss on equity securities		—		(2)		—		(2)
Reclassification of tax rate change		3		1		—		4
As revised, January 1, 2018		19		—		(12)		7
Other comprehensive income before reclassifications:
Pre-tax amount		25		—		(1)		24
Tax benefit		(7)		—		—		(7)
After-tax amount		18		—		(1)		17
Amounts reclassified from accumulated other comprehensive income(1)		(1)		—		—		(1)
Net current period other comprehensive income		17		—		(1)		16
Balance as of September 30, 2018	$	36	$	—	$	(13)	$	23

___________________________________

(1)Amounts are net of tax. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated.

	Amounts Reclassified from Accumulated
	Other Comprehensive Income
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Gains (losses) on derivatives:
Fuel swap contracts	$	—	$	1	$	—	$	3
Interest rate swap contracts		1		1		4		—
Net losses on derivatives		1		3		4		2
Impact of income taxes		—		(1)		—		(1)
Total reclassifications for the period	$	1	$	2	$	3	$	1

 

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Discontinued Operations

9 Months Ended

Sep. 30, 2019

Discontinued Operations [Abstract]

Discontinued Operations

Note 5. Discontinued Operations

American Home Shield Spin-off

On October 1, 2018, we completed the spin-off of our American Home Shield business. The separation was effectuated through a Distribution to our stockholders of approximately 80.2% of the outstanding shares of common stock of Frontdoor. The Distribution was made to our stockholders of record as of the close of business on September 14, 2018, and such stockholders received one share of Frontdoor common stock for every two shares of ServiceMaster common stock held as of the close of business on the Record Date.

In March 2019, we exchanged all of the 19.8% of the outstanding shares of common stock of Frontdoor we retained for certain of our outstanding indebtedness, which obligations were subsequently cancelled and discharged upon delivery to us. See Note 12 for further discussion regarding this transaction.

The American Home Shield Segment is reported in this Quarterly Report on Form 10-Q in discontinued operations.

In connection with the American Home Shield spin-off, the Company and Frontdoor entered into (1) a separation and distribution agreement containing key provisions relating to the separation of Frontdoor effectuated through the Distribution, as well as insurance coverage, non-competition, indemnification and other matters, (2) an employee matters agreement allocating liabilities and responsibilities relating to employee benefit plans and programs and other related matters and (3) a tax matters agreement governing the respective rights, responsibilities and obligations of the parties thereto with respect to taxes, including allocating liabilities for income taxes attributable to Frontdoor and its subsidiaries generally to the Company for tax periods (or portions thereof) ending on or before October 1, 2018, and generally to Frontdoor for tax periods (or portions thereof) beginning after that date.

The charges for the transition services are designed to allow us to fully recover the direct costs of providing the services, plus specified margins and any out-of-pocket costs and expenses. The services provided under the transition services agreement will terminate at various specified times, and in no event later than December 31, 2019. Frontdoor may terminate the transition services agreement (or certain services under the transition services agreement) for convenience upon 90 days written notice, in which case Frontdoor will be required to reimburse us for early termination costs. Under this transition services agreement, in the three and nine months ended September 30, 2019, we recorded approximately $1 million and $2 million, respectively, of fees from Frontdoor, which are included, net of costs incurred, in Selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income. Less than $1 million and $1 million of payments were received during the three and nine months ended September 30, 2019, respectively.

The Company and Frontdoor also entered into a sublease agreement for the space Frontdoor retained in our Global Service Center and Memphis customer care center after the spin-off. We recognized approximately $1 million and $2 million, respectively of rental income in the three and nine months ended September 30, 2019, respectively, and less than $1 million and $4 million of other cost reimbursements related to these sublease agreements during the three and nine months ended September 30, 2019, respectively, which were recorded as a reduction of Selling and administrative expenses on the condensed consolidated statements of operations and comprehensive income. Payments received under the sublease agreements for rental income and other cost reimbursements during the three and nine months ended September 30, 2019 totaled approximately $1 million and $6 million, respectively.

‎

Financial Information for Discontinued Operations

Gain from discontinued operations, net of income taxes, for all periods presented includes the operating results of Frontdoor and previously sold businesses.

	Three Months Ended		Nine Months Ended
(In millions)	September 30, 2018		September 30, 2018
Revenue	$	377	$	979
Cost of services rendered and products sold		203		534
Operating expenses(1)		100		269
Interest and net investment income		—		(1)
Income before income taxes		75		177
Provision for income taxes		22		45
Gain from discontinued operations, net of income taxes	$	53	$	133

___________________________________

(1)Includes spin-off transaction costs incurred of $8 million and $23 million for the three and nine months ended September 30, 2018.

The following selected financial information of Frontdoor is included in the statements of cash flows as cash flows from discontinued operations:

	Nine Months Ended
(In millions)	September 30, 2018
Depreciation	$	8
Amortization		6
Capital expenditures		(18)

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Long-Term Debt (Schedule of Interest Rate Swap Agreements) (Details) - Interest Rate Swap Contracts [Member] - USD ($) $ in Millions		3 Months Ended				9 Months Ended
	Mar. 27, 2019	Jun. 30, 2019		Mar. 31, 2019		Sep. 30, 2019	Dec. 31, 2018	[1]	Nov. 07, 2016
Derivative [Line Items]
Balance at the beginning of the period		$ 209		$ 650		$ 650
Terminated	$ (479)	(38)		(441)		(479)
Balance at the end of the period		$ 171		$ 209		$ 171
Weighted Average Fixed Rate (as a percent)		1.493%	[1]	1.493%	[1]	1.493%	1.493%		1.493%

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

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Income Taxes [Abstract]
Effective Income Tax Rate Reconciliation, Percent	26.50%	28.10%	20.00%	30.30%
Unrecognized tax benefits that would impact effective tax rate if recognized	$ 15		$ 15		$ 15
Unrecognized tax benefits, reasonably possible decrease within the next 12 months	$ 2		$ 2

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Letters of credit posted as collateral under fuel hedging program	$ 2
Hedging gains and losses in accumulated other comprehensive income expected to be recognized in earnings, net of tax	2
Carrying Value [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Long Term Debt And Capital Lease Obligation	1,454	$ 1,776
Estimated Fair Value [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Fair value of total debt	1,553	$ 1,791
Fuel Swap Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Aggregate notional amount	$ 30

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Leases (Future Minimum Lease Payments Under Non-Cancellable Leases) (Details) $ in Millions	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating Leases, 2019 (excluding the nine months ended September 30, 2019)	$ 6
Operating Leases, 2020	26
Operating Leases, 2021	21
Operating Leases, 2022	19
Operating Leases, 2023	15
Operating Leases, Thereafter	95
Operating Leases, Total future minimum lease payments	181
Operating Leases, Less imputed interest	(50)
Operating Leases, Total	131
Finance Leases, 2019 (excluding the nine months ended September 30, 2019)	10
Finance Leases, 2020	36
Finance Leases, 2021	28
Finance Leases, 2022	18
Finance Leases, 2023	11
Finance Leases, Thereafter	4
Finance Leases, Total future minimum lease payments	107
Finance Leases, Less imputed interest	(8)
Finance Leases, Total	$ 100

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Acquisitions (Summary Of Pro Forma Consolidated Financial Information) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Acquisitions [Abstract]
Consolidated revenue	$ 537	$ 508	$ 1,605	$ 1,480
Consolidated net income	$ 29	$ 71	$ 160	$ 205
Basic earnings per share	$ 0.22	$ 0.53	$ 1.18	$ 1.51
Diluted earnings per share	$ 0.21	$ 0.52	$ 1.17	$ 1.51

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income from continuing operations		$ 26	$ 18	$ 155	$ 74
Weighted-average common shares outstanding		135.8	135.6	135.9	135.4
Effect of dilutive securities:
Weighted-average common shares outstanding-assuming dilution		136.5	136.0	136.5	135.8
Basic earnings per share from continuing operations (in dollars per share)		$ 0.19	$ 0.13	$ 1.14	$ 0.55
Diluted earnings per share from continuing operations (in dollars per share)		$ 0.19	$ 0.13	$ 1.13	$ 0.55
RSUs [Member]
Effect of dilutive securities:
Dilutive securities		0.3	0.2	0.3	0.2
Stock Options [Member]
Effect of dilutive securities:
Dilutive securities	[1]	0.3	0.2	0.3	0.2
Antidilutive securities excluded from computation of diluted earnings per share (in shares)			0.5	0.5	0.4

[1] Options to purchase 0.5 million shares for the three months ended September 30, 2018, and 0.5 million and 0.4 million shares for the nine months ended September 30, 2019 and 2018, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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Goodwill and Intangible Assets (Schedule Of Other Intangible Asset Balances For Continuing Operations) (Details) - USD ($) $ in Millions		Sep. 30, 2019	Dec. 31, 2018
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Gross		$ 2,249	$ 2,101
Accumulated Amortization		(531)	(513)
Net		1,718	1,588
Customer Relationships [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Gross		593	469
Accumulated Amortization		(418)	(406)
Net		176	64
Franchise Agreements [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Gross		88	88
Accumulated Amortization		(75)	(73)
Net		13	15
Other [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Gross		86	62
Accumulated Amortization		(39)	(35)
Net		47	27
Trade Names [Member]
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items]
Gross	[1]	1,482	1,482
Net	[1]	$ 1,482	$ 1,482

[1] Not subject to amortization.

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Discontinued Operations (Schedule Of Cash Flows Of Discontinued Operations) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2018 USD ($)
Discontinued Operations [Abstract]
Depreciation	$ 8
Amortization	6
Capital expenditures	$ (18)

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2019

Supplemental Cash Flow Information [Abstract]

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

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Cash paid for or (received from):
Interest expense(1)	$	55	$	95
Interest and dividend income		(2)		(1)
Income taxes, net of refunds		23		40

___________________________________

(1)For the nine months ended September 30, 2019, excludes $12 million received in connection with our partial terminations of the interest rate swap.

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2019

Acquisitions [Abstract]

Preliminary Purchase Price Allocation

Current assets(1)	$	19
Property and equipment		6
Goodwill(2)		152
Identifiable intangible assets(3)		94
Current liabilities(4)		(21)
Long-term liabilities(2)		(44)
Total purchase price	$	207

___________________________________

(1)Primarily trade receivables and cash.

(2)Includes $20 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets.

(3)Primarily customer lists.

(4)Primarily advanced collections from customers.

Summary Of Pro Forma Consolidated Financial Information

	(Unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Consolidated revenue	$	537	$	508	$	1,605	$	1,480
Consolidated net income	$	29	$	71	$	160	$	205
Basic earnings per share	$	0.22	$	0.53	$	1.18	$	1.51
Diluted earnings per share	$	0.21	$	0.52	$	1.17	$	1.51

Schedule Of Supplemental Cash Flow Information Regarding Acquisitions

Supplemental cash flow information regarding the acquisitions is as follows:

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Assets acquired	$	431	$	241
Liabilities assumed(1)		(72)		(27)
Net assets acquired	$	359	$	214
Net cash paid	$	345	$	160
Seller financed debt		11		42
Contingent earnout		4		12
Purchase price	$	359	$	214

___________________________________

(1)Includes $21 million and $11 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets for the nine months ended September 30, 2019 and 2018, respectively.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 8. Stock-Based Compensation

For each of the three months ended September 30, 2019 and 2018, we recognized stock-based compensation expense of $3 million ($2 million, net of tax) and $2 million ($2 million, net of tax), respectively. For the nine months ended September 30, 2019 and 2018, we recognized stock-based compensation expense of $12 million ($9 million, net of tax) and $10 million ($7 million, net of tax), respectively. These charges are recorded within Selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

As of September 30, 2019, there was $29 million of total unrecognized compensation costs related to non-vested stock options, restricted stock units (“RSUs”) and performance share units granted under the Amended and Restated ServiceMaster Global Holdings, Inc. 2014 Omnibus Incentive Plan (the “Omnibus Incentive Plan”). These remaining costs are expected to be recognized over a weighted-average period of 2.15 years.

On February 24, 2015, our board of directors approved and recommended for approval by our stockholders the ServiceMaster Global Holdings, Inc. Employee Stock Purchase Plan (“Employee Stock Purchase Plan”), which became effective for offering periods commencing July 1, 2015. The Employee Stock Purchase Plan was intended to qualify for the favorable tax treatment under Section 423 of the Code. Under the plan, eligible employees of the Company may purchase common stock, subject to IRS limits, during pre-specified offering periods at a discount established by the Company not to exceed 10 percent of the then current fair market value. On April 27, 2015, our stockholders approved the Employee Stock Purchase Plan with a maximum of one million shares of common stock authorized for sale under the plan. On November 3, 2015, we filed a registration statement on Form S-8 under the Securities Act to register the one million shares of common stock that may be issued under the Employee Stock Purchase Plan and, as a result, all shares of common stock acquired under the Employee Stock Purchase Plan will be freely tradable under the Securities Act, unless purchased by our affiliates. Our Compensation Committee amended the Employee Stock Purchase Plan in February 2019 to allow for more frequent purchase periods and to change the allowed 10 percent discount to a company match of 10 percent of employee contributions. The authorized number of shares remaining in the Employee Stock Purchase Plan was not changed from 843,584 and the expiration date of the Employee Stock Purchase Plan was not changed from April 27, 2025. As of September 30, 2019, there were 839,784 shares available for issuance under the Employee Stock Purchase Plan.

Stock Options

In February 2019, our board of directors approved an amended Employee Stock Option Agreement, whereby all options granted in 2019 and thereafter will generally vest in three equal annual installments (rather than four), have a term of eight years (rather than 10 years) and remain subject to an employee’s continued employment. The three year vesting period is the requisite service period over which compensation cost will be recognized on a straight-line basis for all grants. All options issued are accounted for as equity-classified awards.

On January 1, 2019, in connection with an acquisition, we granted 136,092 RSUs to an executive key to our urban markets strategy. All such RSUs cliff vest on the third anniversary of their grant and are subject to the executive’s continued employment.

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Restructuring And Other Charges

9 Months Ended

Sep. 30, 2019

Restructuring And Other Charges [Abstract]

Restructuring And Other Charges

Note 4. Restructuring and Other Charges

Restructuring Charges

We incurred restructuring charges of $3 million ($2 million, net of tax) and $1 million ($1 million, net of tax) in the three months ended September 30, 2019 and 2018, respectively. We incurred restructuring charges of $13 million ($10 million, net of tax) in each of the nine months ended September 30, 2019 and 2018. Restructuring charges were comprised of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Terminix(1)	$	1	$	—	$	4	$	2
ServiceMaster Brands(2)		—		—		2		1
Corporate and Other Operations(3)		1		—		6		3
Global Service Center relocation(4)		—		—		1		8
Total restructuring charges	$	3	$	1	$	13	$	13

___________________________________

(1)For the three and nine months ended September 30, 2019, these charges included $1 million and $4 million, respectively, of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018. For the nine months ended September 30, 2018, restructuring charges included $2 million of severance and other costs.

(2)For the nine months ended September 30, 2019, these charges included $2 million of severance costs, of which less than $1 million were unpaid as of September 30, 2019. For the nine months ended September 30, 2018, these charges included $1 million of severance and other costs.

(3)We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services to support operations. For the three and nine months ended September 30, 2019, these charges included $1 million and $5 million, respectively, of professional fees, accelerated depreciation and other costs to enhance capabilities and align corporate functions with those required to support our strategic needs after the American Home Shield spin-off. For the nine months ended September 30, 2019 and 2018, these charges included $1 million and $3 million of severance and other costs. Corporate restructuring costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018.

(4)For the nine months ended September 30, 2019 and 2018, these charges included lease termination and other charges of $1 million and $8 million, respectively, related to the relocation. Global Service Center relocation costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018.

The pretax charges discussed above are reported in Restructuring charges in the unaudited condensed consolidated statements of operations and comprehensive income.

A reconciliation of the beginning and ending balances of accrued restructuring charges, which are included in Accrued liabilities—Other on the unaudited condensed consolidated statements of financial position, is presented as follows:

	Accrued
	Restructuring
(In millions)	Charges
Balance as of December 31, 2018	$	7
Costs incurred		13
Costs paid or otherwise settled		(17)
Balance as of September 30, 2019	$	3
Balance as of December 31, 2017	$	6
Costs incurred		13
Costs paid or otherwise settled		(11)
Balance as of September 30, 2018	$	8

We expect substantially all of our accrued restructuring charges to be paid by December 31, 2019.

Other Charges

Other charges represent professional fees incurred that are not closely associated with our ongoing operations. Other charges were $2 million ($1 million, net of tax) for the three and nine months ended September 30, 2019. We incurred no such other charges for the three and nine months ended September 30, 2018.

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Long-Term Debt

9 Months Ended

Sep. 30, 2019

Long-Term Debt [Abstract]

Long-Term Debt

Note 12. Long-Term Debt

Long-term debt is summarized in the following table:

	As of		As of
	September 30,		December 31,
(In millions)	2019		2018
Senior secured term loan facility maturing in 2023(1)	$	170	$	637
Revolving credit facility maturing in 2021		120		—
5.125% notes maturing in 2024(2)		742		740
7.45% notes maturing in 2027(3)		166		172
7.25% notes maturing in 2038(3)		40		42
Vehicle finance leases(4)		100		90
Other(5)		116		94
Less current portion		(56)		(49)
Total long-term debt	$	1,398	$	1,727

__________________________________

(1)As of September 30, 2019 and December 31, 2018, presented net of $1 million and $5 million, respectively, in unamortized debt issuance costs. As of December 31, 2018, presented net of $1 million in unamortized original issue discount paid.

(2)As of September 30, 2019 and December 31, 2018, presented net of $8 million and $10 million, respectively, in unamortized debt issuance costs.

(3)As of September 30, 2019 and December 31, 2018, collectively presented net of $29 million and $33 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

(4)We have entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows us to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are finance 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.

(5)As of September 30, 2019 and December 31, 2018, includes approximately $105 million and $82 million, respectively, of future payments in connection with our acquisitions as further described in Note 14.

Borrowing under the Revolving Credit Facility

On September 5, 2019, we borrowed an aggregate principal amount of $120 million under our revolving credit facility to finance our acquisition of Nomor Holding AB.

Extinguishment of Debt and Repurchase of Notes

On March 12, 2019, we borrowed an aggregate principal amount of $600 million under a short-term credit facility to effectuate a debt-for-equity exchange of our Frontdoor retained shares. The proceeds of this short-term credit facility were used to repay $468 million aggregate principal amount of term loans outstanding under our senior secured term loan facility in March and April of 2019. Such prepayments resulted in a loss on extinguishment of debt of $4 million for the nine months ended September 30, 2019.

On March 27, 2019, we completed a non-cash debt-for-equity exchange in which we exchanged the 16.7 million retained shares of Frontdoor common stock (proceeds of $486 million, net), plus used $114 million of proceeds from the short-term credit facility, to extinguish $600 million of our indebtedness under the short-term credit facility. The sale of the Frontdoor common stock resulted in a realized gain of $40 million, which was recorded within Realized (gain) on investment in frontdoor, inc. on the condensed consolidated statements of operations and comprehensive income for the nine months ended September 30, 2019.

In March 2019, we purchased approximately $7 million in aggregate principal amount of our 7.45% notes maturing in 2027 at a price of 105.5% and $3 million in aggregate principal amount of our 7.25% notes maturing in 2038 at a price of 99.5% using available cash. The repurchased notes were delivered to the trustee for cancellation. In connection with these partial repurchases, we recorded a loss on extinguishment of debt of $2 million in the nine months ended September 30, 2019.

In April 2019, we purchased $1 million in aggregate principal amount of our 7.45% notes maturing in 2027 at a price of 105.5%.

The proceeds from and the use of proceeds in connection with the debt-for-equity exchange are as follows:

(in millions)
Proceeds from the short-term credit facility	$	600
Proceeds from the Frontdoor common shares retained, net of $16 million of fees paid		486
Total proceeds	$	1,086
Repayment of the term loan facility, including loss on extinguishment of debt of $4 million	$	(472)
Debt-for-equity exchange using net proceeds from the Frontdoor common shares retained		(486)
Repurchase of 2027 and 2038 notes, including loss on extinguishment of debt of $2 million		(12)
Interest and other payments		(1)
Use of cash to retire short-term credit facility		(114)
Total uses	$	(1,086)

In connection with the prepayments on our senior secured term loan facility, we terminated $479 million of our interest rate swap agreement, receiving $12 million in connection with the terminations. The fair value of the terminated portions of the agreement of $12 million is recorded within accumulated other comprehensive income on the condensed consolidated statements of financial position and will be amortized into interest expense over the original term of the agreement.

Interest Rate Swaps

On November 7, 2016, we entered into a seven year interest rate swap agreement effective November 8, 2016. The notional amount of the agreement was $650 million. Under the terms of the agreement, we will pay a fixed rate of interest of 1.493 percent on the $650 million notional amount, and we will receive a floating rate of interest (based on one-month LIBOR, subject to a floor of zero percent) on the notional amount. Therefore, during the term on the agreement, the effective interest rate on $650 million of the Term Loan Facility is fixed at a rate of 1.493 percent, plus the incremental borrowing margin of 2.50 percent.

The changes in our interest rate swap agreement, as well as the cumulative interest rate swap outstanding, are as follows:

	Notional
(In millions)	Amount		Fixed Rate(1)
Interest rate swap agreement in effect as of December 31, 2018	$	650	1.493	%
Terminated		(441)
Interest rate swap agreement in effect as of March 31, 2019		209	1.493	%
Terminated		(38)
Interest rate swap agreement in effect as of June 30, 2019 and September 30, 2019	$	171	1.493	%

___________________________________

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

In accordance with accounting standards for derivative instruments and hedging activities, and as further described in Note 17, our interest rate swap agreement is classified as a cash flow hedge, and, as such, is recorded on the condensed consolidated statements of financial position as either an asset or liability at fair value, with changes in fair value attributable to the hedged risks recorded in accumulated other comprehensive income.

On October 15, 2019, we terminated the remaining $171 million of our interest rate swap in advance of our debt refinancing.

Refinancing of Indebtedness

On November 5, 2019, the Company closed on an amended $600 million Term Loan B due 2026, as well as a $400 million revolving credit agreement due 2024. The proceeds of the transaction were used to repay approximately $171 million of debt outstanding under its previous Term Loan B due 2023, $120 million outstanding under its previous revolving credit agreement due 2021, as well as $150 million from a recent short-term borrowing entered on October 4, 2019. Concurrently with the refinancing, we entered into a seven year interest rate swap agreement with a notional amount of $550 million. During the term on the agreement, the effective interest rate on $550 million of the new Term Loan B is fixed at a rate of 1.615 percent, plus the incremental borrowing margin of 1.75 percent.

2018

In connection with the spin-off of the American Home Shield Segment, the Company borrowed an aggregate principal amount of $1 billion under a short-term credit facility on August 1, 2018, the proceeds of which were used to prepay $982 million aggregate principal amount of term loans outstanding under the Company’s senior secured term loan facility. Such prepayment resulted in a loss on extinguishment of debt of $10 million for the three and nine months ended September 30, 2018. On August 16, 2018, Frontdoor incurred in favor of the Company $350 million aggregate principal of 6.75% Senior Notes due 2026 and a $650 million senior secured term loan facility, and obtained a $250 million senior secured revolving credit facility. The Company

then transferred and assigned its rights and obligations in respect of Frontdoor’s senior notes and senior secured term loan facility to the lender under such short-term credit facility through a debt-for-debt exchange to satisfy the Company’s obligations thereunder.

On October 1, 2018, in connection with the spin-off of the American Home Shield business, Frontdoor’s senior secured term loan facility and senior notes were included in the transfer of assets and liabilities to Frontdoor, reducing the Company’s total long-term debt by approximately $1 billion.

In the nine months ended September 30, 2018, concurrent with the repayment of $982 million of our term loan facility, we de-designated $7 million of our $650 million interest rate swap.

 

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Acquisitions (Schedule Of Supplemental Cash Flow Information Regarding Acquisitions) (Details) - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018
Supplemental cash flow information regarding acquisitions
Assets acquired		$ 431	$ 241
Liabilities assumed	[1]	(72)	(27)
Net assets acquired		359	214
Net cash paid		345	160
Seller financed debt		11	42
Contingent earnout		4	12
Purchase price		359	214
Deferred tax liabilities		$ 21	$ 11

[1] Includes $21 million and $11 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets for the nine months ended September 30, 2019 and 2018, respectively.

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Leases (Narrative) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Leases [Line Items]
Finance Leases	$ 100
Finance Lease, lease not yet commenced, amount	$ 6
Finance Lease, lease not yet commenced, term of contract	5 years
Assets [Member]
Leases [Line Items]
Assets recorded under finance leases	$ 219
Accumulated Depreciation [Member]
Leases [Line Items]
Assets recorded under finance leases	121
Current Portion Of Long-Term Debt [Member]
Leases [Line Items]
Finance Leases	35
Long-term Debt [Member]
Leases [Line Items]
Finance Leases	$ 65
Variety Of Facilities [Member]
Leases [Line Items]
Option To Extend Lease Term	15 years
Lease, Option to Terminate	1 year
Maximum [Member] | Variety Of Facilities [Member]
Leases [Line Items]
Remaining Lease Term	23 years
Maximum [Member] | Vehicle Leases [Member]
Leases [Line Items]
Remaining Lease Term	8 years
Minimum [Member] | Variety Of Facilities [Member]
Leases [Line Items]
Remaining Lease Term	1 year
Minimum [Member] | Vehicle Leases [Member]
Leases [Line Items]
Remaining Lease Term	1 year

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Business Segment Reporting (Narrative) (Details)	9 Months Ended
	Sep. 30, 2019 segment
Business Segment Reporting [Abstract]
Number of reportable segments	2
Maximum percentage of revenue from customers and franchisees generated in foreign market	3.00%

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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	Sep. 30, 2019	Dec. 31, 2018
Quoted Price In Active Markets (Level 1) [Member]
Financial Assets:
Deferred compensation trust	$ 13	$ 13
Investments	6
Total financial assets	19	21
Quoted Price In Active Markets (Level 1) [Member] | Investment In Marketable Securities [Member]
Financial Assets:
Investments		8
Significant Other Observable Inputs (Level 2) [Member]
Financial Assets:
Derivative asset, Current		30
Total financial assets		475
Total financial liabilities	1
Significant Other Observable Inputs (Level 2) [Member] | Investment In Frontdoor, Inc. [Member]
Financial Assets:
Investments		445
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Contracts [Member]
Financial Assets:
Derivative contracts	1
Significant Unobservable Inputs (Level 3) [Member]
Financial Assets:
Total financial liabilities	1	4
Significant Unobservable Inputs (Level 3) [Member] | Fuel Swap Contracts [Member]
Financial Assets:
Derivative contracts	1	4
Carrying Value [Member]
Financial Assets:
Deferred compensation trust	13	13
Investments	6
Derivative asset, Current		30
Total financial assets	19	496
Total financial liabilities	2	4
Carrying Value [Member] | Investment In Frontdoor, Inc. [Member]
Financial Assets:
Investments		445
Carrying Value [Member] | Investment In Marketable Securities [Member]
Financial Assets:
Investments		8
Carrying Value [Member] | Fuel Swap Contracts [Member]
Financial Assets:
Derivative contracts	1	$ 4
Carrying Value [Member] | Interest Rate Swap Contracts [Member]
Financial Assets:
Derivative contracts	$ 1

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Leases (Future Minimum Lease Payments Due Under Capital And Operating Leases) (Details) $ in Millions	Dec. 31, 2018 USD ($)
Leases [Abstract]
Operating Leases, Less than 1 Yr	$ 17
Operating Leases, 1 - 3 Yrs	36
Operating Leases, 3 - 5 Yrs	25
Operatingl Leases, More than 5 Yrs	67
Operating Leases, Total future minimum lease payments	146
Capital Leases, Less than 1 Yr	31
Capital Leases, 1 - 3 Yrs	46
Capital Leases, 3 - 5 Yrs	14
Capital Leases, More than 5 Yrs	1
Capital Leases, Total future minimum lease payments	$ 92

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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	9 Months Ended
	Sep. 30, 2019 USD ($)
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	$ 1,956
Acquisitions	251
Impact of foreign exchange rates	(2)
Balance at the end of the period	2,206
Terminix [Member]
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	1,781
Acquisitions	78
Impact of foreign exchange rates	0
Balance at the end of the period	1,859
ServiceMaster Brands [Member]
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	175
Acquisitions	7
Impact of foreign exchange rates	0
Balance at the end of the period	182
Corporate [Member]
Goodwill balances by segment for continuing operations
Balance at the beginning of the period	0	[1]
Acquisitions	167	[1]
Impact of foreign exchange rates	(2)	[1]
Balance at the end of the period	$ 164	[1]

[1] Corporate and Other Operations includes goodwill related to pest control acquisitions in Europe completed during the nine months ended September 30, 2019. See Note 14 for further discussion of these acquisitions and purchase price allocations.

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Discontinued Operations (Schedule Of Operating Results Of Discontinued Operations) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Operating results of discontinued operations
Revenue		$ 377		$ 979
Cost of services rendered and products sold		203		534
Operating expenses		100		269
Interest and net investment income				(1)
Income before income taxes		75		177
Provision for income taxes		22		45
Gain from discontinued operations, net of income taxes		53	$ (1)	133
Spin-off transaction costs incurred		$ 8		$ 23

XML

Cash and Marketable Securities (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cash and Marketable Securities [Abstract]
Impairment charges due to other than temporary declines in the value of certain investments	$ 0	$ 0	$ 0	$ 0
Equity Securities, Unrealized Gain (Loss)	0	$ 0
Equity Securities, FV-NI, Unrealized Gain			1,000,000
Equity Securities, FV-NI, Unrealized Loss				$ 1,000,000
Minority interests in several strategic investments	$ 4,000,000		$ 4,000,000

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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						9 Months Ended
		Jan. 01, 2018	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		$ 5			$ 5			$ 5	$ 5	$ 5
Reclassification of unrealized gain/loss on equity securities		(2)
Reclassification of tax rate change		4
Other comprehensive income before reclassifications:
Pre-tax amount									(16)	24
Tax provision (benefit)									7	(7)
After-tax amount									(9)	17
Amounts reclassified from accumulated other comprehensive income	[1]								(3)	(1)
Net current period other comprehensive income			$ (7)	$ (4)	(2)	$ 3	$ 3	10	(13)	16
Balance at the end of period		7	(8)			23			(8)	23
Unrealized Gains (Losses) on Derivatives [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		16			20			16	20	16
Reclassification of tax rate change		3
Other comprehensive income before reclassifications:
Pre-tax amount									(14)	25
Tax provision (benefit)									7	(7)
After-tax amount									(7)	18
Amounts reclassified from accumulated other comprehensive income	[1]								(3)	(1)
Net current period other comprehensive income									(10)	17
Balance at the end of period		19	9			36			9	36
Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		2						2		2
Reclassification of unrealized gain/loss on equity securities		(2)
Reclassification of tax rate change		1
Foreign Currency Translation [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance at the beginning of period		(12)			$ (15)			$ (12)	(15)	(12)
Other comprehensive income before reclassifications:
Pre-tax amount									(2)	(1)
After-tax amount									(2)	(1)
Net current period other comprehensive income									(2)	(1)
Balance at the end of period		$ (12)	$ (18)			$ (13)			$ (18)	$ (13)

[1] Amounts are net of tax. Reclassifications out of accumulated other comprehensive income included the following components for the periods indicated.

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Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Millions		9 Months Ended
		Sep. 30, 2019	Apr. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Long-term debt [Line Items]
Less current portion		$ (56)			$ (49)
Total long-term debt		1,398			1,727
Vehicle Finance Leases [Member]
Long-term debt [Line Items]
Vehicle finance leases	[1]	$ 100			90
Borrowing margin (as a percent)		2.45%
Variable rate basis		one-month LIBOR
Senior Secured Term Loan Facility Maturing In 2023 [Member] | Secured Debt [Member]
Long-term debt [Line Items]
Long-term debt	[2]	$ 170			637
Unamortized debt issuance costs		1			5
Unamortized original issue discount					1
Revolving Credit Facility Maturing In 2021 [Member]
Long-term debt [Line Items]
Long-term debt		120
5.125% Notes Maturing In 2024 [Member] | Loans Payable [Member]
Long-term debt [Line Items]
Long-term debt	[3]	$ 742			740
Interest rate (as a percent)		5.125%
Unamortized debt issuance costs		$ 8			10
7.45% Notes Maturing In 2027 [Member] | Loans Payable [Member]
Long-term debt [Line Items]
Long-term debt	[4]	$ 166			172
Interest rate (as a percent)		7.45%	7.45%	7.45%
7.25% Notes Maturing In 2038 [Member] | Loans Payable [Member]
Long-term debt [Line Items]
Long-term debt	[4]	$ 40			42
Interest rate (as a percent)		7.25%		7.25%
Notes 7.45%, And 7.25% Collectively [Member] | Loans Payable [Member]
Long-term debt [Line Items]
Unamortized fair value adjustments related to purchase accounting		$ 29			33
Other [Member]
Long-term debt [Line Items]
Long-term debt	[5]	116			94
Copesan Services, Inc. (“Copesan”) [Member] | Other [Member]
Long-term debt [Line Items]
Long-term debt		$ 105			$ 82

[1] We have entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows us to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are finance 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 September 30, 2019 and December 31, 2018, presented net of $1 million and $5 million, respectively, in unamortized debt issuance costs. As of December 31, 2018, presented net of $1 million in unamortized original issue discount paid.

[3] As of September 30, 2019 and December 31, 2018, presented net of $8 million and $10 million, respectively, in unamortized debt issuance costs.

[4] As of September 30, 2019 and December 31, 2018, collectively presented net of $29 million and $33 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

[5] As of September 30, 2019 and December 31, 2018, includes approximately $105 million and $82 million, respectively, of future payments in connection with our acquisitions as further described in Note 14.

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Significant Accounting Policies (Impacts Of Adoption Of ASU On Condensed Consolidated Statements Of Financial Position) (Details) - USD ($) $ in Millions	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets	$ 98
Total assets	5,017		$ 5,023
Current portion of long-term lease liability	18
Long-term lease liability	113
Current finance lease liability, within Current portion of long-term debt	56		49
Other long-term obligations, primarily self-insured claims	$ 158		182
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets		$ 107
Finance lease assets, within Property and equipment, net		89
Total right-of-use assets		195
Other assets		86
Total assets		5,129
Current portion of long-term lease liability		15
Long-term lease liability		120
Current finance lease liability, within Current portion of long-term debt		31
Long-term finance lease liability, within Long-term debt		60
Total lease liabilities		225
Accrued liabilities, Other		60
Other long-term obligations, primarily self-insured claims		155
Total liabilities		2,925
Accounting Standards Update 2016-02 [Member] | Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Finance lease assets, within Property and equipment, net			89
Total right-of-use assets			89
Other assets			87
Total assets			5,023
Current finance lease liability, within Current portion of long-term debt			31
Long-term finance lease liability, within Long-term debt			60
Total lease liabilities			90
Accrued liabilities, Other			61
Other long-term obligations, primarily self-insured claims			182
Total liabilities			$ 2,818
Accounting Standards Update 2016-02 [Member] | Restatement Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets		107
Total right-of-use assets		107
Total assets		106
Current portion of long-term lease liability		15
Long-term lease liability		120
Total lease liabilities		135
Accrued liabilities, Other		(1)
Other long-term obligations, primarily self-insured claims		(28)
Total liabilities		$ 106

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Revenues (Movement In Deferred Revenue) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Revenues[Abstract]
Balance at beginning of period	$ 101	$ 101
Deferral of revenue	106	114
Recognition of deferred revenue	(102)	(111)
Balance at end of period	$ 105	$ 104

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Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2019

Significant Accounting Policies [Abstract]

Impacts Of Adoption Of ASU On Condensed Consolidated Statements Of Financial Position

	As previously reported,		Impact of adopting
(In millions)	December 31, 2018		ASC 842		January 1, 2019
Operating lease right-of-use assets	$	—	$	107	$	107
Finance lease assets, within Property and equipment, net		89		—		89
Total right-of-use assets	$	89	$	107	$	195
Other assets		87		—		86
Total assets	$	5,023	$	106	$	5,129
Current portion of long-term lease liability	$	—	$	15	$	15
Long-term lease liability		—		120		120
Current finance lease liability, within Current portion of long-term debt		31		—		31
Long-term finance lease liability, within Long-term debt		60		—		60
Total lease liabilities	$	90	$	135	$	225
Accrued liabilities, Other		61		(1)		60
Other long-term obligations, primarily self-insured claims		182		(28)		155
Total liabilities	$	2,818	$	106	$	2,925

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Business Segment Reporting

9 Months Ended

Sep. 30, 2019

Business Segment Reporting [Abstract]

Business Segment Reporting

Note 16. Business Segment Reporting

Our business is conducted through two reportable segments: Terminix and ServiceMaster Brands.

In accordance with accounting standards for segments, our reportable segments are strategic business units that offer different services. The Terminix segment provides termite and pest control services to residential and commercial customers and distributes pest control products primarily under the Terminix, Terminix Commercial and Copesan brand names. The ServiceMaster Brands segment provides residential and commercial disaster restoration and commercial cleaning services through franchises primarily under

the ServiceMaster, ServiceMaster Restore and ServiceMaster Clean brand names, home cleaning services through franchises primarily under the Merry Maids brand name, cabinet and furniture repair primarily under the Furniture Medic brand name and home inspection services primarily under the AmeriSpec brand name. Corporate and Other Operations includes our European pest control operations, primarily under our Nomor brand, our financing subsidiary exclusively dedicated to providing financing to our franchisees and retail customers of our operating units and our headquarters operations (substantially all of which costs are allocated to our reportable segments), which provide various technology, marketing, finance, legal and other support services to the reportable segments. The composition of our reportable segments is consistent with that used by our chief operating decision maker (the “CODM”) to evaluate performance and allocate resources.

Information regarding the accounting policies used by us are described in our 2018 Form 10-K. We derive substantially all of our revenue from customers and franchisees in the United States with approximately three percent generated in foreign markets. Operating expenses of the business units consist primarily of direct costs and indirect costs allocated from Corporate.

We use Reportable Segment Adjusted EBITDA as our measure of segment profitability. Accordingly, the CODM evaluates performance and allocates resources based primarily on Reportable Segment Adjusted EBITDA. Reportable Segment Adjusted EBITDA is defined as net income before: unallocated corporate expenses; European pest control; costs historically allocated to American Home Shield; (gain) loss from discontinued operations, net of income taxes; provision for income taxes; interest expense; depreciation and amortization expense; acquisition-related costs; fumigation related matters; non-cash stock-based compensation expense; restructuring and other charges; loss on extinguishment of debt; and realized (gain) on investment in frontdoor, inc. European pest control includes the results of our pest control operations in Europe that are recorded within Corporate and Other Operations. Our definition of Reportable Segment Adjusted EBITDA may not be calculated or comparable to similarly titled measures of other companies. We believe Reportable Segment Adjusted EBITDA is useful for investors, analysts and other interested parties as it facilitates company-to-company operating performance comparisons by excluding potential differences caused by variations in capital structures, taxation, the age and book depreciation of facilities and equipment, restructuring initiatives and equity-based, long-term incentive plans.

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Revenue:
Terminix	$	461	$	436	$	1,375	$	1,259
ServiceMaster Brands		63		60		191		183
Reportable Segment Revenue	$	524	$	496	$	1,566	$	1,442
Corporate and Other Operations		4		—		4		1
Total Revenue	$	528	$	496	$	1,570	$	1,443
Reportable Segment Adjusted EBITDA:(1)
Terminix	$	72	$	81	$	261	$	277
ServiceMaster Brands		22		21		70		67
Reportable Segment Adjusted EBITDA	$	95	$	102	$	330	$	344

___________________________________

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Net Income	$	25	$	71	$	154	$	207
Unallocated corporate expenses		(2)		(4)		(6)		(6)
European pest control		(1)		—		(1)		—
Costs historically allocated to American Home Shield		—		11		—		33
Depreciation and amortization expense		26		24		74		68
Acquisition-related costs		8		1		12		2
Fumigation related matters		—		1		—		1
Non-cash stock-based compensation expense		3		2		12		10
Restructuring and other charges		5		1		15		13
Realized (gain) on investment in frontdoor, inc.		—		—		(40)		—
(Gain) loss from discontinued operations, net of income taxes		—		(53)		1		(133)
Provision for income taxes		9		7		39		32
Loss on extinguishment of debt		—		10		6		10
Interest expense		19		33		64		107
Reportable Segment Adjusted EBITDA	$	95	$	102	$	330	$	344

XML

Condensed Consolidated Statements of Financial Position - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 140	$ 224
Investment in frontdoor, inc.		445
Receivables, less allowances of $24 and $21, respectively	214	186
Inventories	45	45
Prepaid expenses and other assets	72	61
Total Current Assets	470	962
Other Assets:
Property and equipment, net	208	201
Operating lease right-of-use assets	98
Goodwill	2,206	1,956
Intangible assets, primarily trade names, service marks and trademarks, net	1,718	1,588
Restricted cash	89	89
Notes receivable	47	43
Long-term marketable securities	19	21
Deferred customer acquisition costs	103	77
Other assets	60	87
Total Assets	5,017	5,023
Current Liabilities:
Accounts payable	129	89
Accrued liabilities:
Payroll and related expenses	61	60
Self-insured claims and related expenses	48	58
Accrued interest payable	21	14
Other	72	61
Deferred revenue	99	95
Current portion of lease liability	18
Long-term lease liability	56	49
Total Current Liabilities	505	425
Long-Term Debt	1,398	1,727
Other Long-Term Liabilities:
Deferred taxes	507	484
Other long-term obligations, primarily self-insured claims	158	182
Long-term lease liability	113
Total Other Long-Term Liabilities	778	666
Commitments and Contingencies (Note 6)
Stockholders' Equity:
Common stock $0.01 par value (authorized 2,000,000,000 shares with 147,841,177 shares issued and 135,705,232 outstanding at September 30, 2019 and 147,209,928 shares issued and 135,687,558 outstanding at December 31, 2018)	2	2
Additional paid-in capital	2,330	2,309
Retained Earnings	313	156
Accumulated other comprehensive (loss) income	(8)	5
Less common stock held in treasury, at cost (12,135,945 shares at September 30, 2019 and 11,552,370 shares at December 31, 2018)	(300)	(267)
Total Stockholders' Equity	2,337	2,204
Total Liabilities and Stockholders' Equity	$ 5,017	$ 5,023

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

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 services to residential and commercial customers in the termite, pest control, cleaning and restoration markets, operating through an extensive service network of more than 8,000 company‑owned locations and franchise and license agreements. Our mission is to simplify and improve the quality of our customers’ lives by delivering services that help them protect and maintain their homes or businesses, typically their most highly valued assets. Our portfolio of well‑recognized brands includes AmeriSpec (home inspections), Copesan (commercial national accounts pest management), Furniture Medic (cabinet and furniture repair), Merry Maids (residential cleaning), Nomor (European pest control), ServiceMaster Clean (commercial cleaning), ServiceMaster Restore (restoration), Terminix (residential termite and pest control) and Terminix Commercial (commercial termite and pest control). All consolidated Company subsidiaries are wholly-owned. Intercompany transactions and balances have been eliminated.

The unaudited condensed consolidated financial statements have been prepared by us 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”). We recommend that the quarterly unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC (the “2018 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 necessarily indicative of the results that might be achieved for any other interim period or for the full year.

American Home Shield Spin-off

On October 1, 2018, we completed the spin-off of our American Home Shield business. The separation was effectuated through a pro rata dividend (the “Distribution”) to our stockholders of approximately 80.2% of the outstanding shares of common stock of frontdoor, inc. (“Frontdoor”), which was formed as a wholly owned subsidiary to hold our American Home Shield business. The Distribution was made to our stockholders of record as of the close of business on September 14, 2018 (the “Record Date”), and such stockholders received one share of Frontdoor common stock for every two shares of ServiceMaster common stock held as of the close of business on the Record Date.

In March 2019, we exchanged all of the 19.8% of the outstanding shares of common stock of Frontdoor we retained for certain of our outstanding indebtedness, which obligations were subsequently cancelled and discharged upon delivery to us. See Note 12 for further discussion regarding this transaction.

The American Home Shield Segment is reported in this Quarterly Report on Form 10-Q in discontinued operations.

 

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Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2019

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

‎

Note 10. Supplemental Cash Flow Information

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

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Cash paid for or (received from):
Interest expense(1)	$	55	$	95
Interest and dividend income		(2)		(1)
Income taxes, net of refunds		23		40

___________________________________

(1)For the nine months ended September 30, 2019, excludes $12 million received in connection with our partial terminations of the interest rate swap.

As of September 30, 2019 and December 31, 2018, Cash and cash equivalents of $140 million and $224 million, respectively, and Restricted cash of $89 million and $89 million, respectively, as presented on the condensed consolidated statements of financial position represent the amounts comprising Cash and cash equivalents and Restricted cash of $228 million and $313 million, respectively, on the condensed consolidated statement of cash flows.

As of September 30, 2018 and December 31, 2017, Cash and cash equivalents of $216 million and $192 million, respectively, and Restricted cash of $89 million and $89 million, respectively, as presented on the condensed consolidated statements of financial position, and cash related to discontinued operations of $305 million and $282 million, respectively, represent the amounts comprising Cash and cash equivalents and restricted cash of $610 million and $563 million, respectively, on the condensed consolidated statement of cash flows.

We acquired $39 million and $23 million of property and equipment through finance leases and other non-cash financing transactions in each of the nine months ended September 30, 2019 and 2018, respectively, which have been excluded from the condensed consolidated statements of cash flows as non-cash investing and financing activities. 

The proceeds from the Frontdoor debt issuances described in Note 12 were retained by the lender in satisfaction of the short-term credit facility and have been excluded from the condensed consolidated statements of cash flows as non-cash financing activities.

The non-cash lease transactions resulting from our adoption of ASC 842 are described in Note 13.

 

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 6. Commitments and Contingencies

We carry insurance policies on insurable risks at levels that we believe to be appropriate, including workers’ compensation, automobile and general liability risks. We purchase insurance policies from third-party insurance carriers, which typically incorporate significant deductibles or self-insured retentions. We are responsible for all claims that fall below the retention limits, exceed our coverage limits or are otherwise not covered by our insurance policies. In determining our accrual for self-insured claims, we use historical claims experience to establish both the current year accrual and the underlying provision for future losses. This actuarially determined provision and related accrual include known claims, as well as incurred but not reported claims. We adjust our estimate of accrued self-insured claims when required to reflect changes based on factors such as changes in health care costs, accident frequency and claim severity.

In the normal course of business, we periodically enter into agreements that incorporate indemnification provisions. While the maximum amount to which we may be exposed under such agreements cannot be estimated, we do not expect these guarantees and indemnifications to have a material effect on our business, financial condition, results of operations or cash flows.

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, 2018	$	111
Provision for self-insured claims		26
Cash payments		(28)
Balance as of September 30, 2019	$	108
Balance as of December 31, 2017	$	115
Provision for self-insured claims		23
Cash payments		(26)
Balance as of September 30, 2018	$	112

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. Termite damage claims can take years to resolve, and timing can be difficult to predict. Current activity could differ causing a change in estimates.

We have certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. We accrue for these liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified.

We also have certain liabilities with respect to litigated claims arising from alleged termite damage. We have experienced an increase in such asserted claims, principally related to Formosan termite activity in the Mobile, Alabama area. Due to the uncertainties involved, management is unable to predict the number or nature of possible future claims and proceedings or their outcomes. We investigate each claim as it arises and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Any resulting adjustments, which could be material, are recorded in the period the adjustments are identified.

On December 16, 2016, the U.S. Virgin Islands Department of Justice filed a civil complaint in the Superior Court of the Virgin Islands related to a fumigation incident in a matter styled Government of the United States Virgin Islands v. The ServiceMaster Company, LLC, The Terminix International Company Limited Partnership, and Terminix International USVI, LLC. The amount and extent of any potential penalties, fines sanctions, costs and damages that the federal or other governmental authorities may yet impose, investigation or other costs and reputational harm, as well as the impact of any additional civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands fumigation matter, which could be material, is not currently known, and any such further penalties, fines, sanctions, costs or damages would not be covered under our general liability insurance policies.

In addition to the matter 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, and which require compliance with the terms of the agreements. If one or more of our settlements are not finally approved and implemented, 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.

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets [Abstract]

Schedule Of Goodwill Balances For Continuing Operations By Reportable Segment And For Other Operations And Headquarters

					Corporate and
			ServiceMaster		Other
(In millions)	Terminix		Brands		Operations(1)		Total
Balance as of December 31, 2018	$	1,781	$	175	$	—	$	1,956
Acquisitions		78		7		167		251
Impact of foreign exchange rates		—		—		(2)		(2)
Balance as of September 30, 2019	$	1,859	$	182	$	164	$	2,206

___________________________________

(1)Corporate and Other Operations includes goodwill related to pest control acquisitions in Europe completed during the nine months ended September 30, 2019. See Note 14 for further discussion of these acquisitions and purchase price allocations.

Schedule Of Other Intangible Asset Balances For Continuing Operations

	As of September 30, 2019						As of December 31, 2018
			Accumulated						Accumulated
(In millions)	Gross		Amortization		Net		Gross		Amortization		Net
Trade names(1)	$	1,482	$	—	$	1,482	$	1,482	$	—	$	1,482
Customer relationships		593		(418)		176		469		(406)		64
Franchise agreements		88		(75)		13		88		(73)		15
Other		86		(39)		47		62		(35)		27
Total	$	2,249	$	(531)	$	1,718	$	2,101	$	(513)	$	1,588

___________________________________

(1)Not subject to amortization.

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Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2019

Long-Term Debt [Abstract]

Schedule Of Long-Term Debt

	As of		As of
	September 30,		December 31,
(In millions)	2019		2018
Senior secured term loan facility maturing in 2023(1)	$	170	$	637
Revolving credit facility maturing in 2021		120		—
5.125% notes maturing in 2024(2)		742		740
7.45% notes maturing in 2027(3)		166		172
7.25% notes maturing in 2038(3)		40		42
Vehicle finance leases(4)		100		90
Other(5)		116		94
Less current portion		(56)		(49)
Total long-term debt	$	1,398	$	1,727

__________________________________

(1)As of September 30, 2019 and December 31, 2018, presented net of $1 million and $5 million, respectively, in unamortized debt issuance costs. As of December 31, 2018, presented net of $1 million in unamortized original issue discount paid.

(2)As of September 30, 2019 and December 31, 2018, presented net of $8 million and $10 million, respectively, in unamortized debt issuance costs.

(3)As of September 30, 2019 and December 31, 2018, collectively presented net of $29 million and $33 million, respectively, of unamortized fair value adjustments related to purchase accounting, which increases the effective interest rate from the coupon rates shown above.

(4)We have entered into a fleet management services agreement (the “Fleet Agreement”) which, among other things, allows us to obtain fleet vehicles through a leasing program. All leases under the Fleet Agreement are finance 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.

(5)As of September 30, 2019 and December 31, 2018, includes approximately $105 million and $82 million, respectively, of future payments in connection with our acquisitions as further described in Note 14.

Summary Of Proceeds And Use Related To Debt-For-Equity Exchange

(in millions)
Proceeds from the short-term credit facility	$	600
Proceeds from the Frontdoor common shares retained, net of $16 million of fees paid		486
Total proceeds	$	1,086
Repayment of the term loan facility, including loss on extinguishment of debt of $4 million	$	(472)
Debt-for-equity exchange using net proceeds from the Frontdoor common shares retained		(486)
Repurchase of 2027 and 2038 notes, including loss on extinguishment of debt of $2 million		(12)
Interest and other payments		(1)
Use of cash to retire short-term credit facility		(114)
Total uses	$	(1,086)

Schedule of Interest Rate Swap Agreements

	Notional
(In millions)	Amount		Fixed Rate(1)
Interest rate swap agreement in effect as of December 31, 2018	$	650	1.493	%
Terminated		(441)
Interest rate swap agreement in effect as of March 31, 2019		209	1.493	%
Terminated		(38)
Interest rate swap agreement in effect as of June 30, 2019 and September 30, 2019	$	171	1.493	%

___________________________________

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

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

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 September 30, 2019:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	13	$	13	$	—	$	—
Investments in marketable securities	Long-term marketable securities		6		6		—		—
Total financial assets		$	19	$	19	$	—	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	1	$	—	$	—	$	1
Interest rate swap contract	Other accrued liabilities		1		—		1		—
Total financial liabilities		$	2	$	—	$	1	$	1
As of December 31, 2018:
Financial Assets:
Deferred compensation trust	Long-term marketable securities	$	13	$	13	$	—	$	—
Investment in Frontdoor	Investment in frontdoor, inc.		445		—		445		—
Investments in marketable securities	Long-term marketable securities		8		8		—		—
Interest rate swap contract	Other assets		30		—		30		—
Total financial assets		$	496	$	21	$	475	$	—
Financial Liabilities:
Fuel swap contracts	Other accrued liabilities	$	4	$	—	$	—	$	4
Total financial liabilities		$	4	$	—	$	—	$	4

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, 2018	$	(4)
Total gains (losses) (realized and unrealized)
Included in earnings		—	Cost of services rendered and products sold
Included in other comprehensive income		2
Settlements		—
Balance as of September 30, 2019	$	(1)
Balance as of December 31, 2017	$	3
Total gains (losses) (realized and unrealized)
Included in earnings		3	Cost of services rendered and products sold
Included in other comprehensive income		1
Settlements		(3)
Balance as of September 30, 2018	$	4

Schedule Of Level 3 Financial Instruments

	Fair Value		Valuation			Weighted
	(in millions)		Technique	Unobservable Input	Range	Average
As of September 30, 2019:
Fuel swap contracts	$	(1)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$2.24 - $2.60	$	2.44
As of December 31, 2018:
Fuel swap contracts	$	(4)	Discounted Cash Flows	Forward Unleaded Price per Gallon(1)	$2.09 - $2.43	$	2.26

___________________________________

(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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Stock-Based Compensation (Narrative) (Details) $ in Millions			1 Months Ended		3 Months Ended		9 Months Ended
	Jan. 01, 2019 shares	Feb. 24, 2015	Feb. 28, 2019 item shares	Jan. 31, 2019 item	Sep. 30, 2019 USD ($) shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) shares	Sep. 30, 2018 USD ($)	Apr. 27, 2015 shares
Stock-Based Compensation [Line Items]
Stock-based compensation expense | $					$ 3	$ 2	$ 12	$ 10
Stock-based compensation expense, net of tax | $					2	$ 2	9	$ 7
Total unrecognized compensation costs related to non-vested stock options and restricted share units | $					$ 29		$ 29
Weighted-average period of recognition of stock-based compensation cost							2 years 1 month 24 days
Percent of current fair market value, discount eligible employees may purchase common stock			10.00%
Employee Stock Purchase Plan, maximum number of shares of common stock authorized for sale									1,000,000
Employee stock plan, shares remaining in ESPP			843,584
Number of shares of available for issuance					839,784		839,784
Expiration date for ESPP							Apr. 27, 2025
Stock Options [Member]
Stock-Based Compensation [Line Items]
Term of stock options			8 years	10 years
Vesting period			3 years
Number of equal annual vesting installments | item			3	4
RSUs [Member]
Stock-Based Compensation [Line Items]
Grants (in shares)	136,092
Maximum [Member]
Stock-Based Compensation [Line Items]
Percent of current fair market value, discount eligible employees may purchase common stock		10.00%

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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	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Commitments and Contingencies [Line Items]
Balance at the beginning of the period	$ 111	$ 115
Provision for self-insured claims	26	23
Cash payments	(28)	(26)
Balance at the end of the period	$ 108	$ 112

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Restructuring And Other Charges (Schedule Of Reconciliation Of The Beginning And Ending Balances Of Accrued Restructuring Charges) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restructuring Cost and Reserve [Line Items]
Costs incurred	$ 5	$ 1	$ 15	$ 13
Restructuring Charges, Not Including Professional Fees [Member]
Restructuring Cost and Reserve [Line Items]
Balance at the beginning of the period			7	6
Costs incurred	3	1	13	13
Costs paid or otherwise settled			(17)	(11)
Balance at the end of the period	$ 3	$ 8	$ 3	$ 8

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Leases (Supplemental Cash Flow Information And Other Information For Leases) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Leases [Abstract]
Operating cash flows for operating leases	$ 18
Operating cash flows for finance leases	4
Financing cash flows for finance leases	25
ROU assets obtained in exchange for lease obligations: Operating leases	8
ROU assets obtained in exchange for lease obligations: Finance leases	$ 39
Weighted Average Remaining Lease Term (in years): Operating leases	10 years 8 months 12 days
Weighted Average Remaining Lease Term (in years): Finance leases	3 years 5 months 8 days
Weighted Average Discount Rate: Operating leases	5.54%
Weighted Average Discount Rate: Finance leases	3.84%

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Business Segment Reporting (Schedule Of Reconciliation Of Net Income (Loss) To Reportable Segment Adjusted EBITDA) (Details) - USD ($) $ in Millions		3 Months Ended						9 Months Ended
		Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Net Income		$ 25	$ 59	$ 70	$ 71	$ 96	$ 40	$ 154	$ 207
Depreciation and amortization expense		26			24			74	68
Acquisition-related costs		8			1			12	2
Fumigation related matters					1				1
Non-cash stock-based compensation expense		3			2			12	10
Restructuring and other charges		5			1			15	13
Realized (gain) on investment in frontdoor, inc.								(40)
(Gain) loss from discontinued operations, net of income taxes					(53)			1	(133)
Provision for income taxes		9			7			39	32
Loss on extinguishment of debt					10			6	10
Interest expense		19			33			64	107
Reportable Segment Adjusted EBITDA		95			102			330	344
European Pest Control [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Costs historically allocated to American Home Shield		(1)						(1)
Operating Segment [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Reportable Segment Adjusted EBITDA	[1]	95			102			330	344
Terminix [Member] | Operating Segment [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Reportable Segment Adjusted EBITDA	[1]	72			81			261	277
American Home Shield [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Costs historically allocated to American Home Shield					11				33
Corporate [Member]
Reconciliation of Reportable Segment Adjusted EBITDA to Net Income (Loss)
Net Income		$ (2)			$ (4)			$ (6)	$ (6)

[1] Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA:

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Fair Value Measurements (Schedule Of Level 3 Financial Instruments) (Details) - Fuel Swap Contracts [Member] $ in Millions		Sep. 30, 2019 USD ($) $ / gal	Dec. 31, 2018 USD ($) $ / gal	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Information relating to the significant unobservable inputs of Level 3 financial instruments
Fair value | $		$ (1)	$ (4)	$ 4	$ 3
Discounted Cash Flows [Member] | Minimum [Member]
Information relating to the significant unobservable inputs of Level 3 financial instruments
Forward Unleaded Price per Gallon (in dollars per gallon)	[1]	2.24	2.09
Discounted Cash Flows [Member] | Maximum [Member]
Information relating to the significant unobservable inputs of Level 3 financial instruments
Forward Unleaded Price per Gallon (in dollars per gallon)	[1]	2.60	2.43
Discounted Cash Flows [Member] | Weighted Average [Member]
Information relating to the significant unobservable inputs of Level 3 financial instruments
Forward Unleaded Price per Gallon (in dollars per gallon)		2.44	2.26

[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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Acquisitions (Preliminary Purchase Price Allocation) (Details) - USD ($) $ in Millions		Sep. 30, 2019	Sep. 06, 2019	Dec. 31, 2018	Sep. 06, 2016
Goodwill		$ 2,206		$ 1,956
Nomor [Member]
Current assets	[1]		$ 19
Property and equipment			6
Goodwill	[2]		152
Intangible intangible assets	[3]		94
Current liabilities	[4]		(21)
Long-term liabilities	[2]		(44)
Total purchase price			$ 207
Deferred tax liabilities, tax differences in intangible assets					$ 20

[1] Primarily trade receivables and cash

[2] Includes $20 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets.

[3] Primarily customer lists.

[4] Primarily advanced collections from customers

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Basis of Presentation (Narrative) (Details) - item		1 Months Ended	9 Months Ended
	Oct. 01, 2018	Mar. 31, 2019	Sep. 30, 2019
Basis Of Presentation [Line Items]
Number of shares of common stock shares received from spinoff company	1
Number of shares of Parent common stock exchanged for shares of Spinoff Company	2
Minimum [Member]
Basis Of Presentation [Line Items]
Number of company-owned locations and franchise and license agreements			8,000
Frontdoor, inc. [Member]
Basis Of Presentation [Line Items]
Pro rata dividend to the Company's stockholders, percent of outstanding shares of common stock	80.20%
Percentage of outstanding common share exchanged		19.80%	19.80%

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Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Reportable segment revenues	$ 528	$ 496	$ 1,570	$ 1,443
Corporate Non-Segment [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues			1	1
Residential Pest Control [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	189	178	535	484
Commercial Pest Control [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	105	93	293	243
Termite and Home Services [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	133	129	450	432
Royalty Fees [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	32	31	101	99
Commercial Clearing And Other National Accounts [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	18	17	54	48
Sales of Products and Other [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	37	34	100	97
Fumigation [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	11	14	33	40
European Pest Control [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	4		4
Terminix [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	461	436	1,375	1,259
Terminix [Member] | Residential Pest Control [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	189	178	535	484
Terminix [Member] | Commercial Pest Control [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	105	93	293	243
Terminix [Member] | Termite and Home Services [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	133	129	450	432
Terminix [Member] | Sales of Products and Other [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	24	22	64	61
Terminix [Member] | Fumigation [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	11	14	33	40
ServiceMaster Brands [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	63	60	191	183
ServiceMaster Brands [Member] | Royalty Fees [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	32	31	101	99
ServiceMaster Brands [Member] | Commercial Clearing And Other National Accounts [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	18	17	54	48
ServiceMaster Brands [Member] | Sales of Products and Other [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	13	$ 12	36	36
Corporate [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	4		4	1
Corporate [Member] | Corporate Non-Segment [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues			1	$ 1
Corporate [Member] | European Pest Control [Member]
Disaggregation of Revenue [Line Items]
Reportable segment revenues	$ 4		$ 4

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Restructuring And Other Charges (Schedule Of Restructuring Charges) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	$ 5	$ 1	$ 15	$ 13
Stock-based compensation expense	3	2	12	10
Terminix [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	1		4	2
Severance and other restructuring costs	1	2	4	2
Unpaid and accrued costs	1		1
ServiceMaster Brands [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges			2	1
Severance and other restructuring costs			2	1
Corporate [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	1		6	3
Other costs	1		5
Severance and other restructuring costs			1	3
Unpaid and accrued costs	1		1
Global Service Center Relocation [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges			1	8
Redundant rent expense, accelerated depreciation and other charges			1	8
Unpaid and accrued costs	1		1
Restructuring Charges, Not Including Professional Fees [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and other charges	3	$ 1	13	$ 13
Maximum [Member] | ServiceMaster Brands [Member]
Restructuring Cost and Reserve [Line Items]
Unpaid and accrued costs	$ 1		$ 1

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Long-Term Debt (Revolving Credit Facility, Extinguishment of Debt and Repurchase of Notes Narrative) (Details) - USD ($) shares in Millions						1 Months Ended		3 Months Ended				9 Months Ended
	Oct. 15, 2019	Mar. 27, 2019	Mar. 12, 2019	Oct. 01, 2018	Aug. 01, 2018	Apr. 30, 2019	Mar. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 05, 2019	Aug. 16, 2018
Debt Instrument [Line Items]
Loss on extinguishment of debt											$ 10,000,000	$ 6,000,000	$ 10,000,000
Amount borrowed												720,000,000	1,000,000,000
Gain (Loss) on Investments												40,000,000
Proceeds From Spin-Off Entity Common Shares Retained, Net												486,000,000
Use Of Cash To Retire Short-Term Credit Facility												114,000,000
Interest Rate Swap Contracts [Member]
Debt Instrument [Line Items]
Derivative Notional Amount Agreement Terminated		$ 479,000,000							$ 38,000,000	$ 441,000,000		479,000,000
Amount Received From Termination Of Interest Rate Swap Agreement		$ 12,000,000
Short-term Credit Facility [Member]
Debt Instrument [Line Items]
Loss on extinguishment of debt												4,000,000
Amount borrowed			$ 600,000,000
Repayment of debt			$ 468,000,000
Revolving Credit Facility Maturing In 2021 [Member]
Debt Instrument [Line Items]
Face amount of debt instrument														$ 120,000,000
Spin-off [Member]
Debt Instrument [Line Items]
Cost of debt purchased				$ 1,000,000,000
Spin-off [Member] | Short-term Credit Facility [Member]
Debt Instrument [Line Items]
Amount borrowed					$ 1,000,000,000
Spin-off [Member] | Frontdoor Term Loan Facility [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Face amount of debt instrument															$ 650,000,000
Spin-off [Member] | Revolving Credit Facility Maturing In 2023 [Member]
Debt Instrument [Line Items]
Maximum borrowings															$ 250,000,000
Secured Debt [Member] | Senior Secured Term Loan Facility Maturing In 2023 [Member]
Debt Instrument [Line Items]
Loss on extinguishment of debt												$ 4,000,000
Secured Debt [Member] | Spin-off [Member] | Senior Secured Term Loan Facility Maturing In 2023 [Member]
Debt Instrument [Line Items]
Repayment of principal amount					982,000,000
Loss on extinguishment of debt											$ 10,000,000		$ 10,000,000
Secured Debt [Member] | Spin-off [Member] | Revolving Credit Facility Maturing In 2023 [Member]
Debt Instrument [Line Items]
Repayment of principal amount					$ 982,000,000
Loans Payable [Member] | 7.25% Notes Maturing In 2038 [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)							7.25%	7.25%		7.25%		7.25%
Redemption percentage							99.50%
Face amount of debt instrument							$ 3,000,000			$ 3,000,000
Loans Payable [Member] | 7.45% Notes Maturing In 2027 [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)						7.45%	7.45%	7.45%		7.45%		7.45%
Repayment of principal amount						$ 1,000,000
Redemption percentage						105.50%	105.50%
Face amount of debt instrument							$ 7,000,000			$ 7,000,000
Loans Payable [Member] | Notes 7.45%, And 7.25% Collectively [Member]
Debt Instrument [Line Items]
Loss on extinguishment of debt								$ 2,000,000				$ 2,000,000
Loans Payable [Member] | Spin-off [Member] | Frontdoor Notes [Member]
Debt Instrument [Line Items]
Interest rate (as a percent)															6.75%
Face amount of debt instrument															$ 350,000,000
Frontdoor, inc. [Member]
Debt Instrument [Line Items]
Debt Conversion, Converted Instrument, Shares Issued		16.7
Cost of debt purchased		$ 600,000,000
Gain (Loss) on Investments												$ 40,000,000
Proceeds From Spin-Off Entity Common Shares Retained, Net		486,000,000
Use Of Cash To Retire Short-Term Credit Facility		$ 114,000,000
Subsequent Event [Member] | Interest Rate Swap Contracts [Member]
Debt Instrument [Line Items]
Derivative Notional Amount Agreement Terminated	$ 171,000,000

XML

Supplemental Cash Flow Information (Narrative) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Cash paid for or (received from):
Cash and cash equivalents	$ 140	$ 216	$ 224	$ 192
Restricted cash	89	89	89	89
Cash related to discontinued operations		305		282
Cash and Cash Equivalents Including Restricted Cash, at Carrying Value	228	610	$ 313	$ 563
Finance leases and other non-cash financing transactions	$ 39	$ 23

XML

Revenues

9 Months Ended

Sep. 30, 2019

Revenues[Abstract]

Revenues

Note 3. Revenues

Effective January 1, 2018, we adopted ASC 606, “Revenue from Contracts with Customers,” using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. During the quarter ended September 30, 2019, we corrected our calculation of deferred tax assets related to the adoption of ASC 606. As a result, approximately $3 million was recognized in Retained earnings in the condensed consolidated statements of financial position.

The following table presents our reportable segment revenues, disaggregated by revenue source. We disaggregate revenue from contracts with customers into major product lines. We have determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. On April 1, 2019, we divested the assets associated with our fumigation service line and now provide fumigation services to our customers through arrangements with independent third parties. Revenue related to fumigation completion services and the related renewals (the “Fumigation Services”) is shown in Fumigation below and prior period amounts related to the Fumigation Services have been reclassified from Termite and Home Services to Fumigation to conform to the current period presentation. Additionally, prior period revenue for Residential Pest Control and Commercial Pest Control has been reclassified to conform to the current period presentation of acquired branches as commercial or residential based on the current reporting structure at Terminix.

As noted in the business segment reporting information in Note 16, our reportable segments are Terminix and ServiceMaster Brands.

	Terminix				ServiceMaster Brands				Corporate and Other Operations				Total
	Three months ended				Three months ended				Three months ended				Three months ended
	September 30,				September 30,				September 30,				September 30,
(In millions)		2019		2018		2019		2018		2019		2018		2019		2018
Major service line
Residential Pest Control	$	189	$	178	$	—	$	—	$	—	$	—	$	189	$	178
Commercial Pest Control		105		93		—		—		—		—		105		93
Termite and Home Services		133		129		—		—		—		—		133		129
Royalty Fees		—		—		32		31		—		—		32		31
Commercial Cleaning and other National Accounts		—		—		18		17		—		—		18		17
Sales of Products and Other		24		22		13		12		—		—		37		34
Fumigation		11		14		—		—		—		—		11		14
European Pest Control		—		—		—		—		4		—		4		—
Total	$	461	$	436	$	63	$	60	$	4	$	—	$	528	$	496

‎

	Terminix				ServiceMaster Brands				Corporate and Other Operations				Total
	Nine months ended				Nine months ended				Nine months ended				Nine months ended
	September 30,				September 30,				September 30,				September 30,
(In millions)		2019		2018		2019		2018		2019		2018		2019		2018
Major service line
Residential Pest Control	$	535	$	484	$	—	$	—	$	—	$	—	$	535	$	484
Commercial Pest Control		293		243		—		—		—		—		293		243
Termite and Home Services		450		432		—		—		—		—		450		432
Royalty Fees		—		—		101		99		—		—		101		99
Commercial Cleaning and other National Accounts		—		—		54		48		—		—		54		48
Sales of Products and Other		64		61		36		36		—		—		100		97
Fumigation		33		40		—		—		—		—		33		40
European Pest Control		—		—		—		—		4		—		4		—
Corporate		—		—		—		—		1		1		1		1
Total	$	1,375	$	1,259	$	191	$	183	$	4	$	1	$	1,570	$	1,443

Corporate and Other Operations

Beginning in the quarter ended September 30, 2019, Corporate and Other Operations includes our pest control operations in Europe and our financing subsidiary. As of September 30, 2019, this includes our September 6, 2019 acquisition of Nomor, which provides pest control services throughout Sweden and Norway.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Contracts with customers are generally for a period of one year or less and are generally renewable. We record a receivable related to revenue recognized on services once we have an unconditional right to invoice and receive payment in the future related to the services provided. All accounts receivables are recorded within Receivables, less allowances, on the condensed consolidated statements of financial position. The current portion of Notes receivable, which represents amounts financed for customers through our financing subsidiary, are included within Receivables, less allowances, on the condensed consolidated statement of financial position and totaled $45 million and $42 million as of September 30, 2019 and December 31, 2018, respectively.

Deferred revenue represents a contract liability and is recognized when cash payments are received in advance of the performance of services, including when the amounts are refundable. For Terminix, amounts are recognized as revenue upon completion of services.

Deferred revenue by reportable segment was as follows:

	As of		As of
(In millions)	September 30, 2019		December 31, 2018
Terminix	$	96	$	91
ServiceMaster Brands(1)		9		11
Total	$	105	$	101

___________________________________

(1)Includes approximately $6 million and $7 million of ServiceMaster Brands Deferred revenue included within Other long-term obligations, primarily self-insurance claims on the condensed consolidated statement of financial position as of September 30, 2019 and December 31, 2018, respectively.

‎

Changes in deferred revenue for the nine months ended September 30, 2019 and 2018 were as follows:

(In millions)	Deferred revenue
Balance, December 31, 2018	$	101
Deferral of revenue		106
Recognition of deferred revenue		(102)
Balance, September 30, 2019	$	105
Balance, January 1, 2018	$	101
Deferral of revenue		114
Recognition of deferred revenue		(111)
Balance, September 30, 2018	$	104

There was approximately $12 million and $59 million of revenue recognized in the three and nine months ended September 30, 2019, respectively, that was included in the deferred revenue balance as of December 31, 2018. There was approximately $12 million and $61 million of revenue recognized in the three and nine months ended September 30, 2018, respectively, that was included in the deferred revenue balance as of January 1, 2018, the date we adopted ASC 606.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
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	Sep. 30, 2019
Document Quarterly Report	true
Document Transition Report	false
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		135,618,768
Entity Shell Company	false
Document Fiscal Year Focus	2019
Security 12b Title	Common, par value $0.01
Security Exchange Name	NYSE
Document Fiscal Period Focus	Q3
Trading Symbol	SERV
Entity File Number	001-36507
Entity Address, Address Line One	150 Peabody Place
Entity Address, City or Town	Memphis
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	38103
Entity Tax Identification Number	20-8738320
City Area Code	901
Local Phone Number	597-1400

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Treasury Stock [Member]	Total
Balance, shares at Dec. 31, 2017	147,000,000
Balance, value at Dec. 31, 2017	$ 2	$ 2,321	$ (895)	$ 5	$ (267)	$ 1,167
Treasury Stock, Shares at Dec. 31, 2017					(12,000,000)
Net income			40			40
Other comprehensive income (loss), net of tax				10		10
Total Comprehensive Income			40	10		50
Cumulative effect of accounting changes			14	2		16
Exercise of stock options, value		2				2
Stock-based employee compensation		4				4
Balance, shares at Mar. 31, 2018	147,000,000
Balance at Mar. 31, 2018	$ 2	2,328	(841)	17	$ (267)	1,239
Treasury Stock, Shares at Mar. 31, 2018					(12,000,000)
Balance, shares at Dec. 31, 2017	147,000,000
Balance, value at Dec. 31, 2017	$ 2	2,321	(895)	5	$ (267)	1,167
Treasury Stock, Shares at Dec. 31, 2017					(12,000,000)
Net income						207
Other comprehensive income (loss), net of tax						16
Total Comprehensive Income						224
Balance, shares at Sep. 30, 2018	147,000,000
Balance at Sep. 30, 2018	$ 2	2,339	(674)	23	$ (267)	1,423
Treasury Stock, Shares at Sep. 30, 2018					(12,000,000)
Balance, shares at Mar. 31, 2018	147,000,000
Balance, value at Mar. 31, 2018	$ 2	2,328	(841)	17	$ (267)	1,239
Treasury Stock, Shares at Mar. 31, 2018					(12,000,000)
Net income			96			96
Other comprehensive income (loss), net of tax				3		3
Total Comprehensive Income			96	3		99
Exercise of stock options, value		4				4
Stock-based employee compensation		4				4
Balance, shares at Jun. 30, 2018	147,000,000
Balance at Jun. 30, 2018	$ 2	2,336	(745)	20	$ (267)	1,346
Treasury Stock, Shares at Jun. 30, 2018					(12,000,000)
Net income			71			71
Other comprehensive income (loss), net of tax				3		3
Total Comprehensive Income			71	3		74
Stock-based employee compensation		3				3
Balance, shares at Sep. 30, 2018	147,000,000
Balance at Sep. 30, 2018	$ 2	2,339	(674)	23	$ (267)	1,423
Treasury Stock, Shares at Sep. 30, 2018					(12,000,000)
Balance, shares at Dec. 31, 2018	147,000,000
Balance, value at Dec. 31, 2018	$ 2	2,309	156	5	$ (267)	$ 2,204
Treasury Stock, Shares at Dec. 31, 2018					(12,000,000)	(11,552,370)
Net income			70			$ 70
Other comprehensive income (loss), net of tax				(2)		(2)
Total Comprehensive Income			70	(2)		68
Exercise of stock options, value		5				5
Stock-based employee compensation		4				4
Repurchase of common stock, value					$ (2)	(2)
Balance, shares at Mar. 31, 2019	148,000,000
Balance at Mar. 31, 2019	$ 2	2,318	226	3	$ (269)	2,280
Treasury Stock, Shares at Mar. 31, 2019					(12,000,000)
Balance, shares at Dec. 31, 2018	147,000,000
Balance, value at Dec. 31, 2018	$ 2	2,309	156	5	$ (267)	$ 2,204
Treasury Stock, Shares at Dec. 31, 2018					(12,000,000)	(11,552,370)
Net income						$ 154
Other comprehensive income (loss), net of tax						(13)
Total Comprehensive Income						141
Balance, shares at Sep. 30, 2019	148,000,000
Balance at Sep. 30, 2019	$ 2	2,330	313	(8)	$ (300)	$ 2,337
Treasury Stock, Shares at Sep. 30, 2019					(12,000,000)	(12,135,945)
Balance, shares at Mar. 31, 2019	148,000,000
Balance, value at Mar. 31, 2019	$ 2	2,318	226	3	$ (269)	$ 2,280
Treasury Stock, Shares at Mar. 31, 2019					(12,000,000)
Net income			59			59
Other comprehensive income (loss), net of tax				(4)		(4)
Total Comprehensive Income			59	(4)		55
Exercise of stock options, value		4				4
Stock-based employee compensation		4				4
Repurchase of common stock, value					$ (15)	(15)
Balance, shares at Jun. 30, 2019	148,000,000
Balance at Jun. 30, 2019	$ 2	2,326	285	(1)	$ (283)	2,329
Treasury Stock, Shares at Jun. 30, 2019					(12,000,000)
Net income			25			25
Other comprehensive income (loss), net of tax				(7)		(7)
Total Comprehensive Income			25	(7)		18
Cumulative effect of accounting changes			3			3
Exercise of stock options, value		1				1
Stock-based employee compensation		3				3
Repurchase of common stock, value					$ (16)	(16)
Balance, shares at Sep. 30, 2019	148,000,000
Balance at Sep. 30, 2019	$ 2	$ 2,330	$ 313	$ (8)	$ (300)	$ 2,337
Treasury Stock, Shares at Sep. 30, 2019					(12,000,000)	(12,135,945)

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Restructuring And Other Charges (Tables)

9 Months Ended

Sep. 30, 2019

Restructuring And Other Charges [Abstract]

Schedule Of Restructuring Charges

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Terminix(1)	$	1	$	—	$	4	$	2
ServiceMaster Brands(2)		—		—		2		1
Corporate and Other Operations(3)		1		—		6		3
Global Service Center relocation(4)		—		—		1		8
Total restructuring charges	$	3	$	1	$	13	$	13

___________________________________

(1)For the three and nine months ended September 30, 2019, these charges included $1 million and $4 million, respectively, of severance and other costs. Severance and other costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018. For the nine months ended September 30, 2018, restructuring charges included $2 million of severance and other costs.

(2)For the nine months ended September 30, 2019, these charges included $2 million of severance costs, of which less than $1 million were unpaid as of September 30, 2019. For the nine months ended September 30, 2018, these charges included $1 million of severance and other costs.

(3)We have historically made changes on an ongoing basis to enhance capabilities and reduce costs in our corporate functions that provide company-wide administrative services to support operations. For the three and nine months ended September 30, 2019, these charges included $1 million and $5 million, respectively, of professional fees, accelerated depreciation and other costs to enhance capabilities and align corporate functions with those required to support our strategic needs after the American Home Shield spin-off. For the nine months ended September 30, 2019 and 2018, these charges included $1 million and $3 million of severance and other costs. Corporate restructuring costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018.

(4)For the nine months ended September 30, 2019 and 2018, these charges included lease termination and other charges of $1 million and $8 million, respectively, related to the relocation. Global Service Center relocation costs of $1 million were unpaid and accrued as of September 30, 2019, which includes amounts previously accrued as of December 31, 2018.

Schedule Of Reconciliation Of The Beginning And Ending Balances Of Accrued Restructuring Charges

	Accrued
	Restructuring
(In millions)	Charges
Balance as of December 31, 2018	$	7
Costs incurred		13
Costs paid or otherwise settled		(17)
Balance as of September 30, 2019	$	3
Balance as of December 31, 2017	$	6
Costs incurred		13
Costs paid or otherwise settled		(11)
Balance as of September 30, 2018	$	8

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

‎

Note 18. 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 share units are reflected in diluted earnings per share by applying the treasury stock method.

A reconciliation of the amounts included in the computation of basic earnings per share from continuing operations and diluted earnings per share from continuing operations is as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions, except per share data)	2019		2018		2019		2018
Income from continuing operations	$	26	$	18	$	155	$	74
Weighted-average common shares outstanding		135.8		135.6		135.9		135.4
Effect of dilutive securities:
RSUs		0.3		0.2		0.3		0.2
Stock options(1)		0.3		0.2		0.3		0.2
Weighted-average common shares outstanding—assuming dilution		136.5		136.0		136.5		135.8
Basic earnings per share from continuing operations	$	0.19	$	0.13	$	1.14	$	0.55
Diluted earnings per share from continuing operations	$	0.19	$	0.13	$	1.13	$	0.55

___________________________________

(1)Options to purchase 0.5 million shares for the three months ended September 30, 2018, and 0.5 million and 0.4 million shares for the nine months ended September 30, 2019 and 2018, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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Acquisitions

9 Months Ended

Sep. 30, 2019

Acquisitions [Abstract]

Acquisitions

Note 14. Acquisitions

Acquisitions have been accounted for as business combinations using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. Asset acquisitions have been accounted for under ASU 2017-01. The assets and liabilities of these businesses were recorded in the financial statements at their estimated fair values as of the acquisition dates.

During the nine months ended September 30, 2019, we completed 30 acquisitions, including 27 pest control acquisitions, the reacquisition of two ServiceMaster Brands franchisees and a ServiceMaster Brands tuck-in. Of these, 27 were accounted for as business combinations and three as asset acquisitions. We funded approximately $345 million at closing for these acquisitions using available cash on hand and borrowings under our revolving credit facility. Another $14 million of deferred purchase price is due to the sellers between one year and five years from the acquisition dates.

On September 6, 2019, we acquired Nomor, a leading provider of pest control services in Sweden and Norway, for approximately 2 billion Swedish krona (approximately $207 million). This strategic acquisition launches our expansion into the European pest control market. Cash acquired in the acquisition was approximately $9 million. We funded the acquisition using cash on hand and proceeds from a $120 million borrowing under our revolving credit facility. Nomor contributed approximately $4 million

of revenue and $1 million of Adjusted EBITDA since the date of acquisition through September 30, 2019. We granted 87,920 of performance shares to Nomor executives in connection with this acquisition. The grant had a grant date fair value of $56.87 per share, which represented the then current fair value of our common stock at the grant date. These performance shares are scheduled to vest on December 31, 2022, based on the achievement of three year cumulative Adjusted EPS and revenue targets established at the grant date and subject to an executive’s continued employment. As the performance shares contain a performance condition, stock-based compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the number of awards expected to vest.

Nomor is included in the condensed consolidated statements of financial position based on an allocation of the purchase price. Given the timing and complexity of this acquisition, the presentation of Nomor in our financial statements, including the allocation of the purchase price, is preliminary and will likely change in future periods, perhaps significantly, as fair value estimates of the assets acquired and liabilities assumed are refined during the measurement period. Specifically, we are still evaluating working capital balances, the intangible and tangible assets acquired, deferred revenue balances, as well as the appropriate useful lives to assign to all assets, including intangibles. The majority of this purchase price allocated to goodwill is not expected to be deductible for income tax purposes. We recognized approximately $4 million as Acquisition-related costs on the condensed consolidated statements of operations and comprehensive income related to our acquisition of Nomor in the three and nine months ended September 30, 2019. We will complete the purchase price allocation no later than the third quarter of 2020.

A preliminary purchase price allocation is as follows (in millions):

Current assets(1)	$	19
Property and equipment		6
Goodwill(2)		152
Identifiable intangible assets(3)		94
Current liabilities(4)		(21)
Long-term liabilities(2)		(44)
Total purchase price	$	207

___________________________________

(1)Primarily trade receivables and cash.

(2)Includes $20 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets.

(3)Primarily customer lists.

(4)Primarily advanced collections from customers.

The following unaudited pro forma consolidated financial information presents the combined operations of ServiceMaster and Nomor for the three and nine months ended September 30, 2019 and 2018, as if the acquisition had occurred at the beginning of 2018 (in millions, except per share data):  

	(Unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Consolidated revenue	$	537	$	508	$	1,605	$	1,480
Consolidated net income	$	29	$	71	$	160	$	205
Basic earnings per share	$	0.22	$	0.53	$	1.18	$	1.51
Diluted earnings per share	$	0.21	$	0.52	$	1.17	$	1.51

ASC 805, “Business Combinations,” establishes guidelines regarding the presentation of the unaudited pro forma information. Therefore, this unaudited pro forma information is not intended to represent, nor do we believe it is indicative of, the consolidated results of operations of ServiceMaster that would have been reported had the acquisition been completed at the beginning of 2018. This unaudited pro forma information does not give effect to the anticipated business and tax synergies of the acquisition and is not representative or indicative of the anticipated future consolidated results of operations of ServiceMaster.

The unaudited pro forma consolidated financial information reflects our historical financial information and the historical results of Nomor, after the conversion of Nomor’s accounting methods from local reporting standards to U.S. generally accepted accounting principles and adjusted to reflect the acquisition had it been completed as of the beginning of 2018. The most significant adjustments made to the pro forma financial information are the inclusion of $4 million of acquisition-related costs as if incurred in the first quarter of 2018, estimated quarterly interest expense of approximately $1 million related to financing obtained for the transaction and the estimated tax impact related to these pro forma adjustments. The unaudited pro forma financial information includes various assumptions, including those related to the preliminary purchase price allocation, that may be impacted upon the finalization of the purchase price allocation. The tax impact of these adjustments was calculated based on Nomor’s statutory rate.

As a result of all other acquisitions completed during the nine months ended September 30, 2019, we recorded preliminary values of $99 million of goodwill, $56 million of other intangible assets, primarily customer relationships, and $11 million of other

assets, primarily trade receivables and fixed assets. Given the timing and complexity of some of the acquisitions, their presentation in our financial statements, including the allocation of the purchase price, is preliminary and will likely change in future periods. Specifically, we are still evaluating working capital balances, the intangible and tangible assets acquired and the appropriate useful lives to assign to all assets. We will complete the purchase price allocations for these acquisitions no later than the third quarter of 2020, and in no instance more than one year from the date of acquisition.

On September 30, 2019, we also completed seven minority investments in pest control companies that are accounted for under the equity method and presented in Other assets on the condensed consolidated statements of financial position.

During the nine months ended September 30, 2018, we completed the acquisition of Copesan and six additional pest control acquisitions which have been accounted for as business combinations and purchased a ServiceMaster Restore master distributor within ServiceMaster Brands which has been accounted for as an asset acquisition in accordance with ASU 2017-01. We funded $161 million at closing for these acquisitions using available cash on hand. An additional $42 million of deferred purchase price and up to $14 million of earnouts contingent on the successful achievement of projected revenue and earnings targets are due to the sellers between one year and five years from the acquisition dates. During the nine months ended September 30, 2019, $4 million was paid related to these earnouts. In connection with these acquisitions, we recorded $145 million of goodwill and $72 of other intangibles, primarily customer lists and reacquired rights. As of September 30, 2019, the purchase price allocations for these acquisitions have been finalized.

Supplemental cash flow information regarding the acquisitions is as follows:

	Nine Months Ended
	September 30,
(In millions)	2019		2018
Assets acquired	$	431	$	241
Liabilities assumed(1)		(72)		(27)
Net assets acquired	$	359	$	214
Net cash paid	$	345	$	160
Seller financed debt		11		42
Contingent earnout		4		12
Purchase price	$	359	$	214

___________________________________

(1)Includes $21 million and $11 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets for the nine months ended September 30, 2019 and 2018, respectively. 

Subsequent to September 30, 2019, we acquired two commercial pest control companies for approximately $140 million.

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Restructuring And Other Charges (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 5	$ 1	$ 15	$ 13
Professional fees	2	0	2	0
Professional fees, net of tax	1		1
Restructuring Charges, Not Including Professional Fees [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	3	1	13	13
Restructuring charges, net of tax	$ 2	$ 1	$ 10	$ 10

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

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				Nine Months Ended
	September 30,				September 30,
(In millions, except per share data)	2019		2018		2019		2018
Income from continuing operations	$	26	$	18	$	155	$	74
Weighted-average common shares outstanding		135.8		135.6		135.9		135.4
Effect of dilutive securities:
RSUs		0.3		0.2		0.3		0.2
Stock options(1)		0.3		0.2		0.3		0.2
Weighted-average common shares outstanding—assuming dilution		136.5		136.0		136.5		135.8
Basic earnings per share from continuing operations	$	0.19	$	0.13	$	1.14	$	0.55
Diluted earnings per share from continuing operations	$	0.19	$	0.13	$	1.13	$	0.55

___________________________________

(1)Options to purchase 0.5 million shares for the three months ended September 30, 2018, and 0.5 million and 0.4 million shares for the nine months ended September 30, 2019 and 2018, respectively, were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive.

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Revenues (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Retained Earnings	$ 313		$ 313		$ 156
Notes receivable, net of allowances	45		45		$ 42
Revenue recognized	12	$ 12	$ 59	$ 61
Contract with customer asset term			1 year
Impact of adopting ASC 606 [Member] | Scenario, Adjustment [Member]
Disaggregation of Revenue [Line Items]
Retained Earnings	$ 3		$ 3

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Long-Term Debt (Interest Rate Swap And Refinancing of Indebtedness Narrative) (Details) - USD ($)								3 Months Ended					9 Months Ended
	Nov. 05, 2019	Oct. 15, 2019	Mar. 27, 2019	Mar. 12, 2019	Oct. 01, 2018	Aug. 01, 2018	Nov. 07, 2016	Jun. 30, 2019		Mar. 31, 2019		Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018		Aug. 16, 2018
Derivative [Line Items]
Borrowings of debt													$ 720,000,000	$ 1,000,000,000
Loss on extinguishment of debt												$ 10,000,000	6,000,000	10,000,000
Short-term Credit Facility [Member]
Derivative [Line Items]
Borrowings of debt				$ 600,000,000
Loss on extinguishment of debt													4,000,000
Spin-off [Member]
Derivative [Line Items]
Debt amount refinanced					$ 1,000,000,000
Amount de-designated from interest rate swap														7,000,000
Spin-off [Member] | Short-term Credit Facility [Member]
Derivative [Line Items]
Borrowings of debt						$ 1,000,000,000
Subsequent Event [Member] | Senior Secured Term Loan Facility Maturing In 2023 [Member]
Derivative [Line Items]
Debt amount refinanced	$ 171,000,000
Subsequent Event [Member] | Revolving Credit Facility Maturing In 2021 [Member]
Derivative [Line Items]
Debt amount refinanced	120,000,000
Subsequent Event [Member] | Short-term Debt [Member]
Derivative [Line Items]
Debt amount refinanced	150,000,000
Term Loan B Due 2026 [Member] | Subsequent Event [Member]
Derivative [Line Items]
Face amount of debt instrument	600,000,000
Revolving Credit Facility Due 2024 [Member] | Subsequent Event [Member]
Derivative [Line Items]
Face amount of debt instrument	$ 400,000,000
Senior Secured Term Loan Facility Maturing In 2023 [Member] | Secured Debt [Member]
Derivative [Line Items]
Loss on extinguishment of debt													4,000,000
Senior Secured Term Loan Facility Maturing In 2023 [Member] | Spin-off [Member] | Secured Debt [Member]
Derivative [Line Items]
Repayment of principal amount						982,000,000
Loss on extinguishment of debt												$ 10,000,000		$ 10,000,000
Frontdoor Notes [Member] | Spin-off [Member] | Loans Payable [Member]
Derivative [Line Items]
Face amount of debt instrument																	$ 350,000,000
Interest rate (as a percent)																	6.75%
Frontdoor Term Loan Facility [Member] | Spin-off [Member] | Revolving Credit Facility [Member]
Derivative [Line Items]
Face amount of debt instrument																	$ 650,000,000
Revolving Credit Facility Maturing In 2023 [Member] | Spin-off [Member]
Derivative [Line Items]
Maximum borrowing capacity																	$ 250,000,000
Revolving Credit Facility Maturing In 2023 [Member] | Spin-off [Member] | Secured Debt [Member]
Derivative [Line Items]
Repayment of principal amount						$ 982,000,000
Interest Rate Swap Contracts [Member]
Derivative [Line Items]
Derivative, Term of Contract							7 years
Derivative, Notional Amount							$ 650,000,000	$ 171,000,000		$ 209,000,000			$ 171,000,000		$ 650,000,000
Derivative, Average Fixed Interest Rate							1.493%	1.493%	[1]	1.493%	[1]		1.493%		1.493%	[1]
Derivative, Basis Spread on Variable Rate							2.50%
Floating Rate							one-month LIBOR
Derivative, Floor Interest Rate							0.00%
Derivative terminated			$ 479,000,000					$ 38,000,000		$ 441,000,000			$ 479,000,000
Interest Rate Swap Contracts [Member] | Subsequent Event [Member]
Derivative [Line Items]
Derivative, Term of Contract	7 years
Derivative, Notional Amount	$ 550,000,000
Derivative, Basis Spread on Variable Rate	1.75%
Derivative terminated		$ 171,000,000
Derivative, Fixed Interest Rate	1.615%

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

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Supplemental Cash Flow Information (Schedule Of Supplemental Information Relating To The Unaudited Condensed Consolidated Statements Of Cash Flows) (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash paid for or (received from):
Interest expense	$ 55	$ 95
Interest and dividend income	(2)	(1)
Income taxes, net of refunds	23	$ 40
Interest rate swap agreement termination fee	$ 12

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Condensed Consolidated Statements of Financial Position (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Condensed Consolidated Statements of Financial Position [Abstract]
Allowance for receivables (in dollars)	$ 24	$ 21
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	2,000,000,000	2,000,000,000
Common stock, shares issued (in shares)	147,841,177	147,209,928
Common stock, shares outstanding (in shares)	135,705,232	135,687,558
Treasury stock (in shares)	12,135,945	11,552,370

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2019

Significant Accounting Policies [Abstract]

Significant Accounting Policies

Note 2. Significant Accounting Policies

Our significant accounting policies are described in Note 2 to the audited consolidated financial statements included in our 2018 Form 10-K. There have been no material changes to the significant accounting policies for the three and nine months ended September 30, 2019, other than those described below.

Adoption of New Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (codified within FASB Accounting Standards Codification (“ASC”) 842) which is the final standard on accounting for leases. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, which amend ASU 2016-02 to provide companies an alternative transition method whereby it may elect to recognize and measure leases by applying the cumulative impact of adopting ASU 2016-02 to the opening retained earnings balance in the period of adoption, thereby removing the requirement that the financial statements of prior periods be restated. We utilized this alternative transition method. While both lessees and lessors are affected by the new guidance, the effects on lessees are much more significant. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. Entities are required to use a modified retrospective approach to adopt the guidance. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. We adopted the new lease guidance effective January 1, 2019, and elected certain of the available practical expedients upon adoption. See Note 13 for further discussion of our lease assets and liabilities.

‎

The impacts of the adoption of this ASU on our condensed consolidated statements of financial position are as follows:

	As previously reported,		Impact of adopting
(In millions)	December 31, 2018		ASC 842		January 1, 2019
Operating lease right-of-use assets	$	—	$	107	$	107
Finance lease assets, within Property and equipment, net		89		—		89
Total right-of-use assets	$	89	$	107	$	195
Other assets		87		—		86
Total assets	$	5,023	$	106	$	5,129
Current portion of long-term lease liability	$	—	$	15	$	15
Long-term lease liability		—		120		120
Current finance lease liability, within Current portion of long-term debt		31		—		31
Long-term finance lease liability, within Long-term debt		60		—		60
Total lease liabilities	$	90	$	135	$	225
Accrued liabilities, Other		61		(1)		60
Other long-term obligations, primarily self-insured claims		182		(28)		155
Total liabilities	$	2,818	$	106	$	2,925

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU simplifies certain aspects of hedge accounting and improves disclosures of hedging arrangements through the elimination of the requirement to separately measure and report hedge ineffectiveness. The ASU generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item in order to align financial reporting of hedging relationships with economic results. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. We adopted this ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements.” This ASU does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. We adopted this ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The amendments in ASU 2018-15 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We early adopted this ASU on January 1, 2019, resulting in the capitalization of certain development costs of approximately $9 million as of September 30, 2019, primarily related to our implementation of Salesforce to replace legacy operating systems.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018, with relief provided for filings made shortly after the final rule’s effective date in SEC Question 105.09 of the Exchange Act Forms C&DIs. We adopted this final rule on November 5, 2018, and modified our disclosures as necessary, which included the presentation of a condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018.

In October 2018, the FASB issued ASU No. 2018-16, “Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes,” which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. We adopted the ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations. 

‎

Accounting Standards Issued But Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments in ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments — Credit Losses.” This ASU does not change the core principle of the guidance in ASU 2016-13; instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. This ASU will have the same effective date and transition requirements as ASU 2016-13. We are currently evaluating the impact the adoption of ASU 2016-13 and ASU 2018-19 will have on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement.” This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The amendments in ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for the removed disclosures and delayed adoption is permitted until fiscal 2021 for the new disclosures. We are currently evaluating the disclosure changes necessary to our consolidated financial statements.

We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do not expect the future adoption of any such pronouncements will have a material impact on our financial condition or the results of our operations. 

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Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2019

Significant Accounting Policies [Abstract]

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (codified within FASB Accounting Standards Codification (“ASC”) 842) which is the final standard on accounting for leases. In July 2018, the FASB issued ASU 2018-10 and ASU 2018-11, which amend ASU 2016-02 to provide companies an alternative transition method whereby it may elect to recognize and measure leases by applying the cumulative impact of adopting ASU 2016-02 to the opening retained earnings balance in the period of adoption, thereby removing the requirement that the financial statements of prior periods be restated. We utilized this alternative transition method. While both lessees and lessors are affected by the new guidance, the effects on lessees are much more significant. The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. Entities are required to use a modified retrospective approach to adopt the guidance. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. We adopted the new lease guidance effective January 1, 2019, and elected certain of the available practical expedients upon adoption. See Note 13 for further discussion of our lease assets and liabilities.

‎

The impacts of the adoption of this ASU on our condensed consolidated statements of financial position are as follows:

	As previously reported,		Impact of adopting
(In millions)	December 31, 2018		ASC 842		January 1, 2019
Operating lease right-of-use assets	$	—	$	107	$	107
Finance lease assets, within Property and equipment, net		89		—		89
Total right-of-use assets	$	89	$	107	$	195
Other assets		87		—		86
Total assets	$	5,023	$	106	$	5,129
Current portion of long-term lease liability	$	—	$	15	$	15
Long-term lease liability		—		120		120
Current finance lease liability, within Current portion of long-term debt		31		—		31
Long-term finance lease liability, within Long-term debt		60		—		60
Total lease liabilities	$	90	$	135	$	225
Accrued liabilities, Other		61		(1)		60
Other long-term obligations, primarily self-insured claims		182		(28)		155
Total liabilities	$	2,818	$	106	$	2,925

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU simplifies certain aspects of hedge accounting and improves disclosures of hedging arrangements through the elimination of the requirement to separately measure and report hedge ineffectiveness. The ASU generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item in order to align financial reporting of hedging relationships with economic results. Entities must apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements must be applied prospectively. We adopted this ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements.” This ASU does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. We adopted this ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” This ASU requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any optional renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The amendments in ASU 2018-15 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We early adopted this ASU on January 1, 2019, resulting in the capitalization of certain development costs of approximately $9 million as of September 30, 2019, primarily related to our implementation of Salesforce to replace legacy operating systems.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018, with relief provided for filings made shortly after the final rule’s effective date in SEC Question 105.09 of the Exchange Act Forms C&DIs. We adopted this final rule on November 5, 2018, and modified our disclosures as necessary, which included the presentation of a condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018.

In October 2018, the FASB issued ASU No. 2018-16, “Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes,” which amends ASC 815, Derivatives and Hedging. This ASU adds the OIS rate based on SOFR to the list of permissible benchmark rates for hedge accounting purposes. We adopted the ASU on January 1, 2019, and it did not have a significant impact on our financial condition or the results of our operations.

Accounting Standards Issued But Not Yet Effective

Accounting Standards Issued But Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions and reasonable and supportable forecasts. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. The amendments in ASU 2016-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments — Credit Losses.” This ASU does not change the core principle of the guidance in ASU 2016-13; instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. This ASU will have the same effective date and transition requirements as ASU 2016-13. We are currently evaluating the impact the adoption of ASU 2016-13 and ASU 2018-19 will have on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement.” This ASU modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The amendments in ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for the removed disclosures and delayed adoption is permitted until fiscal 2021 for the new disclosures. We are currently evaluating the disclosure changes necessary to our consolidated financial statements.

We have reviewed all other recently issued, but not yet effective, accounting pronouncements and do not expect the future adoption of any such pronouncements will have a material impact on our financial condition or the results of our operations.

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Taxes [Abstract]

Income Taxes

Note 15. Income Taxes

As required by ASC 740, “Income Taxes,” we compute interim period income taxes by applying an anticipated annual effective tax rate to our year-to-date income or loss from continuing operations before income taxes, except for significant unusual or infrequently occurring items. Our estimated tax rate is adjusted each quarter in accordance with ASC 740.

The effective tax rate on income from continuing operations was 26.5 percent and 28.1 percent for the three months ended September 30, 2019 and 2018, respectively.

The effective tax rate on income from continuing operations was 20.0 percent and 30.3 percent for the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate on income from continuing operations for the nine months ended September 30, 2019, was primarily affected by the disposition of the Frontdoor retained shares in a non-taxable debt-for-equity exchange that was recorded discretely in the three months ended March 31, 2019.

As of both September 30, 2019 and December 31, 2018, we had $15 million of tax benefits primarily reflected in US Federal and state tax returns that have not been recognized for financial reporting purposes (“unrecognized tax benefits”). Based on information currently available, it is reasonably possible that over the next 12 month period unrecognized tax benefits may decrease by $2 million as the result of settlements of ongoing audits, statute of limitation expirations or final settlements of uncertain tax positions in multiple jurisdictions. Our policy is to recognize interest income, interest expense and penalties related to our tax positions within the tax provision.

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2019

Discontinued Operations [Abstract]

Schedule Of Operating Results Of Discontinued Operations

	Three Months Ended		Nine Months Ended
(In millions)	September 30, 2018		September 30, 2018
Revenue	$	377	$	979
Cost of services rendered and products sold		203		534
Operating expenses(1)		100		269
Interest and net investment income		—		(1)
Income before income taxes		75		177
Provision for income taxes		22		45
Gain from discontinued operations, net of income taxes	$	53	$	133

___________________________________

(1)Includes spin-off transaction costs incurred of $8 million and $23 million for the three and nine months ended September 30, 2018.

Schedule Of Cash Flows Of Discontinued Operations

	Nine Months Ended
(In millions)	September 30, 2018
Depreciation	$	8
Amortization		6
Capital expenditures		(18)

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Cash and Marketable Securities

9 Months Ended

Sep. 30, 2019

Cash and Marketable Securities [Abstract]

Cash and Marketable Securities

Note 11. Cash and Marketable Securities

Cash, money market funds and certificates of deposits with maturities of three months or less when purchased are included in Cash and cash equivalents on the condensed consolidated statements of financial position. As of September 30, 2019 and December 31, 2018, our marketable securities consisted primarily of a deferred compensation trust (“Debt securities”) and common equity securities (“Equity securities”). The amortized cost, fair value and gross realized and unrealized gains and losses of our short- and long-term investments in Debt and Equity securities are as follows:

			Gross Realized		Gross Realized
	Amortized		and Unrealized		and Unrealized		Fair
(In millions)	Cost		Gains		Losses		Value
September 30, 2019:
Debt securities	$	4	$	—	$	—	$	4
Equity securities		13		2		—		14
Total securities	$	17	$	2	$	—	$	19
December 31, 2018:
Debt securities	$	4	$	—	$	—	$	4
Equity securities		15		1		—		16
Total securities	$	19	$	1	$	—	$	21

We account for Equity securities at fair value with adjustments to fair value recognized in Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. For the nine months ended September 30, 2019, approximately $1 million of unrealized gains were recognized within Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. There were no unrealized gains or losses recognized for the three months ended September 30, 2019. For the nine months ended September 30, 2018, approximately $1 million of unrealized losses were recorded within Interest and net investment income in the condensed consolidated statements of operations and comprehensive income. There were no unrealized gains or losses recognized for the three months ended September 30, 2018.

We periodically review our Debt securities to determine whether there has been an other than temporary decline in value. There were no impairment charges due to declines in the value of these investments for the three and nine months ended September 30, 2019 and 2018.

Additionally, we hold minority interests in several strategic investments that do not have readily determinable fair values and are recorded at cost and are remeasured upon the occurrence of observable price changes or impairments. We account for these investments at fair value with adjustments to fair value recognized in our condensed consolidated statements of operations within Interest and net investment income. The investments are included within Other Assets on the condensed consolidated statements of financial position. At September 30, 2019, the carrying amount of these investments was $4 million.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets

Note 7. Goodwill and Intangible Assets

Goodwill and indefinite-lived intangible assets, primarily trade names, are not amortized and are subject to assessment for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate a potential impairment. Our annual assessment date is October 1. There were no impairment charges recorded in the three and nine months ended September 30, 2019 and 2018. There were no accumulated impairment losses recorded as of September 30, 2019. The table below summarizes the goodwill balances for continuing operations by reportable segment and Corporate and Other Operations:

					Corporate and
			ServiceMaster		Other
(In millions)	Terminix		Brands		Operations(1)		Total
Balance as of December 31, 2018	$	1,781	$	175	$	—	$	1,956
Acquisitions		78		7		167		251
Impact of foreign exchange rates		—		—		(2)		(2)
Balance as of September 30, 2019	$	1,859	$	182	$	164	$	2,206

___________________________________

(1)Corporate and Other Operations includes goodwill related to pest control acquisitions in Europe completed during the nine months ended September 30, 2019. See Note 14 for further discussion of these acquisitions and purchase price allocations.

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

	As of September 30, 2019						As of December 31, 2018
			Accumulated						Accumulated
(In millions)	Gross		Amortization		Net		Gross		Amortization		Net
Trade names(1)	$	1,482	$	—	$	1,482	$	1,482	$	—	$	1,482
Customer relationships		593		(418)		176		469		(406)		64
Franchise agreements		88		(75)		13		88		(73)		15
Other		86		(39)		47		62		(35)		27
Total	$	2,249	$	(531)	$	1,718	$	2,101	$	(513)	$	1,588

___________________________________

(1)Not subject to amortization.

For the existing intangible assets, we anticipate amortization expense for the remainder of 2019 and each of the next five years of $6 million, $24 million, $22 million, $20 million, $17 million and $12 million, respectively. These amounts exclude the

intangible assets acquired in connection with the European pest control acquisitions completed during the three months ended September 30, 2019, as intangible asset values and the related useful lives have not yet been finalized.

 

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Business Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2019

Business Segment Reporting [Abstract]

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Revenue:
Terminix	$	461	$	436	$	1,375	$	1,259
ServiceMaster Brands		63		60		191		183
Reportable Segment Revenue	$	524	$	496	$	1,566	$	1,442
Corporate and Other Operations		4		—		4		1
Total Revenue	$	528	$	496	$	1,570	$	1,443
Reportable Segment Adjusted EBITDA:(1)
Terminix	$	72	$	81	$	261	$	277
ServiceMaster Brands		22		21		70		67
Reportable Segment Adjusted EBITDA	$	95	$	102	$	330	$	344

___________________________________

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

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2019		2018		2019		2018
Net Income	$	25	$	71	$	154	$	207
Unallocated corporate expenses		(2)		(4)		(6)		(6)
European pest control		(1)		—		(1)		—
Costs historically allocated to American Home Shield		—		11		—		33
Depreciation and amortization expense		26		24		74		68
Acquisition-related costs		8		1		12		2
Fumigation related matters		—		1		—		1
Non-cash stock-based compensation expense		3		2		12		10
Restructuring and other charges		5		1		15		13
Realized (gain) on investment in frontdoor, inc.		—		—		(40)		—
(Gain) loss from discontinued operations, net of income taxes		—		(53)		1		(133)
Provision for income taxes		9		7		39		32
Loss on extinguishment of debt		—		10		6		10
Interest expense		19		33		64		107
Reportable Segment Adjusted EBITDA	$	95	$	102	$	330	$	344

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies [Abstract]

Schedule Of Reconciliation Of Beginning And Ending Accrued Self-Insured Claims

	Accrued
	Self-insured
(In millions)	Claims, Net
Balance as of December 31, 2018	$	111
Provision for self-insured claims		26
Cash payments		(28)
Balance as of September 30, 2019	$	108
Balance as of December 31, 2017	$	115
Provision for self-insured claims		23
Cash payments		(26)
Balance as of September 30, 2018	$	112

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Cash and Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2019

Cash and Marketable Securities [Abstract]

Schedule Of Amortized Cost, Fair Value And Gross Unrealized Gains And Losses Of The Company's Short- And Long-Term Investments In Debt And Equity Securities

			Gross Realized		Gross Realized
	Amortized		and Unrealized		and Unrealized		Fair
(In millions)	Cost		Gains		Losses		Value
September 30, 2019:
Debt securities	$	4	$	—	$	—	$	4
Equity securities		13		2		—		14
Total securities	$	17	$	2	$	—	$	19
December 31, 2018:
Debt securities	$	4	$	—	$	—	$	4
Equity securities		15		1		—		16
Total securities	$	19	$	1	$	—	$	21

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Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Indefinite-lived Intangible Assets [Line Items]
Accumulated impairment losses recorded in continuing operations	$ 0		$ 0
Amortization expense, for the remainder of 2019	6		6
Amortization expense, 2020	24		24
Amortization expense, 2021	22		22
Amortization expense, 2022	20		20
Amortization expense, 2023	17		17
Amortization expense, Thereafter	12		12
Trade Names [Member]
Indefinite-lived Intangible Assets [Line Items]
Goodwill and trade name impairment	$ 0	$ 0	$ 0	$ 0

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Discontinued Operations (Narrative) (Details) - USD ($) $ in Millions		1 Months Ended	3 Months Ended	9 Months Ended
	Oct. 01, 2018	Mar. 31, 2019	Sep. 30, 2019	Sep. 30, 2019
Details of assets and liabilities and operating results of discontinued operations
Number of shares of common stock shares received from spinoff company	1
Number of shares of Parent common stock exchanged for shares of Spinoff Company	2
Sublease Income			$ 1	$ 2
Frontdoor, inc. [Member]
Details of assets and liabilities and operating results of discontinued operations
Pro rata dividend to the Company's stockholders, percent of outstanding shares of common stock	80.20%
Percentage of outstanding common share exchanged		19.80%		19.80%
Transition Service Agreement, Fees Recorded During Period			1	$ 2
Rental income			1	2
Sublease Income			1	$ 6
Written notice period for termination of service agreement				90 days
Payments received from spin-off entity				$ 1
Proceeds from related party				$ 4
Maximum [Member] | Frontdoor, inc. [Member]
Details of assets and liabilities and operating results of discontinued operations
Payments received from spin-off entity			1
Proceeds from related party			$ 1

XML

Comprehensive Income (Narrative) (Details) - USD ($) $ in Millions			3 Months Ended		9 Months Ended
	Mar. 27, 2019	Jan. 01, 2018	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2019
Derivative [Line Items]
Unrealized gain on marketable securities					$ 3
Unrealized gain on marketable securities, net of tax					2
Tax Cuts and Jobs Act, Reclassification from AOCI to Retained Earnings, Tax Effect		$ 4
Interest Rate Swap Contracts [Member]
Derivative [Line Items]
Derivative Notional Amount Agreement Terminated	$ 479		$ 38	$ 441	479
Derivative, Fair Value, Net					12
Interest rate swap, remaining unamortized amount					$ 10

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Leases (Components Of Lease Expense) (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Depreciation of finance lease ROU assets	$ 9	$ 25
Interest on finance lease liabilities	1	4
Operating lease cost	7	20
Variable lease cost	1	3
Sublease income	(1)	(2)
Total lease cost	$ 17	$ 49

XML

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		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Segment Reporting Information [Line Items]
Revenue		$ 528	$ 496	$ 1,570	$ 1,443
Reportable Segment Adjusted EBITDA		95	102	330	344
Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue		524	496	1,566	1,442
Reportable Segment Adjusted EBITDA	[1]	95	102	330	344
Terminix [Member]
Segment Reporting Information [Line Items]
Revenue		461	436	1,375	1,259
Terminix [Member] | Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue		461	436	1,375	1,259
Reportable Segment Adjusted EBITDA	[1]	72	81	261	277
ServiceMaster Brands [Member]
Segment Reporting Information [Line Items]
Revenue		63	60	191	183
ServiceMaster Brands [Member] | Operating Segment [Member]
Segment Reporting Information [Line Items]
Revenue		63	60	191	183
Reportable Segment Adjusted EBITDA	[1]	22	$ 21	70	67
Corporate [Member]
Segment Reporting Information [Line Items]
Revenue		$ 4		$ 4	$ 1

[1] Presented below is a reconciliation of Net Income to Reportable Segment Adjusted EBITDA:

XML

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	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
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)	$ 3
Total gains (losses) (realized and unrealized)
Included in earnings		3
Included in other comprehensive income	2	1
Settlements		(3)
Balance at the end of the period	$ (1)	$ 4

XML

Acquisitions (Narrative) (Details) $ / shares in Units, kr in Billions				1 Months Ended		3 Months Ended			9 Months Ended
		Sep. 06, 2019 SEK (kr)	Sep. 06, 2019 USD ($) $ / shares	Nov. 04, 2019 USD ($) item	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Sep. 30, 2019 USD ($) item	Sep. 30, 2018 USD ($) item	Dec. 31, 2018 USD ($)
Acquisitions [Line Items]
Number of Businesses Acquired | item									30
Number of minority investments completed | item									7
Net purchase price									$ 359,000,000	$ 214,000,000
Net cash paid									345,000,000	160,000,000
Goodwill					$ 2,206,000,000	$ 2,206,000,000			2,206,000,000		$ 1,956,000,000
Proceeds from revolving credit facility									600,000,000
Payments for Previous Acquisition									4,000,000
Contingent consideration					14,000,000	14,000,000			14,000,000
Interest expense						19,000,000	$ 33,000,000		64,000,000	107,000,000
Customer Relationships [Member]
Acquisitions [Line Items]
Other intangibles related to acquisitions					56,000,000	56,000,000			56,000,000
Customer Lists [Member]
Acquisitions [Line Items]
Other intangibles related to acquisitions							72,000,000			$ 72,000,000
Other [Member]
Acquisitions [Line Items]
Other intangibles related to acquisitions					11,000,000	11,000,000			$ 11,000,000
Pest Acquisitions [Member]
Acquisitions [Line Items]
Number of Businesses Acquired | item									27	6
ServiceMaster Brands Franchisees [Member]
Acquisitions [Line Items]
Number of Businesses Acquired | item									2
Copesan And Four Pest Control Acquisitions [Member]
Acquisitions [Line Items]
Net purchase price										$ 161,000,000
Goodwill							145,000,000			145,000,000
Copesan And Four Pest Control Acquisitions [Member] | Deferred Purchase Price [Member]
Acquisitions [Line Items]
Net purchase price, fair value							42,000,000			42,000,000
Copesan And Four Pest Control Acquisitions [Member] | Earnout [Member]
Acquisitions [Line Items]
Net purchase price, fair value							$ 14,000,000			$ 14,000,000
30 Acquisitions [Member]
Acquisitions [Line Items]
Goodwill					99,000,000	$ 99,000,000			$ 99,000,000
Asset Acquisitions [Member]
Acquisitions [Line Items]
Number of Businesses Acquired | item									3
Nomor [Member]
Acquisitions [Line Items]
Cash Acquired from Acquisition			$ 9,000,000
Net cash paid		kr 2	207,000,000
Goodwill	[1]		152,000,000
Proceeds from revolving credit facility			120,000,000
Revenue since acquisition					4,000,000
Adjusted EBITDA since acquisition					$ 1,000,000
Other intangibles related to acquisitions	[2]		94,000,000
Acquisition related costs			4,000,000					$ 4,000,000
Interest expense								$ 1,000,000
Minimum [Member]
Acquisitions [Line Items]
Contingent consideration, term									1 year	1 year
Maximum [Member]
Acquisitions [Line Items]
Contingent consideration, term									5 years	5 years
Period from acquisition, purchase price allocation will be completed									1 year
Performance Based Shares [Member] | Nomor [Member]
Acquisitions [Line Items]
Granted shares related to acquisition			$ 87,920
Grant date fair value | $ / shares			$ 56.87
Vesting period									3 years
Subsequent Event [Member] | Commercial Pest Control Companies [Member]
Acquisitions [Line Items]
Number of Businesses Acquired | item				2
Net cash paid				$ 140,000,000

[1] Includes $20 million of deferred tax liabilities recognized as a result of tax basis differences in intangible assets.

[2] Primarily customer lists.