American Home Shield 2015 Annual Report Download - page 44

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We and our operating companies own and lease a variety of facilities, principally in the United States, for branch and service
center operations and for office, storage, call center and data processing space. Our branches are strategically located to optimize route
efficiency, market coverage and branch overhead. The following table identifies the number of owned and leased facilities, other than
the headquarters properties listed above, used by each of our reportable segments as of December 31, 2015. We believe that these
facilities, when considered with the corporate headquarters, call center facilities, offices and training facilities described above, are
suitable and adequate to support the current needs of its business.
Owned Leased
Reportable Segment Facilities Facilities
Terminix 19 334
American Home Shield 1 4
Franchise Services Group — 65
ITEM 3. LEGAL PROCEEDINGS
In March 2015, we were informed that the DOJ initiated a criminal investigation into allegations that a local Terminix
branch used methyl bromide as a fumigant at a resort in St. John, U.S. Virgin Islands, resulting in serious injuries to four
members of a family vacationing there. The U.S. Virgin Islands government is also investigating the matter, as is the EPA. The
EPA also requested information concerning the possible distribution, sale or use of methyl bromide in Puerto Rico. During the
year ended December 31, 2015, we recorded in our consolidated statement of operations and comprehensive income (loss) a
charge of $3 million in connection with civil claims related to the U.S. Virgin Islands matter, an amount equal to our insurance
deductible under our general liability insurance program, although no assurance can be given regarding our insurance coverage
or recoveries in connection with such civil claims.
We continue to cooperate fully with all relevant governmental authorities in their investigations and have had
discussions with the DOJ concerning potential resolution of the criminal investigation. Although we have recorded in our
consolidated statement of operations and comprehensive income (loss) a charge of $8 million as a result of those discussions,
the amount and extent of any further potential penalties, fines, sanctions, costs and damages that the federal or other
governmental authorities may yet impose, investigation or other costs and reputational harm, as well as the impact of any civil,
criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to the U.S. Virgin Islands
incident, which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs
or damages may not be covered under our general liability insurance program.
On September 15, 2015, a lawsuit was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach
County, Florida, styled Carl Robert McCaughey, et al. v. Terminix International Company Limited Partnership, Sunland Pest
Control Services, Inc., et al. (Case No. 32080796). The lawsuit alleges that fumigation of a Florida family’s residence by
Sunland, a subcontractor of Terminix, resulted in serious injuries to one of the family’s children, alleges claims for negligence
and strict liability, and seeks an unspecified amount of monetary and punitive damages. The court has set a trial date in
September 2016. The DOJ and other federal and state agencies are investigating the matter, and the DOJ has filed criminal
charges against Sunland and two persons associated with Sunland. We continue to cooperate fully with all relevant
governmental authorities. The amount and extent of any potential penalties, fines, sanctions, costs and damages that the federal
or other governmental authorities may impose, investigation or other costs and reputational harm, as well as the impact of any
civil, criminal or other claims or judicial, administrative or regulatory proceedings resulting from or related to this incident,
which could be material, is not currently known or reasonably estimable, and any such penalties, fines, sanctions, costs or
damages may not be covered under our general liability insurance program.
In addition to the matters discussed above, in the ordinary course of conducting business activities, we and our subsidiaries
become involved in judicial, administrative and regulatory proceedings involving both private parties and governmental authorities.
These proceedings include insured and uninsured matters that are brought on an individual, collective, representative and class action
basis, or other proceedings involving regulatory, employment, general and commercial liability, automobile liability, wage and hour,
environmental and other matters. We have entered into settlement agreements in certain cases, including with respect to putative
collective and class actions, which are subject to court or other approvals. If one or more of our settlements are not finally approved,
we could have additional or different exposure, which could be material. Subject to the paragraphs above, we do not expect any of
these proceedings to have a material effect on our reputation, business, financial position, results of operations or cash flows; however,
we can give no assurance that the results of any such proceedings will not materially affect our reputation, business, financial position,
results of operations and cash flows. See Note 9 to the consolidated financial statements for more details.
ITEM 4. MINE SAFETY DISCLOSURES
None.
42 2015 Annual Report