American Home Shield 2015 Annual Report Download - page 94

Table of Contents
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31, 2015, 2014 and 2013, these charges included severance and other costs of $1 million, $5 million and $1 million,
respectively. For the years ended December 31, 2014 and 2013, these charges also included professional fees of $1 million
and $3 million, respectively.
The pretax charges discussed above are reported in Restructuring charges in the consolidated statements of operations and
comprehensive (loss) income.
A reconciliation of the beginning and ending balances of accrued restructuring charges, which are included in Accrued
liabilities—Other on the consolidated statements of financial position, is presented as follows:
Accrued
Restructuring
(In millions) Charges
Balance as of December 31, 2013 $ 1
Costs incurred 11
Costs paid or otherwise settled (8)
Balance as of December 31, 2014 4
Costs incurred 5
Costs paid or otherwise settled (7)
Balance as of December 31, 2015 $ 1
Note 9. Commitments and Contingencies
The Company leases certain property and equipment under various operating lease arrangements. Most of the property leases
provide that the Company pay taxes, insurance and maintenance applicable to the leased premises. As leases for existing locations
expire, the Company expects to renew the leases or substitute another location and lease.
Rental expense for the years ended December 31, 2015, 2014 and 2013 was $29 million, $31 million and $29 million,
respectively. Based on leases in place as of December 31, 2015, future long-term non-cancelable operating lease payments will be
approximately $20 million in 2016, $17 million in 2017, $13 million in 2018, $9 million in 2019, $2 million in 2020 and $5 million in
2021 and thereafter.
In the normal course of business, the Company periodically enters into agreements that incorporate indemnification
provisions. While the maximum amount to which the Company may be exposed under such agreements cannot be estimated, the
Company does not expect these guarantees and indemnifications to have a material effect on the Company’s business, financial
condition, results of operations or cash flows.
The Company carries insurance policies on insurable risks at levels that it believes to be appropriate, including workers’
compensation, auto and general liability risks. The Company purchases insurance policies from third-party insurance carriers, which
typically incorporate significant deductibles or self-insured retentions. The Company is responsible for all claims that fall below the
retention limits. In determining the Company’s accrual for self-insured claims, the Company uses historical claims experience to
establish both the current year accrual and the underlying provision for future losses. This actuarially determined provision and related
accrual include known claims, as well as incurred but not reported claims. The Company adjusts its estimate of accrued self-insured
claims when required to reflect changes based on factors such as changes in health care costs, accident frequency and claim severity.
A reconciliation of beginning and ending accrued self-insured claims, which are included in Accrued liabilities—Self-insured
claims and related expenses and Other long-term obligations, primarily self-insured claims on the consolidated statements of financial
position, net of insurance recoverables, which are included in Prepaid expenses and other assets and Other assets on the consolidated
statements of financial position, is presented as follows:
Accrued
Self-insured
(In millions) Claims, Net
Balance as of December 31, 2013 $ 101
Provision for self-insured claims 45
Cash payments (43)
Balance as of December 31, 2014 104
Provision for self-insured claims 41
Cash payments (31)
Balance as of December 31, 2015 $ 114
Accruals for home warranty claims in the American Home Shield business are made based on the Company’s claims
experience and actuarial projections. Termite damage claim accruals in the Terminix business are recorded based on both the
historical rates of claims incurred within a contract year and the cost per claim. Current activity could differ causing a change in
estimates. The Company has certain liabilities with respect to existing or potential claims, lawsuits and other proceedings. The
92 2015 Annual Report