American Home Shield 2009 Annual Report Download

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SERVICEMASTER CO
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/30/2010
Filed Period 12/31/2009

Table of contents

  • Page 1
    SERVICEMASTER CO 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/30/2010 Filed Period 12/31/2009

  • Page 2
    ...1934 Commission File Number 1-14762 THE SERVICEMASTER COMPANY (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 860 Ridge Lake Boulevard, Memphis, Tennessee 38120 (Address of principal executive offices, including zip code...

  • Page 3
    ...held corporation and its equity shares are not publicly traded. At March 30, 2010, 1,000 shares of the registrant's common stock were outstanding, all of which were owned by CDRSVM Holding, Inc. The ServiceMaster Company is not required to file this Annual Report on Form 10-K with the Securities and...

  • Page 4
    ... 132 Item 9A. Controls and Procedures 132 Item 9B. Other Information 133 PART III Item 10. Directors, Executive Officers and Corporate Governance 133 Item 11. Executive Compensation 136 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 153 Item...

  • Page 5
    ... LandCare; Terminix; American Home Shield; ServiceMaster Clean; and Other Operations and Headquarters. All ServiceMaster subsidiaries are wholly owned. The financial information for each operating segment for 2009, 2008 and 2007 is contained in Item 8 of this Annual Report on Form 10-K. MERGER...

  • Page 6
    ... revenue from continuing operations derived from each of ServiceMaster's reportable segments in the years indicated: Segment 2009 2008 2007 TruGreen LawnCare TruGreen LandCare Terminix American Home Shield ServiceMaster Clean Other Operations and Headquarters TruGreen LawnCare Segment...

  • Page 7
    ... air conditioning systems, water heaters and other covered household systems and appliances that break down due to normal wear and tear and services those contracts through independent repair contractors. As of December 31, 2009, American Home Shield issued and administered home service contracts...

  • Page 8
    ...a customer fails to make payments under a retail installment sales contract for 120 days after the due date, Terminix purchases the installment contract from SMAC. Headquarters Functions. The Business Support Center, headquartered in Memphis, Tennessee, administers payroll, benefits, risk management...

  • Page 9
    ...the commercial pest control segment. Home Service Contracts for Systems and Appliances. Competition in the market segment for home service contracts for household systems and appliances comes mainly from regional providers of home service contracts. Home Inspection Services. owned firms. Competition...

  • Page 10
    ... include laws relating to consumer protection, wage and hour regulations, deceptive trade practices, permit and license requirements, real estate settlements, workers' safety, environmental regulations and employee benefits. The TruGreen LawnCare, TruGreen LandCare and Terminix businesses must also...

  • Page 11
    ..., we provide various insurance coverages, including deductible reimbursement policies, to our business units through our wholly owned captive insurance company, which is domiciled in Vermont. EMPLOYEES The average number of persons employed by ServiceMaster during 2009 was approximately 27,000...

  • Page 12
    ... with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K. Risks Related to Our Business and Our Industry Recent credit and financial market events...

  • Page 13
    ... institution or insurance company with which we do business may have a material adverse effect on our financial position, results of operations and cash flows. Weather conditions and seasonality affect the demand for our services and our results of operations. The demand for our services and our...

  • Page 14
    ... travel to service locations due to hazardous road conditions. In addition, severe temperatures can lead to an increase in service requests related to household systems and appliances in our home service contract business, resulting in higher costs and lower profitability. Our market segments are...

  • Page 15
    ... relations, permit and licensing requirements, workers' safety, the environment, insurance and home service contracts, employee benefits, marketing (including telemarketing or green marketing) and advertising, the application of fertilizers, herbicides, pesticides and other chemicals, noise and air...

  • Page 16
    ... to provide additional health insurance benefits to our employees would likely increase our expenses, and any such increases could be significant enough to materially impact our financial position, results of operations and cash flows. The loss of the services of management personnel and other...

  • Page 17
    ... compete effectively depends in part on our rights to service marks, trademarks, trade names and other intellectual property rights we own or license, particularly our registered brand names, ServiceMaster, Terminix, TruGreen, TruGreen LandCare, Merry Maids, ServiceMaster Clean, American Home Shield...

  • Page 18
    ... liabilities relating to violations of privacy laws or otherwise, which may lead to lower revenues, increased costs and other material adverse effects on our financial position, results of operations and cash flows. If we fail to protect the security of personal information about our customers, we...

  • Page 19
    ... resources needed to integrate new businesses, technologies, products, personnel or systems; the inability to retain employees, customers and suppliers; the assumption of actual or contingent liabilities; failure to follow internal processes; write-offs or impairment charges relating to goodwill and...

  • Page 20
    ... less debt or with comparable debt on more favorable terms and, as a result, they may be better positioned to withstand economic downturns; our ability to refinance debt may be limited or the associated costs may increase; and our flexibility to adjust to changing market conditions and ability to...

  • Page 21
    ... under the Revolving Credit Facility, as of December 31, 2009, and permit additional borrowings beyond those commitments under certain circumstances. In addition, we have the option to pay interest on portions of our debt by increasing the principal amount of the outstanding loans ("PIK Interest...

  • Page 22
    ... and as described under "Risks Relating to Our Business and Our Industry" above. The payment of ordinary and extraordinary dividends by our subsidiaries that are regulated as insurance, home service, or similar companies is subject to applicable state law limitations. If we cannot receive sufficient...

  • Page 23
    ... LandCare and Terminix, along with the corporate headquarters, are located in leased premises at 860 Ridge Lake Boulevard, Memphis, Tennessee. The headquarters for American Home Shield are located in leased premises at 889 Ridge Lake Boulevard, Memphis, Tennessee. The headquarters for ServiceMaster...

  • Page 24
    ...headquarters, call center facility, offices, training facilities and warehouses described above, are suitable and adequate to support the current needs of its business. Operating Company Owned Facilities Leased Facilities ITEM 3. TruGreen LawnCare TruGreen LandCare Terminix American Home Shield...

  • Page 25
    ... that will be used to pay all claims asserted, or arising, from cancellation of the stock options, including claims for attorney fees related thereto. The amount to be paid into the settlement fund is not material to the Company's financial condition or results of operations. The Court has set the...

  • Page 26
    ... improve the effectiveness and efficiency of its functional support areas, and accruals for employee retention and severance to be paid in future periods that are related to the Company's decision to consolidate its corporate headquarters into its operations support center in Memphis, Tennessee and...

  • Page 27
    ... business. This charge is classified within the financial statement caption "(loss) income from discontinued operations, net of income taxes". (2) The 2009 results include a $46.1 million ($29.6 million, net of tax) gain on extinguishment of debt related to the completion of open market purchases...

  • Page 28
    ... different, and sometimes higher, cost basis associated with the allocation of the purchase price. The Company refers to the operations of ServiceMaster for both the Predecessor and Successor periods. The Consolidated Statements of Financial Position as of December 31, 2009 and December 31, 2008 and...

  • Page 29
    ...Accounting Policies and Estimates" for further details. Represents the gain on extinguishment of debt recorded in the year ended December 31, 2009 related to the completion of open market purchases of $89.0 million in face value of the Company's Permanent Notes. Represents the increase in management...

  • Page 30
    ..., non-cash trade name impairment, residual value guarantee charge and management fee supported by the improved results at Terminix, American Home Shield, TruGreen LandCare and ServiceMaster Clean, offset, in part, by a decline in results at TruGreen LawnCare and Other Operations and Headquarters as...

  • Page 31
    ... at Terminix and the favorable impact of exiting certain fleet leases in 2008, offset, in part, by unfavorable trending in healthcare costs and a residual value guarantee charge. The Company reported selling and administrative expenses of $852.8 million for the year ended December 31, 2009 compared...

  • Page 32
    ... in work force and various process improvements, including the closing of American Home Shield's call center located in Santa Rosa, California, the organization of certain corporate support functions into centers of excellence which are expected to deliver higher quality services to our business...

  • Page 33
    ... costs of $3.1 million and severance costs of $0.3 million. The results for the year ended December 31, 2008 include restructuring charges related to the Company's consolidation of its corporate headquarters into its operations support center in Memphis, Tennessee and the closing of its headquarters...

  • Page 34
    ... Control Customers 78.5% Pest Control Customer Retention Rate (2)% (Reduction) Growth in Termite Customers 85.7% Termite Customer Retention Rate American Home Shield- 0% Growth (Reduction) in Home Service Contracts 63.8% Customer Retention Rate Segment Review (Year ended December 31, 2009 compared...

  • Page 35
    ... Company believes Comparable Operating Performance, which excludes the impact of purchase accounting and non-cash option and restricted stock expense adjustments, is useful to investors. The exclusion of the impact of these items facilitates a comparison of operating results from periods pre-dating...

  • Page 36
    ..., (iv) the Company's consolidation of its corporate headquarters into its operations support center in Memphis, Tennessee and the closing of its former headquarters in Downers Grove, Illinois, and (v) organizational changes at TruGreen LandCare and Merger related charges. Represents management and...

  • Page 37
    ... accounting(4) Comparable Operating Performance Memo: Items included in Comparable Operating Performance Restructuring charges and Merger related charges(5) Management fee(6) Other American Operations TruGreen TruGreen Home ServiceMaster and LawnCare LandCare Terminix Shield Clean Headquarters...

  • Page 38
    ... name impairment Adjusted EBITDA Non-cash option and restricted stock expense Non-cash charges (credits) attributable to purchase accounting(4) Comparable Operating Performance Memo: Items included in Comparable Operating Performance Restructuring charges and Merger related charges(5) Management fee...

  • Page 39
    ... EBITDA Non-cash option and restricted stock expense Non-cash (credits) charges attributable to purchase accounting(4) Comparable Operating Performance Memo: Items included in Comparable Operating Performance Restructuring charges and Merger related charges(5) Management fee(6) Memo: Items excluded...

  • Page 40
    ...loss on our American Home Shield segment investment portfolio. Cash, short-term and long-term marketable securities associated with regulatory requirements in connection with American Home Shield and for other purposes totaled $256.5 million as of December 31, 2009. American Home Shield interest and...

  • Page 41
    ..., (iv) the Company's consolidation of its corporate headquarters into its operations support center in Memphis, Tennessee and the closing of its former headquarters in Downers Grove, Illinois, and (v) organizational changes at TruGreen LandCare and Merger related charges. Represents management and...

  • Page 42
    ... Home Shield Segment The American Home Shield segment, which provides home service contracts to consumers that cover heating, ventilation, air conditioning ("HVAC"), plumbing and other systems and appliances, reported a 7.2 percent increase in revenue for the year ended December 31, 2009 compared...

  • Page 43
    ... million increase in interest and net investment income from the American Home Shield investment portfolio (primarily reflecting reductions in impairments of securities). American Home Shield's Comparable Operating Performance also reflects a decline in sales and marketing costs, offset, in part, by...

  • Page 44
    ...not fit within the long-term strategic plans of the Company and committed to a plan to sell the business. InStar provided disaster response and reconstruction services to primarily commercial customers and was previously reported as part of the Company's Other Operations and Headquarters segment. As...

  • Page 45
    ... as part of the purchase cost for financial reporting purposes. Represents a decrease in restructuring charges primarily resulting from completion of the consolidation of the Company's corporate headquarters into its operations support center in Memphis, Tennessee and completion of significant...

  • Page 46
    ... effect on investment income. Short term interest rates improved the Company's results of operations by $26.5 million pre-tax for the year ended December 31, 2008 compared to the combined periods for the year ended December 31, 2007. Operating and Non-Operating Expenses The Company reported cost...

  • Page 47
    ... financing to our franchisees and retail customers of our operating units, and interest income on other cash balances. The effective tax rate on income (loss) from continuing operations was a benefit of 23.9 percent for the year ended December 31, 2008 compared to a benefit of 35.1 percent for the...

  • Page 48
    ... restructuring charges related to the Company's consolidation of its corporate headquarters into its operations support center in Memphis, Tennessee and the closing of its headquarters in Downers Grove, Illinois. The transition to Memphis was substantially completed in 2007. Almost all costs related...

  • Page 49
    ... materials and labor management on the base contract maintenance portfolio and reduced overhead spending. The factors were offset, in part, by increased fuel costs. Terminix Segment The Terminix segment reported a 0.2 percent increase in revenue for the year ended December 31, 2008 compared to the...

  • Page 50
    ... Comparable Operating Performance reflects lower termite materials costs, effective management of seasonal staffing of production and sales labor, lower vehicle fleet counts and reduced overhead spending, offset, in part, by increased fuel costs. American Home Shield Segment The American Home Shield...

  • Page 51
    ...and Merger related charges and lower functional support costs, offset, in part, by a $1.1 million increase in management fees and a $9.5 million decrease in interest and net investment income. The Merry Maids operations reported comparable Comparable Operating Performance for the year ended December...

  • Page 52
    ... 31, 2009 compared to net cash provided from financing activities from continuing operations of $89.0 million for the year ended December 31, 2008. During the first quarter of 2009, the Company completed open market purchases of $89.0 million in face value of the Permanent Notes for a cost of...

  • Page 53
    ... Interest. All interest payments due through January 2010 were paid entirely as Cash Interest. The Company has elected to pay all interest payable in 2010 entirely as Cash Interest. Cash and short- and long-term marketable securities totaled $385.6 million at December 31, 2009, compared with $538...

  • Page 54
    ... the year ended December 31, 2009 related to this shortfall and will expense the remaining $6.3 million over the remainder of the lease term, which expires July 24, 2010. There was no similar charge in any prior period. The Company holds certain financial instruments that are measured at fair value...

  • Page 55
    ...31, 2009, Holdings has completed open market purchases totaling $65.0 million in face value of the Permanent Notes for a cost of $21.4 million. The debt acquired by Holdings has not been retired, and the Company has continued to pay interest in accordance with the terms of the debt. During the years...

  • Page 56
    ... subsidiaries to make distributions and dividends to us depends on their operating results, cash requirements and financial condition and general business conditions. Our insurance subsidiaries and home service and similar subsidiaries (through which we conduct our American Home Shield business) are...

  • Page 57
    ... are reported in the Consolidated Statements of Financial Position These amounts represent future interest payments related to the Company's existing debt obligations based on fixed and variable interest rates and principal maturities specified in the associated debt agreements. Payments related to...

  • Page 58
    ..., reflecting an increase in home service contracts written at American Home Shield. Inventories decreased from prior year levels, reflecting a change in the timing of inventory purchases relating to the Company's production season. There is seasonality in the lawn care operations. In the winter...

  • Page 59
    ... self-insurance claims and related expenses decreased from prior year levels, reflecting a reduction in required reserve levels under certain of our self-insurance programs, offset, in part, by an increase in accruals for home service contract claims in the American Home Shield business. Other...

  • Page 60
    ... 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. Accruals for home service contract claims in the American Home Shield business are...

  • Page 61
    ... carrying amount and the fair value of the asset. Changes in the estimated useful lives or in the asset values could cause the Company to adjust its book value or future expense accordingly. As part of applying purchase accounting related to the Merger, the Company has established useful lives for...

  • Page 62
    ... growth rates. The discount rates used in the DCF analyses are intended to reflect the risks inherent in the future cash flows of the respective reporting units. In addition, the market-based comparable and transaction approaches utilize comparable company public trading values, comparable company...

  • Page 63
    ... the estimation of fair value. The revenue growth assumption was based on expected sales growth to new customers, increased penetration of enhancement services to existing customers, improved retention rates and cross-selling to commercial customers of other business segments within the Company. The...

  • Page 64
    ... Company does not hold or issue derivative financial instruments for trading or speculative purposes. The Company has entered into specific financial arrangements in the normal course of business to manage certain market risks, with a policy of matching positions and limiting the terms of contracts...

  • Page 65
    ... the amount of acquired tax attributes be included in the Company's results of operations, rather than adjusting the allocated purchase price. This standard was effective on January 1, 2009 and is being applied prospectively to business combinations that have an acquisition date on or after January...

  • Page 66
    ... and related hedged items affect the entity's financial position, results of operations and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company adopted this standard in the first quarter of 2009...

  • Page 67
    ...the date through which subsequent events have been evaluated. ASU No. 2010-9 was effective upon issuance. The Company applied the provisions of this standard to these Consolidated Financial Statements and there was no material effect from that application. In September 2009, the FASB issued ASU 2009...

  • Page 68
    ... prices and lack of availability, including fuel and fertilizers; increases in operating costs, such as higher insurance premiums, self-insurance costs and health care costs; employee retention, labor shortages or increases in compensation and benefits costs; epidemics, pandemics or other public...

  • Page 69
    ...purposes. The Company has entered into specific financial arrangements, primarily interest rate swaps and fuel hedges, 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...

  • Page 70
    ...50% at December 31, 2009. In September 2008, the Company entered into a four-year interest rate swap agreement effective October 1, 2008. The notional amount of the swap agreement was $200.0 million. Under the terms of the agreement, the Company will pay a weighted average fixed rate of interest of...

  • Page 71
    ... pay rate 0.2% 0.3% 0.3% Average receive rate (1) Fuel Price Risk The Company is exposed to market risk for changes in fuel prices through the consumption of fuel by its vehicle fleet in the delivery of services to its customers. The Company uses approximately 25 million gallons of fuel on an annual...

  • Page 72
    ... DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors of The ServiceMaster Company Memphis, Tennessee We have audited the accompanying consolidated statements of financial position of The ServiceMaster Company and subsidiaries (the "Company") as of December 31, 2009...

  • Page 73
    ...,079 $3,311,432 $ Operating Revenue Operating Costs and Expenses: 1,913,329 2,024,196 Cost of services rendered and products sold 852,831 843,253 Selling and administrative expenses 161,886 173,626 Amortization expense 28,000 60,100 Trade name impairment 2,321 1,249 Merger related charges 24,555 11...

  • Page 74
    ... trade names, service marks and trademarks, net Notes receivable Long-term marketable securities Other assets Debt issuance costs Total Assets Liabilities and Shareholder's Equity: Current Liabilities: Accounts payable Accrued liabilities: Payroll and related expenses Self-insured claims and related...

  • Page 75
    ...Total comprehensive income Adoption of accounting standards for uncertain tax benefits Shareholders' dividends Distribution to noncontrolling interests Shares issued under options, grant plans and other (10,445 shares) Shares issued for acquisitions (56 shares) Accumulated Additional Retained Other...

  • Page 76
    ... income Other comprehensive loss, net of tax: Net unrealized gain on securities Net unrealized gain on derivative instruments Foreign currency translation Total comprehensive income Stock-based employee compensation -contribution from Holdings Balance December 31, 2009 1,473 1,473 1,473 (123,520...

  • Page 77
    See accompanying Notes to the Consolidated Financial Statements. 71

  • Page 78
    ... Option and restricted stock expense Trade name impairment Restructuring charges Cash payments related to restructuring charges Merger related charges Change in working capital, net of acquisitions: Current income taxes Receivables Inventories and other current assets Accounts payable Deferred...

  • Page 79
    Net Cash (Used for) Provided from Discontinued Operations Cash (Decrease) Increase During the Period Cash and Cash Equivalents at End of Period (3,480) 21,869 (1,132) (30,346) $ 207,219 $ 13,366 113,890 237,565 (...

  • Page 80
    ... the use of management estimates relate to revenue recognition; the allowance for uncollectible receivables; accruals for self-insured retention limits related to medical, workers' compensation, auto and general liability insurance claims; accruals for home service contracts and termite damage...

  • Page 81
    ... 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. Accruals for home service contract claims in the American Home Shield business are...

  • Page 82
    ...December 31, 2009 and 2008, respectively. Deferred revenue consists primarily of payments received for annual contracts relating to home service contracts, termite baiting, termite inspection, pest control and lawn care services. Deferred Customer Acquisition Costs: Customer acquisition costs, which...

  • Page 83
    ... carrying amount and the fair value of the asset. Changes in the estimated useful lives or in the asset values could cause the Company to adjust its book value or future expense accordingly. As part of applying purchase accounting related to the Merger, the Company has established useful lives for...

  • Page 84
    ... growth rates. The discount rates used in the DCF analyses are intended to reflect the risks inherent in the future cash flows of the respective reporting units. In addition, the market-based comparable and transaction approaches utilize comparable company public trading values, comparable company...

  • Page 85
    ... of Balance as of December 31, 2008 December 31, 2009 December 31, 2007 Impairment 2008 Impairment 2009 TruGreen LawnCare TruGreen LandCare Terminix American Home Shield ServiceMaster Clean Other Operations and Headquarters(1) Total $ 783.6 12.7 891.6 140.4 153.6 $ - $ (1.4) (16.5) - (1.0) 783...

  • Page 86
    ...1. Significant Accounting Policies (Continued) assessing the impairment of its trade names that was one percent higher across all business segments (holding all other assumptions unchanged), the Company would have recorded an additional impairment charge of approximately $300.0 million in 2009. The...

  • Page 87
    ... under accounting standards for share based payments, which require that stock options and share grants be measured at fair value and this value is recognized as compensation expense over the vesting period. Newly Issued Accounting Statements and Positions: ASC In June 2009, the FASB issued guidance...

  • Page 88
    ... the amount of acquired tax attributes be included in the Company's results of operations, rather than adjusting the allocated purchase price. This standard was effective on January 1, 2009 and is being applied prospectively to business combinations that have an acquisition date on or after January...

  • Page 89
    ... Notes to the Consolidated Financial Statements (Continued) Note 1. Significant Accounting Policies (Continued) standard is effective for financial statements issued for fiscal years beginning after November 15, 2008 (calendar year 2009). The Company adopted this standard in the first quarter of...

  • Page 90
    ... certain of the Company's existing indebtedness and to pay related transaction fees and expenses. In addition, letters of credit issued under a new $150.0 million pre-funded letter of credit facility were used to replace and/or secure letters of credit previously issued under a ServiceMaster credit...

  • Page 91
    ... stock on the NYSE was July 24, 2007. The Company incurred certain costs related to the Merger that are presented as "Merger related charges" in the Consolidated Statements of Operations and are recorded in the Other Operations and Headquarters business segment. For the years ended December 31, 2009...

  • Page 92
    ... price over the net tangible and intangible assets acquired was recorded as goodwill. The Company recorded purchase accounting adjustments to increase the carrying value of property, to establish intangible assets for trade names, service marks and trademarks ("trade names"), customer relationships...

  • Page 93
    ... Current assets (deferred customer acquisition costs) Current liabilities (primarily deferred revenue) Fixed assets Fair value adjustment to existing debt Other non-current liabilities Historical debt issuance fees written off Deferred taxes Other Allocation of purchase price in excess of historical...

  • Page 94
    ..., Terminix, American Home Shield, ServiceMaster Clean and Other Operations and Headquarters. In accordance with accounting standards for segments, the Company's reportable segments are strategic business units that offer different services. The TruGreen LawnCare segment provides residential and...

  • Page 95
    ... related to its operations. Segment information for continuing operations is presented below. Successor Predecessor Year Ended Dec. 31, (In thousands) 2009 Operating Revenue: TruGreen LawnCare TruGreen LandCare Terminix American Home Shield ServiceMaster Clean Other Operations and Headquarters...

  • Page 96
    (1) Presented below is a reconciliation of segment operating income to income (loss) from continuing operations before income taxes. 88

  • Page 97
    ... of restructuring charges by segment: (3) Successor Predecessor Year Ended Dec. 31, (In thousands) Restructuring charges: TruGreen LawnCare TruGreen LandCare Terminix American Home Shield ServiceMaster Clean Other Operations and Headquarters Total restructuring charges (4) $ 2009 8,717 194...

  • Page 98
    See Note 5 for information relating to segment goodwill. 89

  • Page 99
    ..., to reduce the carrying value of trade names as a result of the Company's annual impairment testing of goodwill and indefinite-lived intangible assets. No impairment of goodwill was recorded as a result of this review. During the years ended December 31, 2009 and 2008, the increase in goodwill and...

  • Page 100
    ... adjustment to goodwill. Under accounting standards for business combinations, the reversal of pre-acquisition liabilities for uncertain tax benefits will no longer be recorded as an adjustment to goodwill effective in fiscal years beginning in 2009. At December 31, 2009 and December 31, 2008...

  • Page 101
    ... Company's effective income tax rate for continuing operations is as follows: Successor Predecessor Year Ended Dec. 31, 2009 2008 Jul. 25, 2007 to Dec. 31, 2007 Jan. 1, 2007 to Jul. 24, 2007 Tax at U.S. federal statutory rate State and local income taxes, net of U.S. federal benefit Tax credits...

  • Page 102
    ... reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The deferred tax asset primarily reflects the impact of future tax deductions related to the Company's accruals and certain net operating loss...

  • Page 103
    ...at their estimated fair values as of the acquisition dates. Current Year During the year ended December 31, 2009, the Company completed several lawn care and pest control acquisitions, along with several Merry Maids' franchise acquisitions, for a total net purchase price of $35.7 million. Related to...

  • Page 104
    ...not fit within the long-term strategic plans of the Company and committed to a plan to sell the business. InStar provided disaster response and reconstruction services to primarily commercial customers and was previously reported as part of the Company's Other Operations and Headquarters segment. As...

  • Page 105
    ... fair value estimate of InStar's net assets based on changing market conditions and the ongoing sales process. Upon the sale of InStar the Company recorded a loss on sale, net of tax, of $0.5 million. Financial Information for Discontinued Operations Reported "loss from discontinued operations, net...

  • Page 106
    ... in work force and various process improvements, including the closing of American Home Shield's call center located in Santa Rosa, California, the organization of certain corporate support functions into centers of excellence which are expected to deliver higher quality services to our business...

  • Page 107
    ... restructuring charges related to the Company's consolidation of its corporate headquarters into its operations support center in Memphis, Tennessee and the closing of its headquarters in Downers Grove, Illinois. The transition to Memphis was substantially completed in 2007. Almost all costs related...

  • Page 108
    ...certain officers in the Company's Downers Grove, Illinois office whose employment was terminated due to the consolidation of the corporate headquarters into the Memphis, Tennessee operations support center. The consummation of the Merger resulted in additional severance costs and other benefits that...

  • Page 109
    ... 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, 2009 and 2008, the...

  • Page 110
    ... 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. Accruals for home service contract claims in the American Home Shield business are...

  • Page 111
    ... Company recorded consulting fees related to these agreements of $1.25 million for the year ended December 31, 2009. The Company was advised by Holdings that, during the first quarter of 2009, Holdings completed open market purchases of $11.0 million in face value of the Permanent Notes for a cost...

  • Page 112
    ... payable to Holdings at December 31, 2008 was acquired by Holdings in their open market purchases). Note 12. Employee Benefit Plans Effective January 2, 2007, the Company approved a new long-term incentive plan (the "LTIP") designed to reward certain employees based on the accumulated three-year...

  • Page 113
    ... the amortization of fair value adjustments related to purchase accounting, which effectively increases the stated coupon interest rates. In connection with the completion of the Transactions, the Company (i) entered into the Senior Term Loan Facility, (ii) entered into a new $1.15 billion senior...

  • Page 114
    ...of December 31, 2009. In September 2008, the Company entered into a four-year interest rate swap agreement effective October 1, 2008. The notional amount of the swap agreement was $200.0 million. Under the terms of the agreement, the Company will pay a weighted average fixed rate of interest of 3.53...

  • Page 115
    ... at a rate per annum equal to 11.50%. If the Company elects to pay PIK Interest, the principal amount of the notes will increase in an amount equal to the PIK Interest payable for the applicable payment period to the holders of the Permanent Notes on the relevant record date. Interest payable after...

  • Page 116
    ... in 2014 (average rate of 4.9 percent). The scheduled long-term debt payments of $64.4 million in 2010 include the repayment of $10.0 million transferred under the Company's accounts receivable securitization arrangement, as described in Note 16. Note 15. Cash and Marketable Securities Cash, money...

  • Page 117
    ... financial condition of the issuer or the market(s) in which it competes. The Company recorded gross realized gains resulting from sales of available-for-sale securities of $3.9 million ($2.4 million, net of tax) and $13.2 million ($10.0 million, net of tax) for the years ended December 31, 2009 and...

  • Page 118
    ... disclosed in the Consolidated Statements of Shareholder's Equity. The following table summarizes the activity in other comprehensive (loss) income and the related tax effects. Successor Predecessor Year Ended Dec. 31, (In thousands) 2009 2008 Jul. 25, 2007 to Dec. 31, 2007 Jan. 1, 2007 to Jul...

  • Page 119
    ... Effective July 24, 2007 upon completion of the Merger, the Certificate of Incorporation of the Company was amended to provide for the authorization of 1,000 shares of common stock to replace the previously authorized, issued and outstanding common stock. As a result of the Merger, CDRSVM Holding...

  • Page 120
    ... by the board of directors of Holdings of the fair market value of the common stock of Holdings as of the purchase/grant date. In 2009 and 2008, Holdings completed various equity offerings to certain executive officers and key employees pursuant to the MSIP. The shares sold and options granted to...

  • Page 121
    ... executive officers and key employees options to purchase an additional 437,000 and 427,500 shares of Holdings common stock at an exercise price of $10.00 per share in 2009 and 2008, respectively. These options are subject to and governed by the terms of the MSIP. The $10.00 per share purchase price...

  • Page 122
    ..., 2007, the Company recognized total pre-tax share grant and restricted stock compensation expense of $1.7 million, and the Company recognized related tax benefits of $0.7 million. The Company did not issue stock options, stock appreciation rights, share grants, restricted stock awards or restricted...

  • Page 123
    ... approximate fair value as the effective interest rates for these instruments are comparable to market rates at period end. The period end carrying amounts of current and long-term marketable securities also approximate fair value, with unrealized gains and losses reported net-of-tax as a component...

  • Page 124
    ... Active Observable Unobservable Estimated Sheet Carrying Markets Inputs Inputs Carrying Fair Locations Value (Level 1) (Level 2) (Level 3) Value Value Financial Assets: Deferred Long-term compensation marketable trust assets securities $ Marketable securities and Longterm marketable securities...

  • Page 125
    ... in earnings are reported in cost of services rendered and products sold. The Company uses derivative financial instruments to manage risks associated with changes in fuel prices and interest rates. The Company does not hold or issue derivative financial instruments for trading or speculative...

  • Page 126
    ...) into Income included in Year ended December 31, 2009 Income Fuel swap contracts $ 31,840 $ Interest rate swap contracts $ 5,732 $ (25,305)Cost of services rendered and products sold Interest (50,704)expense Derivatives designated as Cash Flow Hedge Relationships Effective Portion of Gain...

  • Page 127
    ... been allocated to all of the subsidiaries of the Company based on management's estimates. On July 24, 2008, outstanding amounts under the Interim Loan Facility converted into the Permanent Notes. The payment obligations of the Company under the Permanent Notes are jointly and severally guaranteed...

  • Page 128
    ... Operating Revenue Operating Costs and Expenses: Cost of services rendered and products sold Selling and administrative expenses Amortization expense TradeName Impairment Merger related charges Restructuring charges Total operating costs and expenses Operating (Loss) Income Non-operating...

  • Page 129
    ... Operating Revenue Operating Costs and Expenses: Cost of services rendered and products sold Selling and administrative expenses Amortization expense Trade name impairment Merger related charges Restructuring charges Total operating costs and expenses Operating (Loss) Income Non-operating...

  • Page 130
    ...422,358 Operating Revenue Operating Costs and Expenses: Cost of services rendered and - 781,445 148,078 (31,022) 898,501 products sold 1,489 206,792 122,859 - 331,140 Selling and administrative expenses 96 112,424 20,142 - 132,662 Amortization expense 799 - - - 799 Merger related charges - 8,691 17...

  • Page 131
    ...934,390 Operating Revenue Operating Costs and Expenses: Cost of services rendered and - 1,055,793 179,493 (39,024) 1,196,262 products sold 2,185 330,625 197,864 - 530,674 Selling and administrative expenses - 4,527 645 - 5,172 Amortization expense 41,431 - - - 41,431 Merger related charges - - 16...

  • Page 132
    ... taxes Assets of discontinued operations Total Current Assets Property and Equipment: At cost Less: accumulated depreciation Net property and equipment Other Assets: Goodwill Intangible assets, primarily trade names, service marks and trademarks, net Notes receivable Long-term marketable securities...

  • Page 133
    ... taxes Assets of discontinued operations Total Current Assets Property and Equipment: At cost Less: accumulated depreciation Net Property and Equipment Other Assets: Goodwill Intangible assets, primarily trade names, service marks and trademarks, net Notes receivable Long-term marketable securities...

  • Page 134

  • Page 135
    ...290 (525,459) 192,191 Operations Cash Flows from Investing Activities from Continuing Operations: - (54,226) (8,296) - (62,522) Property additions - 3,071 118 - 3,189 Sale of equipment and other assets Acquisition of The ServiceMaster (1,695) - - - (1,695) Company Other business acquisitions, net of...

  • Page 136
    ... from (used for) investing activities Proceeds from sale of - - 19,523 - 19,523 businesses - - (208) - (208) Other investing activities - - (167) - (167) Cash used for financing activities Net Cash Provided from - - 21,869 - 21,869 Discontinued Operations Cash Increase (Decrease) During 199,933...

  • Page 137
    ...,102) 315,381 - Shareholders' dividends (101,534) - - - (101,534) Debt issuance costs paid 158 - - - 158 Proceeds from employee share plans (81,219) 56,403 24,816 - - Net intercompany advances Net Cash Provided from (Used for) Financing Activities from 4,795,584 (201,005) (42,590) 315,381 4,867,370...

  • Page 138
    ...- - 36,069 Proceeds from employee share plans (76,129) 21,382 54,747 - - Net intercompany advances Net Cash Used for Financing Activities from Continuing (140,847) (217,144) (46,408) 326,265 (78,134) Operations Cash Flows from Discontinued Operations: Cash provided from operating - - 12,559 - 12,559...

  • Page 139
    ...of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors of The ServiceMaster Company Memphis, Tennessee We have audited the internal control over financial reporting of The ServiceMaster Company and subsidiaries (the "Company") as of December 31, 2009, based on...

  • Page 140
    ...the Public Company Accounting Oversight Board (United States), the consolidated statement of financial position of the Company as of December 31, 2009 and the related consolidated statements of operations, shareholder's equity, and cash flows for the year ended December 31, 2009 and our report dated...

  • Page 141
    ... "Interim Reporting" section in the Significant Accounting Policies, for interim accounting purposes, TruGreen LawnCare and other business segments of the Company incur pre-season advertising costs. In addition, TruGreen LawnCare incurs costs related to annual repairs and maintenance procedures that...

  • Page 142
    ...participation of ServiceMaster's Chief Executive Officer, J. Patrick Spainhour, and ServiceMaster's Senior Vice President and Chief Financial Officer, Steven J. Martin, the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. In making this assessment, it...

  • Page 143
    ... & Touche LLP, the Company's independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2009. This attestation report is included in Item 8 of this Annual Report on Form 10-K. Changes in...

  • Page 144
    ... 43 President & Chief Operating Officer, Terminix 1997 David J. Crawford 52 President & Chief Operating Officer, American Home Shield 2005 Reggie L. Crenshaw 40 Senior Vice President-Innovation & Process Improvement 2008 Stephen M. Donly 58 President & Chief Operating Officer, TruGreen 2009 Laura...

  • Page 145
    ... Company, a water treatment company, where he served as Executive Vice President, Strategy and Marketing. Daniel J. Marks has served as Senior Vice President & Chief Information Officer since August 2007. He served as Senior Vice President and Chief Information Officer for American Home Shield...

  • Page 146
    ... President of Corporate Communications of Cendant Timeshare Resort Group, Inc., a vacation ownership company, from February 2005 to March 2005. FINANCIAL CODE OF ETHICS ServiceMaster has a Financial Code of Ethics that applies to the Chief Executive Officer, Chief Financial Officer and Controller...

  • Page 147
    ... global economic conditions in 2008, our Board decided not to increase base salaries of our Named Executive Officers in 2009. As part of our strategy to forge a direct connection between our executive officers and shareholders, and in recognition of their hire into the senior management team, Messrs...

  • Page 148
    ... the Company, the competitive market data provided by Hewitt Associates ("Hewitt") and presented to the Board by our Senior Vice President, Human Resources, the Board's assessment of the Chief Executive Officer's individual performance and prevailing economic conditions. The Chief Executive Officer...

  • Page 149
    ... the 2008 data to help make its pay decisions for 2009. Base Salary Base salaries for executive officers are reviewed annually by the Board during the Company's merit review process in February. To determine base salaries for executive officers, the Company first reviews market data and targets base...

  • Page 150
    ... Executive Officers holding positions within corporate headquarter functions, such as Messrs. Spainhour, Martin, McMullen and Crenshaw, Annual Bonus Plan payments are based 100 percent on overall Company performance. For our Named Executive Officer in charge of a business unit, Mr. Donly, payments...

  • Page 151
    ... goals and relative weighting reflect the Board's objective of ensuring that a substantial amount of each Named Executive Officer's total compensation is tied to Company and, where applicable, business unit performance goals. 2009 Annual Bonus Plan Weighting Participant J. Patrick Spainhour Steven...

  • Page 152
    ... in customer cancellations 96% 98% 88% 89% 98% 84% 89% 76% 88% 28% 34% 88% 4% 34% The 2009 Annual Bonus Plan target payout opportunity for each Named Executive Officer (see table below) was based on our review of Peer Group survey data and the importance of the Named Executive Officer's position...

  • Page 153
    ... performance under the terms of the Annual Bonus Plan, Mr. Donly would have earned $56,917; however, in accordance with Mr. Donly's offer of employment, his 2009 bonus was guaranteed to be not less than 65 percent of his 2009 annualized salary, then prorated based on his hire date, which equals $214...

  • Page 154
    ...Officer's termination of employment, (ii) a fixed date selected by such Named Executive Officer or (iii) a change in control of Holdings. Apart from the "matching" options described above, Holdings has also granted additional "standalone" options to each Named Executive Officer. The number of shares...

  • Page 155
    ... long-term incentive opportunity needs to be provided at this time. This analysis will be evaluated each year based upon the competitive marketplace. Retirement Benefits Employees, including the Named Executive Officers, are generally eligible to participate in the ServiceMaster Profit Sharing...

  • Page 156
    ...on his hire date (March 23, 2009), Mr. Donly will be covered under the terms of his offer letter that provides payments related to termination of employment. All of the other Named Executive Officers are covered under ServiceMaster's standard policy or practice as in effect at the time employment is...

  • Page 157
    ...to require companies to account for stock option awards based on the grant date fair value of such awards. As discussed above in "Long-Term Incentive Plans-MSIP", Holdings' practice to date has been to offer each Named Executive Officer only one opportunity to invest in Holdings' common stock and to...

  • Page 158
    ...Grants of Plan-Based Awards (2009) Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) All Other Option Exercise Grant Date Awards: or Base Fair Value Number of Price of of Securities Option Stock and Maximum Underlying Awards Option ($) Options ($/Sh) Awards Named Executive Officer...

  • Page 159
    (2) Messrs. Donly and Crenshaw each received an award of stock options in 2009 in conjunction with being hired in 2009 and 2008, respectively. 147

  • Page 160
    ... our Chief Executive Officer effective as of June 30, 2006. The original term of the employment agreement ended on December 31, 2008. The agreement automatically renews each year unless terminated by ServiceMaster or Mr. Spainhour. The employment agreement provides Mr. Spainhour with an annual base...

  • Page 161
    ... of time and continued employment over a four-year period, with 25 percent becoming exercisable on each anniversary following the date of grant. 2009 Option Exercises and Stock Vested No options were exercised by a Named Executive Officer in 2009, and no stock vested during 2009 as the Company does...

  • Page 162
    ...Board elects a non-executive Chairman, so long as Mr. Spainhour remains a member of the Board and continues to report directly to the Board; A reduction in Mr. Spainhour's base salary or target annual bonus, each as in effect as of the effective date or as the same may be increased from time to time...

  • Page 163
    ... options' normal term, after which date such options are cancelled. If an executive's employment terminates voluntarily before there is a public offering of Holdings' common stock, all unvested options immediately terminate and Holdings and certain Equity Sponsors have the right to purchase shares...

  • Page 164
    ... payable by the Company to each of the Named Executive Officers employed by the Company as of December 31, 2009 in the event of death, disability or qualifying termination. In the event of a change in control and based on a year-end estimated share value of $10 per share, there would be no stock...

  • Page 165
    ... option exercise price of $10 per share, there would be no value from an acceleration of vesting on December 31, 2009. Other than the employment agreement with Mr. Spainhour, the Company does not currently offer employment agreements or change-in-control agreements to newly hired executive officers...

  • Page 166
    ... common stock. Unless otherwise indicated, the address for each individual listed below is The ServiceMaster Company, 860 Ridge Lake Boulevard, Memphis, Tennessee 38120. Name of Beneficial Owner Number of Shares Owned Percent of Class (%) Clayton, Dubilier & Rice Fund VII, L.P. and related funds...

  • Page 167
    ... All executive officers as a group have the right to acquire 1,926,350 shares prior to May 14, 2010 through the exercise of stock options. All employees of the Company as a group held 2,258,304 shares of common stock as of December 31, 2009, constituting 1.55% of the total ownership of Holdings. 155...

  • Page 168
    ... information, as of December 31, 2009, about the amount of shares in Holdings, our indirect parent company, to be issued upon the exercise of outstanding options granted under the MSIP. Plan Category Number of Securities Number of Remaining Available for Securities to Future Issuance Under be...

  • Page 169
    ... directors of Holdings) agreed to a higher amount. On July 30, 2009, the annual management fee payable under the consulting agreement with CD&R was increased from $2.0 million to $6.25 million in order to align the fee structure with current market rates. Under this agreement, the Company...

  • Page 170
    Table of Contents serves in an executive management position, Holdings will pay CD&R an additional fee to be reasonably determined by CD&R, but not to exceed the amount of the annual fee then in effect. In addition, in August 2009, the Company entered into consulting agreements with Citigroup, BAS ...

  • Page 171
    ... accrued interest payable to Holdings at December 31, 2008 was acquired by Holdings in their open market purchases). ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The Board selected Deloitte & Touche LLP as our independent auditors for 2009. The Board pre-approves all audit, audit-related and non...

  • Page 172
    ... Registered Public Accounting Firm contained in Item 8 of this Annual Report on Form 10-K. Consolidated Statements of Financial Position as of December 31, 2009 and 2008 (Successor) contained in Item 8 of this Annual Report on Form 10-K. Consolidated Statements of Operations for the years ended...

  • Page 173
    ...Date /s/ J. PATRICK SPAINHOUR Chief Executive Officer (Principal Executive Officer) J. Patrick Spainhour /s/ STEVEN J. MARTIN Steven J. Martin /s/ KENNETH A. GIURICEO Director Kenneth A. Giuriceo /s/ DAVID H. WASSERMAN Director David H. Wasserman 161 March 30, 2010 Senior Vice President and Chief...

  • Page 174
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors The ServiceMaster Company Memphis, Tennessee We have audited the consolidated statements of financial position of The ServiceMaster Company and subsidiaries (the "Company") as of December 31, 2009 and 2008 (Successor Company), and the related...

  • Page 175
    ... at Beginning of Period Additions Charged to Balance at Costs and End of Expenses Deductions(1) Period AS OF AND FOR THE YEAR ENDING DECEMBER 31, 2009 (SUCCESSOR) Continuing Operations- Allowance for doubtful accounts Accounts receivable Notes receivable Income tax valuation allowance AS OF AND...

  • Page 176
    ..., N.A., as administrative agent, is incorporated by reference to Exhibit 4.2 to the registrant's Current Report on Form 8-K dated July 24, 2008 (File No. 001-14762). First Supplemental Indenture, dated August 13, 2008, among TruGreen LandCare, the Company, each existing Subsidiary Guarantor under...

  • Page 177
    ... by reference to Exhibit 10.3 to the 2007 8-K. Security Agreement, dated as of July 24, 2007, made by the Company and ServiceMaster Consumer Services Limited Partnership, in favor of the Term Loan Collateral Agent and Term Loan Administrative Agent is incorporated by reference to Exhibit 10.4 to the...

  • Page 178
    ...14762). Employment Agreement dated August 16, 2006, effective as of June 30, 2006, between the Company and J. Patrick Spainhour is incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated August 15, 2006 (File No. 001-14762). 2007 Long-Term Incentive Plan ("LTIP...

  • Page 179
    ...'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (File No. 001-14762). Amended and Restated Offer of Employment letter, dated March 24, 2010, between the Company and Steve Donly. Ratio of Earnings to Fixed Charges Subsidiaries. Certification of Chief Executive Officer pursuant to...

  • Page 180

  • Page 181
    ..., dated as of November 23, 2009 (this "Agreement"), is entered into by and among ServiceMaster Global Holdings, Inc., a Delaware corporation (the "Company"), The ServiceMaster Company, a Delaware corporation ("ServiceMaster"), and Clayton, Dubilier & Rice, LLC, a Delaware limited liability company...

  • Page 182
    ...the "Consulting Services"), including assistance (i) developing and implementing corporate and business strategy and planning for the Company Group, including plans and programs for improving operating, marketing and financial performance, (ii) recruiting key management employees, (iii) establishing...

  • Page 183
    ... Affiliates is appointed to an executive management position (or a position of comparable responsibility) with the Company or any other member of the Company Group, then, for the period of such employee's service in such position, the Consulting Fee shall be increased by an amount to be reasonably...

  • Page 184
    ... days prior to the consummation of the applicable Transaction, provided that if such securities do not have an existing public trading market, the value of the securities shall be their fair market value as mutually reasonably agreed between Manager and the Company, on behalf of the members of the...

  • Page 185
    ... to such termination (whether or not such Expenses shall then have become payable). If, at any time, no member of the Company Group is permitted to make any payment or reimbursement due to Manager under this Agreement under the terms of any credit agreement or other financing agreement to which any...

  • Page 186
    ... any of the obligations of the Company hereunder, including, without limitation, its obligation to pay the any fee or reimburse any Expenses. None of Manager and its Affiliates (other than the Company and its subsidiaries) and its and their respective employees and agents shall, solely by virtue of...

  • Page 187
    ... not the obligations under this Agreement to any entity directly or indirectly controlling, controlled by or under common control with Manager shall be expressly permitted hereunder and shall not require the prior written consent of the Company. This Agreement is not intended to confer any right or...

  • Page 188
    representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the waiver contained therein, (ii) it understands and has considered the implications of such waiver, (iii) it makes such waiver ...

  • Page 189
    ...: Vice President, Treasurer and Assistant Secretary SERVICEMASTER GLOBAL HOLDINGS, INC. By: /s/ Steven J. Martin Name: Steven J. Martin Title: Vice President and Chief Financial Officer THE SERVICEMASTER COMPANY By: /s/ Steven J. Martin Name: Steven J. Martin Title: Senior Vice President and Chief...

  • Page 190
    ... in the Company managed by Manager or its Affiliates, "Manager Associates"). B. The Company is an acquisition vehicle formed by CD&R Inc. that executed an Agreement and Plan of Merger, dated March 18, 2007 (as the same may have been amended from time to time in accordance with its terms and the...

  • Page 191
    ...conditions set forth therein, to purchase stock of the Company for an aggregate purchase price equal to its Commitment (as defined in the Commitment Letter). E. In order to finance the Merger and related transactions, the Company sold shares of its common shares, par value US$0.01 per share ("Shares...

  • Page 192
    ...Investors, Manager Associates, or related Persons or Affiliates under applicable securities laws or otherwise in connection with the Transactions (including the Initial Services) or the Securities Offerings, or relating to other actions or omissions of or by members of the Company Group, or relating...

  • Page 193
    ... any officer, director, general partner, special limited partner or trustee of any such Person described in clause (i) or (ii). "Control" of any Person shall consist of the power to direct the management and policies of such Person (whether through the ownership of voting securities, by contract, as...

  • Page 194
    ... each of Manager, CD&R Inc., CD&R LP, the Investor, the Other Investors, Manager Associates, their respective Affiliates, their respective successors and assigns, andthe respective directors, officers, partners, members, employees, agents, advisors, consultants, representatives and controlling 5

  • Page 195
    ... one of which is an underwriter of nationally recognized standing or (ii) the board of directors of the Company has determined that Shares otherwise have become publicly-traded for this purpose. (o) "Related Document" means any agreement, certificate, instrument or other document to which any member...

  • Page 196
    ..., member, employee or agent of or advisor or consultant to another corporation, partnership, joint venture, trust or other enterprise, (B) any breach or alleged breach by such Indemnitee of his or her fiduciary duty as a director or an officer of any member of the Company Group or (C) any payment or...

  • Page 197
    ... the Company Group, the Delaware General Corporate Law, any other applicable law or any liability insurance policy, the Indemnifying Parties shall indemnify such Indemnitee against all costs and Expenses incurred by such Indemnitee or on such Indemnitee's behalf (including by any Manager Associates...

  • Page 198
    ... therein or necessary to make the statements therein not misleading, (ii) the relative benefits received by the members of the Company Group, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering and (iii) if required by applicable law, any other relevant...

  • Page 199
    ... in the event that Manager shall in good faith determine that the defense of any claim by the Indemnifying Parties is inadequate or may conflict with the interest of any Indemnitee (including without limitation, Claims brought by or on behalf of any member of the Company Group), Manager may, at the...

  • Page 200
    ... prime rate as of the date of such payment plus 2% per annum, from the date the Indemnifying Parties receive the Notice of Payment to the date on which any Indemnifying Party shall repay the amount of such Claim plus interest thereon to Manager or such Indemnitee. The Indemnifying Parties shall make...

  • Page 201
    ... Indemnifying Parties shall pay all expenses incurred by Indemnitee in connection with a Determination. (e) Independent Legal Counsel. If there has not been a Change in Control, Independent Legal Counsel shall be selected by the board of directors of the Company and approved by Manager or lndemnitee...

  • Page 202
    ..., shall implement and maintain in full force and effect any and all corporate charter and by-law provisions that may be necessary or appropriate to enable it to carry out its obligations hereunder to the fullest extent permitted by applicable law, including without limitation a provision of its 14

  • Page 203
    ... breach of fiduciary duty to the fullest extent permitted by applicable law, as amended from time to time. So long as the Company or any other member of the Company Group maintains liability insurance for any directors, officers, employees or agents of any such Person, the Indemnifying Parties shall...

  • Page 204
    ... to: CDR SVM Co-Investor L.P. c/o M&C Corporate Services Limited P.O. Box 309GT Ugland House South Church Street George Town, Grand Cayman Cayman Islands, British West Indies Facsimile: (345) 949-8080 or to such other address or such other person as the Company Entities, Manager, CD&R Inc., CD&R LP...

  • Page 205
    ... and permitted assigns, and each other Indemnitee, but neither this Agreement nor any right, interest or obligation hereunder shall be assigned, whether by operation of law or otherwise, by the Company Entities without the prior written consent of Manager, CD&R Inc., CD&R LP, the Investor and...

  • Page 206
    [The remainder of this page has been left blank intentionally.] 19

  • Page 207
    ...WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. CLAYTON, DUBILIER & RICE, INC. By: /s/ Theresa A. Gore Name: Theresa A. Gore Title: Vice President, Treasurer and Assistant Secretary CLAYTON, DUBILIER & RICE...

  • Page 208
    ... VII, Ltd., its general partner By: /s/ Theresa A. Gore Name: Theresa A. Gore Title: Vice President, Treasurer and Assistant Secretary CLAYTON, DUBILIER & RICE, FUND VII, (COINVESTMENT), L.P. By: CD&R Associates VII (Co-Investment), Ltd., its general partner By: /s/ Theresa A. Gore Name: Theresa...

  • Page 209
    CDR SVM CO-INVESTOR, L.P. By: CDR SVM Co-Investor GP Limited, its general partner By: /s/ Theresa A. Gore Name: Theresa A. Gore Title: Director

  • Page 210
    SERVICEMASTER GLOBAL HOLDINGS, INC. By: /s/ Steven J. Martin Name: Steven J. Martin Title: Vice President and Chief Financial Officer THE SERVICEMASTER COMPANY By: /s/ Steven J. Martin Name: Steven J. Martin Title: Senior Vice President and Chief Financial Officer

  • Page 211
    ... with the terms thereof, the "Stockholders Agreement"), dated as of July 24, 2007, setting forth certain agreements with respect to, among other things, the management of the Company and transfers of its shares in various circumstances. C. In connection with the Merger, each Committing Investor (as...

  • Page 212
    ...subject to the terms and conditions of the Stockholders Agreement and any other applicable agreement. J. The parties hereto recognize the possibility that claims might be made against and liabilities incurred by the Investor, the Other Investors, Investor Associates, or related Persons or Affiliates...

  • Page 213
    ... any officer, director, general partner, special limited partner or trustee of any such Person described in clause (i) or (ii). "Control" of any Person shall consist of the power to direct the management and policies of such Person (whether through the ownership of voting securities, by contract, as...

  • Page 214
    ... that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company. Notwithstanding the foregoing, a Public Offering shall not constitute a Change in Control. (c) "Claim" means, with respect to any Indemnitee, any claim by or against such Indemnitee involving any...

  • Page 215
    ..., the Other Investors, Investor Associates, their respective Affiliates, their respective successors and assigns, and the respective directors, officers, partners, members, employees, agents, advisors, consultants, representatives and controlling persons (within the meaning of the Securities Act) of...

  • Page 216
    standing or (ii) the board of directors of the Company has determined that Shares otherwise have become publicly-traded for this purpose. (q) "Related Document" means any agreement, certificate, instrument or other document to which any member of the Company Group may be a party or by which it or ...

  • Page 217
    ... the performance by the Investor (or its Affiliates) of the Initial Services pursuant to the Transaction Fee Agreement or (D) the performance by BAS Capital Funding Corporation under its consulting agreement with the Company and ServiceMaster, dated as of August 13, 2009 (the "Consulting Agreement...

  • Page 218
    ... the Company Group, the Delaware General Corporate Law, any other applicable law or any liability insurance policy, the Indemnifying Parties shall indemnify such Indemnitee against all costs and Expenses incurred by such Indemnitee or on such Indemnitee's behalf (including by any Investor Associates...

  • Page 219
    ..., is based upon or relates to the Transactions or any Securities Offering, the relative benefits received by each member of the Company Group, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering and (iii) if required by applicable law, any other relevant...

  • Page 220
    ... rate as of the date of such payment plus 2% per annum, from the date the Indemnifying Parties receive the Notice of Payment to the date on which any Indemnifying Party shall repay the amount of such Claim plus interest thereon to such Indemnitee. The Indemnifying Parties shall make indemnification...

  • Page 221
    .... The Indemnifying Parties shall pay all expenses incurred by Indemnitee in connection with a Determination. (e) Independent Legal Counsel. If there has not been a Change in Control, Independent Legal Counsel shall be selected by the board of directors of the Company and approved by Indemnitee...

  • Page 222
    ... any Determination, or any review of any Determination, by ...claim or create a presumption that an Indemnitee did not meet the applicable...effect regardless of any investigation made by or on behalf of such Indemnitee. Following the Transactions, each of the Company Entities, and each of their corporate...

  • Page 223
    ... breach of fiduciary duty to the fullest extent permitted by applicable law, as amended from time to time. So long as the Company or any other member of the Company Group maintains liability insurance for any directors, officers, employees or agents of any such Person, the Indemnifying Parties shall...

  • Page 224
    ...312) 861-2200 or to such other address or such other person as the Company Entities, the Investor, the Other Investors or Investor Associates, as the case may be, shall have designated by notice to the other parties hereto. All communications hereunder shall be effective upon receipt by the party to...

  • Page 225
    7. Arbitration (a) Any dispute, claim or controversy arising out of, relating to, or in connection with this contract, or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be ...

  • Page 226
    ... be governed in all respects, including validity, interpretation and effect, by the law of the State of New York, regardless of the law that might be applied under principles of conflict of laws to the extent such principles would require or permit the application of the laws of another jurisdiction...

  • Page 227
    Company Group shall be entitled to contribution or indemnification from or subrogation against such other Indemnitee or insurer. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. ...

  • Page 228
    IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. BANC OF AMERICA CAPITAL INVESTORS V, L.P. By: Banc of America Capital Management V, L.P., its General Partner By: BACM I GP, LLC, its General Partner By: ...

  • Page 229
    BANC OF AMERICA STRATEGIC INVESTMENTS CORPORATION By: /s/ George E. Morgan, III Name: George E. Morgan, III Title: Authorized Person BANC OF AMERICA CAPITAL MANAGEMENT V, L.P. By: BACM I GP, LLC, its General Partner By: /s/ George E. Morgan, III Name: George E. Morgan, III Title: Authorized Person ...

  • Page 230
    SERVICEMASTER GLOBAL HOLDINGS, INC. By: /s/ Steven J. Martin Name: Steven J. Martin Title: Vice President & Chief Financial Officer THE SERVICEMASTER COMPANY By: /s/ Steven J. Martin Name: Steven J. Martin Title: Senior Vice President & Chief Financial Officer

  • Page 231
    ... with the terms thereof, the "Stockholders Agreement"), dated as of July 24, 2007, setting forth certain agreements with respect to, among other things, the management of the Company and transfers of its shares in various circumstances. C. In connection with the Merger, each Committing Investor (as...

  • Page 232
    ...subject to the terms and conditions of the Stockholders Agreement and any other applicable agreement. J. The parties hereto recognize the possibility that claims might be made against and liabilities incurred by the Investor, the Other Investors, Investor Associates, or related Persons or Affiliates...

  • Page 233
    ... any officer, director, general partner, special limited partner or trustee of any such Person described in clause (i) or (ii). "Control" of any Person shall consist of the power to direct the management and policies of such Person (whether through the ownership of voting securities, by contract, as...

  • Page 234
    ... that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company. Notwithstanding the foregoing, a Public Offering shall not constitute a Change in Control. (c) "Claim" means, with respect to any Indemnitee, any claim by or against such Indemnitee involving any...

  • Page 235
    ..., the Other Investors, Investor Associates, their respective Affiliates, their respective successors and assigns, and the respective directors, officers, partners, members, employees, agents, advisors, consultants, representatives and controlling persons (within the meaning of the Securities Act) of...

  • Page 236
    ... one of which is an underwriter of nationally recognized standing or (ii) the board of directors of the Company has determined that Shares otherwise have become publicly-traded for this purpose. (q) "Related Document" means any agreement, certificate, instrument or other document to which any member...

  • Page 237
    ... performance by the Investor (or its Affiliates) of the Initial Services pursuant to the Transaction Fee Agreement or (D) the performance by Citigroup Alternative Investments LLC under its consulting agreement with the Company and ServiceMaster, dated as of August 13, 2009 (the "Consulting Agreement...

  • Page 238
    ... the Company Group, the Delaware General Corporate Law, any other applicable law or any liability insurance policy, the Indemnifying Parties shall indemnify such Indemnitee against all costs and Expenses incurred by such Indemnitee or on such Indemnitee's behalf (including by Investor Associates or...

  • Page 239
    ..., is based upon or relates to the Transactions or any Securities Offering, the relative benefits received by each member of the Company Group, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering and (iii) if required by applicable law, any other relevant...

  • Page 240
    ... rate as of the date of such payment plus 2% per annum, from the date the Indemnifying Parties receive the Notice of Payment to the date on which any Indemnifying Party shall repay the amount of such Claim plus interest thereon to such Indemnitee. The Indemnifying Parties shall make indemnification...

  • Page 241
    .... The Indemnifying Parties shall pay all expenses incurred by Indemnitee in connection with a Determination. (e) Independent Legal Counsel. If there has not been a Change in Control, Independent Legal Counsel shall be selected by the board of directors of the Company and approved by Indemnitee...

  • Page 242
    ... any Determination, or any review of any Determination, by ...claim or create a presumption that an Indemnitee did not meet the applicable...effect regardless of any investigation made by or on behalf of such Indemnitee. Following the Transactions, each of the Company Entities, and each of their corporate...

  • Page 243
    ... breach of fiduciary duty to the fullest extent permitted by applicable law, as amended from time to time. So long as the Company or any other member of the Company Group maintains liability insurance for any directors, officers, employees or agents of any such Person, the Indemnifying Parties shall...

  • Page 244
    ...646) 291-3063 or to such other address or such other person as the Company Entities, the Investor, the Other Investors or Investor Associates, as the case may be, shall have designated by notice to the other parties hereto. All communications hereunder shall be effective upon receipt by the party to...

  • Page 245
    7. Arbitration (a) Any dispute, claim or controversy arising out of, relating to, or in connection with this contract, or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be ...

  • Page 246
    Company Group shall be entitled to contribution or indemnification from or subrogation against such other Indemnitee or insurer. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. ...

  • Page 247
    ... representatives as of the date first above written. CITIGROUP CAPITAL PARTNERS II 2007 CITIGROUP INVESTMENT, L.P. By: Citigroup Private Equity LP, its general partner By: /s/ Darren Friedman Name: Darren Friedman Title: Co-President CITIGROUP CAPITAL PARTNERS II EMPLOYEE MASTER FUND, L.P. By...

  • Page 248
    CITIGROUP CAPITAL PARTNERS II CAYMAN HOLDINGS, L.P. By: Citigroup Private Equity LP, its general partner By: /s/ Darren Friedman Name: Darren Friedman Title: Co-President CPE CO-INVESTMENT (SERVICEMASTER) LLC By: Citigroup Private Equity LP, its managing member By: /s/ Darren Friedman Name: Darren ...

  • Page 249
    SERVICEMASTER GLOBAL HOLDINGS, INC. By: /s/ Steven J. Martin Name: Steven J. Martin Title: Vice President & Chief Financial Officer THE SERVICEMASTER COMPANY By: /s/ Steven J. Martin Name: Steven J. Martin Title: Senior Vice President & Chief Financial Officer

  • Page 250
    ...Ventures Corporation, the "Investor"). Capitalized terms used herein without definition have the meanings set forth in Section 1 of this Agreement. RECITALS A. The Company is an acquisition vehicle formed by Clayton, Dubilier & Rice, Inc. ("CD&R") that executed an Agreement and Plan of Merger, dated...

  • Page 251
    ... to the terms and conditions of the Stockholders Agreement and any other applicable agreement. J. The parties hereto recognize the possibility that claims might be made against and liabilities incurred by the Investor or related Persons or Affiliates under applicable securities laws or otherwise...

  • Page 252
    ... any officer, director, general partner, special limited partner or trustee of any such Person described in clause (i) or (ii). "Control" of any Person shall consist of the power to direct the management and policies of such Person (whether through the ownership of voting securities, by contract, as...

  • Page 253
    ... in a Proceeding. (i) "Indemnitee" means the Investor, its Affiliates, its successors and assigns, and the respective directors, officers, partners, members, employees, agents, advisors, consultants, representatives and controlling persons (within the meaning of the Securities Act) of each of them...

  • Page 254
    ... one of which is an underwriter of nationally recognized standing or (ii) the board of directors of the Company has determined that Shares otherwise have become publicly-traded for this purpose. (o) "Related Document" means any agreement, certificate, instrument or other document to which any member...

  • Page 255
    ... by or on behalf of any member of the Company Group or any placement agent or underwriter in connection with the Transactions or any Securities Offering, (iv) any federal, state or foreign securities law or other governmental or regulatory filings or applications made in connection with any...

  • Page 256
    ..., member, employee or agent of or advisor or consultant to another corporation, partnership, joint venture, trust or other enterprise, (B) any breach or alleged breach by such Indemnitee of his or her fiduciary duty as a director or an officer of any member of the Company Group or (C) any payment or...

  • Page 257
    ...and any member of the Company Group are party, any vote of directors of any member of the Company Group, the Delaware General Corporate Law, any other applicable law or any liability insurance policy, the Indemnifying Parties shall indemnify such Indemnitee against all costs and Expenses incurred by...

  • Page 258
    ... therein or necessary to make the statements therein not misleading, (ii) the relative benefits received by the members of the Company Group, on the one hand, and such Indemnitee, on the other, from such Transaction or Securities Offering and (iii) if required by applicable law, any other relevant...

  • Page 259
    ... rate as of the date of such payment plus 2% per annum, from the date the Indemnifying Parties receive the Notice of Payment to the date on which any Indemnifying Party shall repay the amount of such Claim plus interest thereon to such Indemnitee. The Indemnifying Parties shall make indemnification...

  • Page 260
    .... The Indemnifying Parties shall pay all expenses incurred by Indemnitee in connection with a Determination. (e) Independent Legal Counsel. If there has not been a Change in Control, Independent Legal Counsel shall be selected by the board of directors of the Company and approved by Indemnitee...

  • Page 261
    ... breach of fiduciary duty to the fullest extent permitted by applicable law, as amended from time to time. So long as the Company or any other member of the Company Group maintains liability insurance for any directors, officers, employees or agents of any such Person, the Indemnifying Parties shall...

  • Page 262
    ... of Debt Financing (or as agents for the lenders thereunder) or in the performance of services pursuant to (x) the Engagement Letter, dated March 18, 2007, among CDRSVM Acquisition Co., Inc., Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Banc of America Securities LLC or (y) the...

  • Page 263
    ... New York, New York 10017 Attention: John C. Ericson, Esq. Facsimile: (212) 455-2502 or to such other address or such other person as the Company Entities or the Investor, as the case may be, shall have designated by notice to the other parties hereto. All communications hereunder shall be effective...

  • Page 264
    ...or part of the costs of the arbitration, including the fees of the arbitrator and the attorneys' fees of ...effect, by the law of the State of New York, regardless of the law that might be applied under principles of conflict of laws to the extent such principles would require or permit the application...

  • Page 265
    ...benefit of each party hereto and its successors and permitted...of a similar nature, ...contract, at law or in equity or otherwise, provided that (i) to the extent that any Indemnitee is entitled to be indemnified by any member of the Company Group and by any other Indemnitee or any insurer under a policy...

  • Page 266
    IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. JPMORGAN CHASE FUNDING INC. By: /s/ John M. Buley Name: John M. Buley Title: Managing Director

  • Page 267
    SERVICEMASTER GLOBAL HOLDINGS, INC. By: /s/ Steven J. Martin Name: Steven J. Martin Title: Vice President & Chief Financial Officer THE SERVICEMASTER COMPANY By: /s/ Steven J. Martin Name: Steven J. Martin Title: Senior Vice President & Chief Financial Officer

  • Page 268
    ... Directors) shall receive Director Share Awards. The Board shall determine the terms of each Award, consistent with the Plan. Section 2.2 Administration. The Board shall be responsible for the administration of the Plan. The Board may prescribe, amend and rescind rules and regulations relating...

  • Page 269
    ... of the Company or other similar transaction affecting the Common Stock, the Board shall proportionately adjust the number of shares of Common Stock available for issuance under the Plan and the number, class, exercise price or other terms of any outstanding Award and/or make other provisions...

  • Page 270
    ... such other terms as the Board shall determine. Section 5.2 Exercise Price. The exercise price per share of Common Stock to be purchased upon exercise of an Option shall not be less than the Fair Market Value on the Grant Date. Section 5.3 Vesting and Exercise of Options. Options shall become vested...

  • Page 271
    ... Public Offering to purchase all or any portion of a Participant's Common Stock upon any termination of employment (determined without regard to any statutory or deemed or express contractual notice period), at such time and at a purchase price per share equal to the Fair Market Value as of the date...

  • Page 272
    ... readily marketable securities in an amount or with a value equal to the number of shares of Common Stock covered by such vested Award times the excess, if any, of the Change in Control Price over any applicable exercise price or reference price, if any, for such Award. Section 7.2 Alternative Award...

  • Page 273
    ... market value of the stock subject to the Alternative Award on the date of surrender over the price that such Participant would be required to pay to exercise such Alternative Award or shall have an immediate right to exercise such Alternative Award and receive shares that are then publicly traded...

  • Page 274
    .... Article IX Director Share Awards Director Share Awards may have such terms as the Board shall determine from time to time, and may be granted as part of the retainer or other fees payable to an Eligible Director or as part of an arrangement that permits the deferral of payment of such fees, on...

  • Page 275
    ... of the management policies of a Person by reason of ownership of voting securities, by contract or otherwise. "Alternative Award" has the meaning given in Section 7.2. "Award" means an Option, a Deferred Share Unit, a Director Share Award or an offer and sale or grant of Common Stock pursuant to...

  • Page 276
    ... his or her material employment-related duties for the Company and its Subsidiaries; (iii) the Participant's material violation of any material Company policy as in effect from time to time; (iv) the Participant's engaging in any willful act or making any public statement that impairs, impugns...

  • Page 277
    ... in Control. "Change in Control Price" means the price per share of Common Stock offered in conjunction with any transaction resulting in a Change in Control. If any part of the offered price is payable other than in cash, the Change in Control price shall be determined in good faith by the Board as...

  • Page 278
    ... executive, officer or other employee of the Company or any Subsidiary. "Fair Market Value" means, as of any date of determination prior to a Public Offering, the per share fair market value on such date of a share of Common Stock as determined in good faith by the Board. In making a determination...

  • Page 279
    ... the Plan and in the form approved by the Board from time to time for such purpose. "Participant" means any Employee or Eligible Director who is granted an Award. "Person" means any natural person, firm, partnership, limited liability company, association, corporation, company, trust, business trust...

  • Page 280
    ...the Company and a Participant embodying the terms of any stock purchase made pursuant to the Plan and in the form approved by the Board from time to time for such purpose. "Subsidiary" means any corporation, limited liability company or other entity, a majority of whose outstanding voting securities...

  • Page 281
    ... other plans or to pay compensation to its Employees or Eligible Directors, in cash or property, in a manner that is not expressly authorized under the Plan. Except as may otherwise be specifically and unequivocally stated under any employee benefit plan, policy or program, no amount payable in...

  • Page 282
    ... creditors of the Company. The Plan is not intended to be subject to the Employee Retirement Income and Security Act of 1974, as amended. Section 13.10 Term of Plan. The Plan shall be effective as of November 20, 2007, (the "Effective Date") and shall continue in effect, unless sooner terminated...

  • Page 283
    ..., effective as of March 23, 2009, the position of President and Chief Operating Officer, TruGreen. In this role, you will report to the Chief Executive Officer of ServiceMaster. Your base compensation in this position for 2009 will be at a semi-monthly rate of $17,708.33, which computes to an annual...

  • Page 284
    ... offer, please sign the acceptance below and return it to me. Sincerely, /s/ Jed Norden Jed Norden Senior Vice President, Human Resources The ServiceMaster Company I accept this offer of employment under the terms and conditions set forth above. /s/ Steve Donly Steve Donly Date: March 24, 2010

  • Page 285
    QuickLinks -- Click here to rapidly navigate through this document Exhibit 12 RATIOS OF EARNINGS TO FIXED CHARGES Our consolidated ratios of earnings to fixed charges for the years ended December 31, 2009 and 2008, the Successor period from July 25, 2007 to December 31, 2007, the Predecessor period...

  • Page 286
    QuickLinks Exhibit 12 RATIOS OF EARNINGS TO FIXED CHARGES

  • Page 287
    ..., Inc. American Residential Services Holding L.L.C. AmeriSpec, Inc. Certified Systems, Inc. D. R. Church Landscape Co., Inc. FM Medic LLC Furniture Medic Limited Partnership GreenLawn, Ltd. Home Shield Insurance Agency, Inc. Merry Maids Limited Partnership Minnesota Lawn Maintenance, Inc. MM...

  • Page 288
    ...Steward Insurance Company Terminix International, Inc. Terminix International, S.A. The ServiceMaster Acceptance Company Limited Partnership The ServiceMaster Foundation The Terminix International Company Limited Partnership TruGreen Companies L.L.C. TruGreen Home Landscape Services, L.L.C. TruGreen...

  • Page 289
    QuickLinks Exhibit 21 SUBSIDIARIES OF THE SERVICEMASTER COMPANY

  • Page 290
    ... financial information; and 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. (b) Date: March 30, 2010 /s/ J. PATRICK SPAINHOUR J. Patrick Spainhour Chief Executive Officer

  • Page 291
    QuickLinks Exhibit 31.1 CERTIFICATIONS

  • Page 292
    ...; and 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. (b) Date: March 30, 2010 /s/ STEVEN J. MARTIN Steven J. Martin Senior Vice President and Chief Financial Officer

  • Page 293
    QuickLinks Exhibit 31.2 CERTIFICATIONS

  • Page 294
    ... United States Code I, J. Patrick Spainhour, the Chief Executive Officer of The ServiceMaster Company, certify that (i) the Annual Report on Form 10-K for the year ended December 31, 2009, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii...

  • Page 295
    QuickLinks Exhibit 32.1 Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of The United States Code

  • Page 296
    ...63 of Title 18 of The United States Code I, Steven J. Martin, the Senior Vice President and Chief Financial Officer of The ServiceMaster Company, certify that (i) the Annual Report on Form 10K for the year ended December 31, 2009, fully complies with the requirements of Section 13(a) or 15(d) of the...

  • Page 297
    QuickLinks Exhibit 32.2 Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of The United States Code