Condensed Consolidating Financial Statements of The ServiceMaster Company and Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2012

Condensed Consolidating Financial Statements of The ServiceMaster Company and Subsidiaries

Schedule of Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income

THE SERVICEMASTER COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
For the Year Ended December 31, 2012
(In thousands)

	The ServiceMaster Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Revenue	$	—		$	2,401,526		$	851,010		$	(59,255	)	$	3,193,281
Operating Costs and Expenses:
Cost of services rendered and products sold		—			1,512,389			407,724			(58,444	)		1,861,669
Selling and administrative expenses		8,368			478,820			385,263			(425	)		872,026
Amortization expense		—			61,540			3,758			—			65,298
Goodwill and trade name impairment		—			897,732			11,141			—			908,873
Restructuring charges		—			7,748			10,429			—			18,177
Total operating costs and expenses		8,368			2,958,229			818,315			(58,869	)		3,726,043
Operating (Loss) Income		(8,368	)		(556,703	)		32,695			(386	)		(532,762	)
Non-operating Expense (Income):
Interest expense (income)		178,427			85,881			(18,024	)		—			246,284
Interest and net investment loss (income)		1,100			9,991			(18,550	)		(386	)		(7,845	)
Loss on extinguishment of debt		55,554			—			—			—			55,554
Other expense		—			—			622			—			622
(Loss) Income from Continuing Operations before Income Taxes		(243,449	)		(652,575	)		68,647			—			(827,377	)
(Benefit) provision for income taxes		(82,895	)		(101,629	)		70,264			—			(114,260	)
Equity in losses of joint venture		—			—			(226	)		—			(226	)
Loss from Continuing Operations		(160,554	)		(550,946	)		(1,843	)		—			(713,343	)
(Loss) income from discontinued operations, net of income taxes		—			(202	)		2			—			(200	)
Equity in earnings of subsidiaries (net of tax)		(552,989	)		4,034			—			548,955			—
Net Loss	$	(713,543	)	$	(547,114	)	$	(1,841	)	$	548,955		$	(713,543	)
Total Comprehensive Loss	$	(700,765	)	$	(546,632	)	$	(2,179	)	$	548,811		$	(700,765	)

THE SERVICEMASTER COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
For the Year Ended December 31, 2011
(In thousands)

	The ServiceMaster Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Revenue	$	—		$	2,452,731		$	811,446		$	(58,305	)	$	3,205,872
Operating Costs and Expenses:
Cost of services rendered and products sold		—			1,483,220			388,201			(57,715	)		1,813,706
Selling and administrative expenses		9,186			499,101			372,630			(425	)		880,492
Amortization expense		222			67,443			23,687			—			91,352
Trade name impairment		—			36,700			—			—			36,700
Restructuring charges		35			4,678			3,449			—			8,162
Total operating costs and expenses		9,443			2,091,142			787,967			(58,140	)		2,830,412
Operating (Loss) Income		(9,443	)		361,589			23,479			(165	)		375,460
Non-operating Expense (Income):
Interest expense (income)		189,677			89,819			(6,373	)		—			273,123
Interest and net investment loss (income)		2,969			3,491			(17,346	)		—			(10,886	)
Loss on extinguishment of debt		774			—			—			—			774
Other expense		—			—			700			—			700
(Loss) Income from Continuing Operations before Income Taxes		(202,863	)		268,279			46,498			(165	)		111,749
(Benefit) provision for income taxes		(76,622	)		18,720			101,814			—			43,912
(Loss) Income from Continuing Operations		(126,241	)		249,559			(55,316	)		(165	)		67,837
Income (loss) from discontinued operations, net of income taxes		—			19,497			(46,678	)		165			(27,016	)
Equity in earnings of subsidiaries (net of tax)		167,062			(111,863	)		—			(55,199	)		—
Net Income (Loss)	$	40,821		$	157,193		$	(101,994	)	$	(55,199	)	$	40,821
Total Comprehensive Income (Loss)	$	51,980		$	156,150		$	(103,323	)	$	(52,827	)	$	51,980

THE SERVICEMASTER COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income
For the Year Ended December 31, 2010
(In thousands)

	The ServiceMaster Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
Operating Revenue	$	—		$	2,405,822		$	777,219		$	(55,647	)	$	3,127,394
Operating Costs and Expenses:
Cost of services rendered and products sold		—			1,461,057			371,293			(55,046	)		1,777,304
Selling and administrative expenses		9,577			516,349			370,208			(184	)		895,950
Amortization expense		222			99,918			35,860			—			136,000
Restructuring charges (credits)		1,208			10,484			(244	)		—			11,448
Total operating costs and expenses		11,007			2,087,808			777,117			(55,230	)		2,820,702
Operating (Loss) Income		(11,007	)		318,014			102			(417	)		306,692
Non-operating Expense (Income):
Interest expense		196,647			76,258			14,028			—			286,933
Interest and net investment loss (income)		1,628			3,596			(14,582	)		—			(9,358	)
Other expense		—			—			733			—			733
(Loss) Income from Continuing Operations before Income Taxes		(209,282	)		238,160			(77	)		(417	)		28,384
(Benefit) provision for income taxes		(73,163	)		25,134			58,974			—			10,945
(Loss) Income from Continuing Operations		(136,119	)		213,026			(59,051	)		(417	)		17,439
Income (loss) from discontinued operations, net of income taxes		—			17,868			(50,283	)		417			(31,998	)
Equity in earnings of subsidiaries (net of tax)		121,560			(117,729	)		—			(3,831	)		—
Net (Loss) Income	$	(14,559	)	$	113,165		$	(109,334	)	$	(3,831	)	$	(14,559	)
Total Comprehensive (Loss) Income	$	(8,156	)	$	114,793		$	(105,070	)	$	(9,723	)	$	(8,156	)

Schedule of Condensed Consolidating Statement of Financial Position

Condensed Consolidating Statement of Financial Position
As of December 31, 2012
(In thousands)

	The ServiceMaster Company		Guarantors			Non-Guarantors			Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	316,528	$	13,842		$	92,375		$	—		$	422,745
Marketable securities		—		—			19,347			—			19,347
Receivables		1,164		116,778			476,620			(190,857	)		403,705
Inventories		—		54,313			2,249			—			56,562
Prepaid expenses and other assets		6,597		10,272			21,810			(1,335	)		37,344
Deferred customer acquisition costs		—		19,010			14,911			—			33,921
Deferred taxes		38,140		66,129			3,230			—			107,499
Total Current Assets		362,429		280,344			630,542			(192,192	)		1,081,123
Property and Equipment:
At cost		—		440,107			193,475			—			633,582
Less: accumulated depreciation		—		(209,044	)		(84,490	)		—			(293,534	)
Net property and equipment		—		231,063			108,985			—			340,048
Other Assets:
Goodwill		—		2,055,779			356,472			—			2,412,251
Intangible assets, primarily trade names, service marks and trademarks, net		—		1,634,145			739,324			—			2,373,469
Notes receivable		2,005,485		23			30,343			(2,013,432	)		22,419
Long-term marketable securities		11,987		—			114,469			—			126,456
Investments in and advances to subsidiaries		2,098,929		630,029			—			(2,728,958	)		—
Other assets		47,947		1,435			7,984			(47,169	)		10,197
Debt issuance costs		44,850		—			101			—			44,951
Total Assets	$	4,571,627	$	4,832,818		$	1,988,220		$	(4,981,751	)	$	6,410,914
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable	$	156	$	41,011		$	45,543		$	—		$	86,710
Accrued liabilities:
Payroll and related expenses		1,709		41,861			34,618			—			78,188
Self-insured claims and related expenses		—		20,180			62,855			—			83,035
Accrued interest payable		54,008		350			38			(240	)		54,156
Other		8,355		26,377			25,357			(1,095	)		58,994
Deferred revenue		—		135,074			348,823			—			483,897
Liabilities of discontinued operations		—		767			138			—			905
Current portion of long-term debt		93,989		20,287			128,795			(190,857	)		52,214
Total Current Liabilities		158,217		285,907			646,167			(192,192	)		898,099
Long-Term Debt		3,837,872		2,044,238			40,361			(2,013,432	)		3,909,039
Other Long-Term Liabilities:
Deferred taxes		—		715,794			265,646			(47,169	)		934,271
Intercompany payable		—		—			445,489			(445,489	)		—
Other long-term obligations, primarily self-insured claims		20,888		1,243			92,724			—			114,855
Total Other Long-Term Liabilities		20,888		717,037			803,859			(492,658	)		1,049,126
Shareholder's Equity		554,650		1,785,636			497,833			(2,283,469	)		554,650
Total Liabilities and Shareholder's Equity	$	4,571,627	$	4,832,818		$	1,988,220		$	(4,981,751	)	$	6,410,914

Condensed Consolidating Statement of Financial Position
As of December 31, 2011
(In thousands)

	The ServiceMaster Company		Guarantors			Non-Guarantors			Eliminations			Consolidated
Assets
Current Assets:
Cash and cash equivalents	$	232,382	$	13,751		$	82,797		$	—		$	328,930
Marketable securities		—		—			12,026			—			12,026
Receivables		1,202		108,486			452,149			(187,637	)		374,200
Inventories		—		57,219			2,424			—			59,643
Prepaid expenses and other assets		5,629		12,742			20,218			(294	)		38,295
Deferred customer acquisition costs		—		13,838			16,565			—			30,403
Deferred taxes		39,221		47,218			4,170			—			90,609
Assets of discontinued operations		—		7			10			—			17
Total Current Assets		278,434		253,261			590,359			(187,931	)		934,123
Property and Equipment:
At cost		—		377,900			163,917			—			541,817
Less: accumulated depreciation		—		(164,689	)		(70,369	)		—			(235,058	)
Net property and equipment		—		213,211			93,548			—			306,759
Other Assets:
Goodwill		—		2,796,789			365,191			—			3,161,980
Intangible assets, primarily trade names, service marks and trademarks, net		—		1,804,619			738,920			—			2,543,539
Notes receivable		1,997,157		82			31,187			(2,005,104	)		23,322
Long-term marketable securities		10,834		—			119,622			—			130,456
Investments in and advances to subsidiaries		2,890,634		872,451			—			(3,763,085	)		—
Other assets		51,871		3,838			3,926			(50,789	)		8,846
Debt issuance costs		37,708		—			90			—			37,798
Total Assets	$	5,266,638	$	5,944,251		$	1,942,843		$	(6,006,909	)	$	7,146,823
Liabilities and Shareholder's Equity
Current Liabilities:
Accounts payable	$	192	$	46,378		$	35,071		$	—		$	81,641
Accrued liabilities:
Payroll and related expenses		1,659		40,608			43,079			—			85,346
Self-insured claims and related expenses		—		20,400			52,671			—			73,071
Accrued interest payable		67,000		260			45			(294	)		67,011
Other		2,919		31,760			35,424			—			70,103
Deferred revenue		—		142,918			330,324			—			473,242
Liabilities of discontinued operations		—		279			526			—			805
Current portion of long-term debt		108,428		14,258			116,789			(187,637	)		51,838
Total Current Liabilities		180,198		296,861			613,929			(187,931	)		903,057
Long-Term Debt		3,782,391		2,015,961			30,784			(2,005,104	)		3,824,032
Other Long-Term Liabilities:
Deferred taxes		—		808,830			278,652			(50,789	)		1,036,693
Intercompany payable		12,309		—			310,011			(322,320	)		—
Liabilities of discontinued operations		—		—			2,070			—			2,070
Other long-term obligations, primarily self-insured claims		43,821		220			89,011			—			133,052
Total Other Long-Term Liabilities		56,130		809,050			679,744			(373,109	)		1,171,815
Shareholder's Equity		1,247,919		2,822,379			618,386			(3,440,765	)		1,247,919
Total Liabilities and Shareholder's Equity	$	5,266,638	$	5,944,251		$	1,942,843		$	(6,006,909	)	$	7,146,823

Schedule of Condensed Consolidating Statement of Cash Flows

THE SERVICEMASTER COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2012
(In thousands)

	The ServiceMaster Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
Cash and Cash Equivalents at Beginning of Period	$	232,382		$	13,751		$	82,797		$	—		$	328,930
Net Cash Provided from Operating Activities from Continuing Operations		396,129			479,789			7,781			(649,090	)		234,609
Cash Flows from Investing Activities from Continuing Operations:
Property additions		—			(43,636	)		(29,592	)		—			(73,228	)
Sale of equipment and other assets		—			2,141			56			—			2,197
Other business acquisitions, net of cash acquired		—			(41,025	)		(5,113	)		—			(46,138	)
Notes receivable, financial investments and securities, net		—			—			(1,176	)		—			(1,176	)
Net Cash Used for Investing Activities from Continuing Operations		—			(82,520	)		(35,825	)		—			(118,345	)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt		1,350,000			—			—			—			1,350,000
Payments of debt		(1,313,714	)		(18,816	)		(2,417	)		—			(1,334,947	)
Shareholders' dividends		—			(515,706	)		(133,384	)		649,090			—
Debt issuance costs paid		(32,978	)		—			(111	)		—			(33,089	)
Net intercompany advances		(315,291	)		141,623			173,668			—			—
Net Cash (Used for) Provided from Financing Activities from Continuing Operations		(311,983	)		(392,899	)		37,756			649,090			(18,036	)
Cash Flows from Discontinued Operations:
Cash used for operating activities		—			(668	)		(134	)		—			(802	)
Cash used for investing activities:
Proceeds from sale of business		—			(3,611	)		—			—			(3,611	)
Net Cash Used for Discontinued Operations		—			(4,279	)		(134	)		—			(4,413	)
Cash Increase During the Period		84,146			91			9,578			—			93,815
Cash and Cash Equivalents at End of Period	$	316,528		$	13,842		$	92,375		$	—		$	422,745

THE SERVICEMASTER COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2011
(In thousands)

	The ServiceMaster Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
Cash and Cash Equivalents at Beginning of Period	$	132,168		$	16,900		$	103,630		$	—		$	252,698
Net Cash Provided from (Used for) Operating Activities from Continuing Operations		476,575			565,023			(29,251	)		(717,346	)		295,001
Cash Flows from Investing Activities from Continuing Operations:
Property additions		—			(68,189	)		(28,351	)		—			(96,540	)
Sale of equipment and other assets		—			4,433			172			—			4,605
Acquisition of The ServiceMaster Company		(35	)		—			—			—			(35	)
Other business acquisitions, net of cash acquired		—			(43,316	)		(1,049	)		—			(44,365	)
Purchase of other intangibles		—			(1,900	)		—			—			(1,900	)
Notes receivable, financial investments and securities, net		—			633			2,376			—			3,009
Net Cash Used for Investing Activities from Continuing Operations		(35	)		(108,339	)		(26,852	)		—			(135,226	)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt		—			—			4,000			—			4,000
Payments of debt		(91,500	)		(13,119	)		(1,286	)		—			(105,905	)
Shareholders' dividends		—			(573,412	)		(143,934	)		717,346			—
Debt issuance costs paid		(267	)		—			—			—			(267	)
Net intercompany advances		(284,559	)		100,224			184,335			—			—
Net Cash (Used for) Provided from Financing Activities from Continuing Operations		(376,326	)		(486,307	)		43,115			717,346			(102,172	)
Cash Flows from Discontinued Operations:
Cash provided from (used for) operating activities		—			340			(6,228	)		—			(5,888	)
Cash provided from (used for) investing activities:
Proceeds from sale of business		—			26,134			—			—			26,134
Other investing activities		—			—			(1,617	)		—			(1,617	)
Net Cash Provided from (Used for) Discontinued Operations		—			26,474			(7,845	)		—			18,629
Cash Increase (Decrease) During the Period		100,214			(3,149	)		(20,833	)		—			76,232
Cash and Cash Equivalents at End of Period	$	232,382		$	13,751		$	82,797		$	—		$	328,930

THE SERVICEMASTER COMPANY AND SUBSIDIARIES
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2010
(In thousands)

	The ServiceMaster Company			Guarantors			Non-Guarantors			Eliminations			Consolidated
Cash and Cash Equivalents at Beginning of Period	$	124,674		$	17,689		$	112,993		$	—		$	255,356
Net Cash Provided from (Used for) Operating Activities from Continuing Operations		296,963			460,679			(62,561	)		(472,537	)		222,544
Cash Flows from Investing Activities from Continuing Operations:
Property additions		—			(82,594	)		(51,640	)		—			(134,234	)
Sale of equipment and other assets		—			1,003			352			—			1,355
Acquisition of The ServiceMaster Company		(2,245	)		—			—			—			(2,245	)
Other business acquisitions, net of cash acquired		—			(57,724	)		(217	)		—			(57,941	)
Purchase of other intangibles		—			(2,500	)		—			—			(2,500	)
Notes receivable, financial investments and securities, net		22,012			—			(1,585	)		—			20,427
Net Cash Provided from (Used for) Investing Activities from Continuing Operations		19,767			(141,815	)		(53,090	)		—			(175,138	)
Cash Flows from Financing Activities from Continuing Operations:
Borrowings of debt		5,000			—			10,000			—			15,000
Payments of debt		(32,250	)		(15,325	)		(13,758	)		—			(61,333	)
Shareholders' dividends		—			(413,197	)		(59,340	)		472,537			—
Debt issuance costs paid		—			—			(30	)		—			(30	)
Net intercompany advances		(281,986	)		108,869			173,117			—			—
Net Cash (Used for) Provided from Financing Activities from Continuing Operations		(309,236	)		(319,653	)		109,989			472,537			(46,363	)
Cash Flows from Discontinued Operations:
Cash provided from operating activities		—			—			6,776			—			6,776
Cash used for investing activities		—			—			(10,477	)		—			(10,477	)
Net Cash Used for Discontinued Operations		—			—			(3,701	)		—			(3,701	)
Cash Increase (Decrease) During the Period		7,494			(789	)		(9,363	)		—			(2,658	)
Cash and Cash Equivalents at End of Period	$	132,168		$	16,900		$	103,630		$	—		$	252,698