Through January 2020, when we announced were exploring strategic alternatives related to the ServiceMaster Brands business that resulted in it being classified as held for sale, we conducted business through two reportable segments: Terminix and ServiceMaster Brands. We now have one reportable segment, Terminix.

In accordance with accounting standards for segments, we identified Terminix as our reportable segment primarily based on the nature of the services it provides and the operating results that are regularly reviewed by our chief operating decision maker (the

“CODM”) to evaluate performance and allocate resources. The Terminix segment provides termite and pest control services to residential and commercial customers and distributes pest control products, primarily under the Terminix, Terminix Commercial, Copesan, Assured Environments, Gregory Pest Solutions and McCloud Services brand names.

European Pest Control and Other includes our European pest control operations, primarily under our Nomor brand, our captive insurance subsidiary, which provides automobile, workers' compensation and general liability coverage to our reportable segment, and our headquarters operations (substantially all of which costs are allocated to our reportable segment), which provides various technology, finance, legal and other support services to Terminix. Our European pest control operations meet the definition of an operating segment, but do not meet the quantitative thresholds to require them to be reported as a reportable segment.

Information regarding the accounting policies used by us are described in our 2019 Form 10-K. We derive substantially all of our revenue from customers and franchisees in the United States with approximately five percent generated in foreign markets as of March 31, 2020. Operating expenses of Terminix consist primarily of direct costs and indirect costs allocated from Corporate.

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

Information for continuing operations for Terminix and European Pest Control and Other is presented below:



	Three Months Ended
	March 31,
(In millions)	2020		2019
Revenue:
Terminix	$	438	$	419
European Pest Control and Other		18		—
Total Revenue	$	456	$	419
Reportable Segment Adjusted EBITDA:⁽¹⁾
Terminix	$	63	$	83

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


	Three Months Ended
	March 31,
(In millions)	2020		2019
Net Income	$	14	$	70
Unallocated corporate expenses		1		(3)
Costs historically allocated to ServiceMaster Brands		3		3
European pest control		(1)		—
Depreciation and amortization expense		28		23
Acquisition-related costs		1		1
Fumigation related matters		—		1
Non-cash stock-based compensation expense		4		4
Restructuring and other charges		4		6
Realized (gain) on investment in frontdoor, inc.		—		(40)
Net earnings from discontinued operations		(13)		(16)
(Benefit) provision for income taxes		(2)		3
Loss on extinguishment of debt		—		6
Interest expense		23		27
Reportable Segment Adjusted EBITDA	$	63	$	83