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Related Party Transactions | 9 Months Ended
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Sep. 30, 2019
Related Party Transactions [Abstract] |
Related Party Transactions | Note 9. Related Party Transactions ServiceMaster was a related party to Frontdoor prior to the Spin-off. The significant transactions and balances with ServiceMaster prior to the Spin-off are described below. Separation from ServiceMaster Prior to the Spin-off, we were managed and operated in the normal course of business by ServiceMaster along with other businesses. Accordingly, certain shared costs were allocated to us and are reflected as expenses in the accompanying condensed consolidated and combined financial statements. Our management considers the expenses included and the allocation methodologies used to be reasonable and appropriate reflections of the historical ServiceMaster expenses attributable to us for purposes of the accompanying condensed consolidated and combined financial statements; however, the expenses reflected in the accompanying condensed consolidated and combined financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if we historically operated as a separate, stand-alone entity. In addition, the expenses reflected in the accompanying condensed consolidated and combined financial statements may not be indicative of related expenses that we could incur in the future. Corporate expenses The accompanying condensed consolidated and combined financial statements include transactions with ServiceMaster for services (such as executive functions, information systems, accounting and finance, human resources, legal and general corporate expenses) that were provided to us by the centralized ServiceMaster organization. Corporate-level items also include personnel-related expenses of corporate employees (such as salaries, insurance coverage, stock-based compensation costs, etc.). Throughout the period covered by the accompanying condensed consolidated and combined financial statements, the costs of such functions, services and items were directly charged or allocated to us using methods management believes are reasonable. The methods for allocating functions, services and items to us were based on proportional allocation bases which include revenue, headcount and others. All such costs were deemed to have been incurred and settled in the period in which the costs were recorded. For the three and nine months ended September 30, 2018, directly charged corporate expenses are included in Selling and administrative expenses in the accompanying condensed consolidated and combined statements of operations and comprehensive income in the amounts of $7 million and $14 million, respectively. For the three and nine months ended September 30, 2018, allocated corporate expenses are included in Selling and administrative expenses in the accompanying condensed consolidated and combined statements of operations and comprehensive income in the amounts of $11 million and $35 million, respectively. ServiceMaster trade and service marks We had a trademark license agreement with ServiceMaster in which we were charged a royalty fee for the use of ServiceMaster-owned trade and service marks. The royalty fee was 0.175 percent of our customer revenues for the period. The royalty fee is included within Affiliate royalty expense in the accompanying condensed consolidated and combined statements of operations and comprehensive income in the amounts $1 million for each of the three and nine months ended September 30, 2018. The trademark license agreement with ServiceMaster was terminated in connection with the Spin-off. Health insurance coverage Our employees participated in a self-insured health insurance program administered by ServiceMaster through June 30, 2018. We paid premiums to ServiceMaster for this coverage, which were based on the number of our employees in the medical plan. These premiums are reflected in the accompanying condensed consolidated and combined statements of operations and comprehensive income in the amount of $6 million for the nine months ended September 30, 2018. As we entered into a separate health insurance program effective July 1, 2018, there are no premiums associated with ServiceMaster’s program recorded in the three months ended September 30, 2018. In addition to these costs, a portion of medical insurance costs for corporate employees were allocated to us through the corporate expense allocation discussed under the heading “Corporate expenses” above. Risk management Prior to the Spin-off, ServiceMaster carried insurance policies on insurable risks related to our business at levels which it believed to be appropriate, including workers’ compensation, automobile and general liability risks. These insurance policies were purchased from third-party insurance carriers, which typically incorporated significant deductibles or self-insured retentions. We paid a premium to ServiceMaster in exchange for the coverage provided. Expenses related to coverage provided by ServiceMaster and changes in ultimate losses relating to self-insured programs are reflected in the accompanying condensed consolidated and combined statements of operations and comprehensive income in the amounts of $1 million and $2 million for the three and nine months ended September 30, 2018, respectively. Our coverage under these self-insured programs was terminated in connection with the Spin-off.

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 + Details
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